Alan A. Stephens

From tulip bulbs to sub‐prime mortgages examining the sub‐prime crisis: The case for a systemic approach

Purpose – The collapse of the sub‐prime mortgage market parallels several earlier failures within the financial services sector, begging the question why the lessons of past failures were not learned. Throughout history from the tulip bulb crisis of the 1600s to the most recent economic crisis, decision‐makers keep making the same mistakes. This occurs in part because of a failure to recognize similarities between past and current events. This conceptual paper aims to use systems dynamics tools to examine the crisis and illustrate how seemingly independent events are linked.Design/methodology/approach – The paper provides a fundamental review of systems thinking concepts and uses a tool of systems dynamics, causal loop diagrams (CLD), to provide a visualization of the dynamics of the sub‐prime market collapse over time. This approach provides insights that traditional analytic methods do not, which should be beneficial in understanding future cases where speculative demand drives behavior.Findings – The p...

Impact of scheduling free goods on the throughput performance of a manufacturing operation

Theory of Constraints philosophy operates under the assumption that the goal of a for-profit business is to ‘Make money now and in the future’. Consequently, it is a managers job continuously to search for ways to increase their operations throughput. Increasing the amount of free goods the operation accepts is one way a manager can do this. Free goods are items that do not use the capacity of the operations primary constraint. Because of this, it is possible to increase their output. However, increasing the number of free goods processed decreases the amount of protective capacity within the operation. Protective capacity plays a key role in the ability of an operation to deliver orders on time. Increasing the amount of free goods the operation processes is an action that could jeopardize the systems future throughput because it will impact on the operations ability to ship orders on time. In order for managers to fulfil the goal of making money now and in the future, they must maximize total throughput while minimizing late orders. This paper provides some initial insights about how managers can intelligently manage free goods to balance these competing goals.

Linking operational decision making and financial analysis: an experiment in cross-course cooperation

This paper presents the results of a dual effort to help students connect operational decision making to financial analysis. The paper has two primary objectives. First, it will discuss a method of team teaching that avoids many of the logistical barriers common with this teaching method. The second objective is to demonstrate how the teaching method helped students make better connections between standard financial analysis and operational decision making. We argue the second objective can be generalised for the common disciplines found in colleges of business. The process involved team teaching a single case exercise in two separate classes. In the finance class, students used the case to apply traditional financial analysis to make recommendations about future actions. In the operations class, students used a dynamic simulation of the case to put their financial analysis recommendations into action and watch the impact of those decisions over time. The simulation altered their perspective about decisions made with just the financial data.

Managing dynamic complexity: opportunities for systems thinking in graduate management education

Competition and the time pressure to respond are adding to the challenges faced by business leaders. Managers are increasingly faced with decision-making scenarios characterised by significant dynamic complexity. While Systems Thinking (ST) tools exist to help prepare managers deal with dynamic complexity, it is not clear whether managers are in fact aware of or incorporating ST in making complex decisions. Results of a survey of faculty at the leading graduate schools of management in the USA suggest that opportunities exist to expand the awareness of ST both among faculty and the managers they are preparing. Moreover, they demonstrate a need to distinguish thinking about systems from thinking systemically.