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 / Fall 2005 / Issue 40(originally published by Booz & Company)


The Prophet of Unintended Consequences

Some of Professor Forrester’s protégés were more enthusiastic ambassadors to the corporate world. Two of his graduate students, Jack Pugh and Ed Roberts, started a consulting business (Pugh-Roberts) in 1963; they applied system dynamics to nuclear power plant design, missile system development, and planning the tunnel under the English Channel. One simulation prompted MasterCard’s decision to introduce the first third-party affinity cards. The model accurately predicted the amount of market share MasterCard would gain as well as the fact that Visa would match the offering within a year, and that American Express and Discover would not or could not follow in the cobranding. Pugh-Roberts never trumpeted its connection to Professor Forrester or his ideas. “We used the methodology, but we didn’t sell ourselves as system dynamics consultants,” says James M. Lyneis, who worked with the firm from 1978 to 2002.

Businesspeople, it turned out, needed more than a solution. They needed to internalize that solution. It would take until the early 1980s for other Professor Forrester students to create experiences that might change the thinking of decision makers more directly. Professor Forrester himself, meanwhile, had reached the conclusion that the slow uptake on the part of corporations was a symptom of their stultifying management structures. The conventional command-and-control hierarchy, in his view, amounted to a kind of corporate socialism, no more likely to thrive in the long run than the planned economies of the Communist world. In a 1965 paper titled “A New Corporate Design,” he predicted that less self-defeating management forms, based on individual responsibility and the free exchange of information, would ultimately prevail. These ideas anticipated the thinking of later organizational theorists, including Charles Handy and Shoshana Zuboff. In the meantime, Professor Forrester was on to bigger projects.

When John F. Collins, a former mayor of Boston, took a temporary appointment at MIT as a visiting professor, he was assigned the office next to Professor Forrester’s. It was 1968, riots had broken out in cities across America, and the two instructors naturally fell into conversations about solving the stagnation and unemployment that plagued many cities.

“Collins was very much a man of action,” Professor Forrester recalls. “I suggested enlisting researchers — not urban studies students, but people who knew the real urban world — for a half a day a week, for as long as it would take, to extract a dynamic picture of the problem. Collins’s immediate answer was: ‘They’ll be here Wednesday afternoon.’”

With Mr. Collins’s clout, the two quickly assembled a team of high-level advisors from politics and business to research the dynamics of urban poverty. After four months, Professor Forrester had the basis for a new book, Urban Dynamics, with a startling assertion: The harder a policymaker tried to relieve poverty, the more that poverty would increase. Low-cost housing, intended to revive inner cities, actually crowded out industry that might have created jobs, while attracting underemployed people and concentrating them in decaying neighborhoods that made it harder for them to break out of the vicious cycle they were in. The model supported arguments for fostering industrial expansion before building low-cost housing, and thus giving cities room to expand their economies naturally.

Urban Dynamics offended many social activists, while free-market advocates claimed Professor Forrester as one of their own. In truth, he belonged to neither group; he was just relating the results of his models. Meanwhile, it took three to five hours to fully communicate the implications to an audience, and he rarely had an audience’s attention that long. He made some converts, including one Harlem activist who started out decrying the report as racist, and ended up saying, “They don’t just have a solution to the urban problem up there at MIT; they have the only solution.” But as Professor Forrester lamented in his autobiography, “We have not solved the challenge of how to bring enough people across the barrier separating their usual, simple, static viewpoint from a more comprehensive understanding of dynamic complexity.”

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  1. Mark Buchanan, “Supermodels to the Rescue,” s+b, Spring 2005: An overview of the current state of computer modeling in business. Click here.
  2. Diana Fisher, Modeling Dynamic Systems: Lessons for a First Course (Isee Systems, 2005): Introduction for educators using models in the classroom.
  3. Lawrence M. Fisher, “The Paradox of Charles Handy,” s+b, Fall 2003: Jay Forrester’s article “A New Corporate Design” anticipated the ideas of visionary creative mind Charles Handy… Click here.
  4. Andrea Gabor, “Post-capitalism’s Drop-out Prophet,” s+b, Fall 2004: …and controversial post-Harvard creative mind Shoshana Zuboff. Click here.
  5. Jay Forrester, Collected Papers of Jay W. Forrester (Pegasus Communications, 1975): Jay Forrester’s most critical papers, including “A New Corporate Design” and a summary of his industrial research.
  6. Jay Forrester, Industrial Dynamics (1961), Urban Dynamics (1969), World Dynamics (1971), all from Pegasus Press: The great Forrester trilogy, still full of surprises and insights after more than 30 years.
  7. Donella H. Meadows, Jørgen Randers, and Dennis L. Meadows, Limits to Growth: The 30-Year Update (Chelsea Green, 2004): The most current overview of global potential for overshoot and collapse.
  8. Keith Oliver, Dermot Shorten, and Harriet Engel, “Supply Chain Strategy: Back to Basics,” s+b, Fall 2004, The management of complex supply chain systems. Click here.
  9. Peter Senge, The Fifth Discipline (Doubleday, 1990): Business-savvy bestseller that introduces key systems thinking concepts and practice.
  10. Peter Senge et al., Schools That Learn (Doubleday, 2000): Application of system dynamics and other “learning organization” ideas to education, with an essay by Jay Forrester.
  11. John Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World (Irwin/McGraw-Hill, 2000): The most accessible and up-to-date guide to system dynamics for business planning and development.
  12. MIT System Dynamics in Education Project: The project is designed to help educators prepare tomorrow’s complex thinkers. Click here.
  13. System Dynamics Web site: The System Dynamics Society home page, a starting point for resources and conferences. Click here.
  14. Ventana Systems Web site, Click here, and Isee Systems Web site, Click here.: Access to software for modeling systems.
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