J.P.BIRCHALL P0194869
T247
TMA
04
13/9/95
QUESTION 1
The specifying of a model involves paying particular attention to the
processes which must be undertaken prior to the actual construction of the
model, to ensure the model reflects purpose and appropriate aspects of
reality. Equally important are those processes which must be used afterwards
to make interpretation of results sensible and bridge the model to reality.
The pre-model activity is mapping, which matches understanding of
the situation with an understanding of what it is possible to model. Reality is
complex and mapping involves isolating the issues that are of interest or
concern and finding a simple representation of them which serves the stated
purpose. The mapping problem is how best to simplify.
After model construction there is a translation stage, which attempts
to relate the output of the model to specific decisions and actions. It is often
easy to draw conclusions but it can be difficult to identify the actions which
can be taken in the real world. Issuing statements of intent or commands on
there own are seldom satisfactory, life is full of unintended consequences
and differing personal perspectives. Actions can be straight forward if the
problem is classified as a difficulty where the solution is clear, but in most
human activity systems the issue is a mess where even the problem is not
clear never mind the solution!
The translation process presents problems of timing, statistical
interpretation and motivation of people. It involves understanding that
problems can be with the model as well as with reality. The issue is how best
to get your feet on the ground without having your head in the clouds!
The hard modelling sequence that will be followed is shown in fig.1.
Part 1, state the purpose of the model.
The first step is to obtain a clear understanding of the situation to be
modelled.
My understanding of the situation at the refuge (described in Block 6)
is summarised in my spray diagram fig. 2. A new opportunity has now been
identified for some of the unemployed women to earn an income through the
production of home made cakes etc. which can be sold through the local
shops.
Before any return can be secured the project requires investment in
equipment. Investment is always risky, a one off input of resources is
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required before there is increased or improved output. It is this expectation
of increase or improvement which is the return.
The refuge is not simply goal directed with a profit objective but a
multiple stakeholder system where returns are less tangible. Both the women
and the support group are stakeholders, that is they are more than
participants, as they both invest their own time and interest in the refuge. A
more subtle social exchange is involved, perhaps the return the women
expect is security, while the support group may look to job satisfaction. The
two groups will have different perspectives, on the one hand the women are
looking for an additional income stream and useful personal contributions
whereas the support group maybe worried about the investment risk and the
effect on the financial stability of the refuge and future refugees. It is the
reconciliation of these potentially conflicting goals that is the crux of the
issue.
In voluntary organisations where there is discretionary exchange the
evaluation of investment cannot be a simple quantification of financial
return on investment. The model will attempt to include the effects of social
exchange where personal interests and contributions are not obligatory but
discretionary. It is mediation of differing interests that is involved not a
control of finance.
Thus, the purpose of the model is to provide quantified output data
which will help the support group to make a decision on investment of
resources in equipment for the production of home-made cakes etc. for sale
at a profit. It will address the particular concerns of the risk associated with
there being too few women to help with production at the very time refuge
income from other sources is short.
Part 2, describe the nature and structure of the model.
The second step in the modelling process is to map the situation
understanding into the model specification.
The model will be a static model quantifying the investment and the
return in terms of both finance and time, and have stochastic elements
associated with the availability of women for work and the variability of the
refuge income.
The structure will be similar to the ‘insurance model’ in Block 2, there
the number of deaths was random within an expected range and the
investment income was variable due to the unpredictable nature of interest
rate variation. In this case the number of women available for work and the
refuge income will replace the number of deaths and the investment income.
The model will calculate the net refuge income and the financial
return on investment (the equipment cost) from labour availability and
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material costs, and cake production and selling price. The discretionary
investment cannot be quantified directly so it will be will be modelled by
proxy variables representing the women’s work time and a factor associated
with income from other sources. Thus, both the women’s time and other
refuge income will not only vary randomly within limits but also depend on
a factor representing discretionary input of time.
Part 3, state the main variables in the model and the relationships involved.
The main variables are: the number of women available for work
this is randomly variable from the current number
available, say, 8, to plus or minus, say, 2 and 4, with an equal chance of
plus/minus 2 and a 50% chance of plus/minus 4.
 the time they are prepared to invest
this is to be set as a norm of 8 hours per day with a factor
to represent the additional discretionary investment which can be called on.
This will factor will be 1, initially, but could be changed during analysis up
to say, 1.5 representing a 12 hour day. Or conversely down to 0.5 if lack of
enthusiasm or alternative essential tasks lead to part time working.
 the number of cakes produced
this will follow from the number of women hours
required to make a cake.
 the selling price
this will be assumed to be fixed in the short term but the
model will be able to accommodate a changed price.
 income from cake production
this will follow from production and selling price, the
assumption being that all cakes will be sold.
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other refuge income
this is to be set to vary randomly within a normal
distribution with a mean of last year’s income and a range of +/- 50%.
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net refuge income
this is the main model output
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discretionary additional income
to represent the possibility of additional discretionary
investment a factor will be applied to other refuge income. Initially this will
be 1 but could be changed on analysis up to 1.5 or down to 0.5 in the same
way as the discretionary factor associated with work hours investment
above.
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At this point I iterated and realised that the additional refuge income
from discretionary exchange would depend on the level of time investment
in cake production. In other words the more time that went into cake
production the less maybe available for alternative sources.
Thus the factor will be adjusted too limit the total discretionary hours,
the extra hours invested in cake production will be subtracted from the total
available for investment in other income sources.
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potential refuge income
this will include the discretionary income.
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return on investment
this is a subsidiary model output allowing a conventional
financial investment criteria to be applied.
Other variables initially assumed to be fixed: the number of women hours per cake
 the cost of cake materials
 other sundry costs, electricity, repairs, cleaning, transport,
wastage/spoilage/returns...
The relationships between the main variables are shown in the sign
graph diagram fig. 3.
It will be clear from the above that the selection and quantification of
variables is not straightforward. Even the quantification of some ‘easy’
variables, for example, the price of the cakes, is fraught with difficulty. This
has been assumed constant, but in reality price is bound to effect the quantity
sold. Similarly choosing an appropriate measure of performance can be a
problem, see the comments below on return on investment.
Apart from the model design, covered above, the third and fourth
steps in fig.1, the construction and testing/debugging of the model, are not
required.
Part 4, explain how the model output will be used.
The fifth step is to use the model to obtain output.
Firstly, the model will be used to obtain net refuge income data and
return on investment for a series runs. Each run will involve the random
change to the number of women available for work and random fluctuations
in the refuge income.
Secondly, a sensitivity analysis will be undertaken to establish the
effect on net refuge income and ROI of varying the discretionary factors
affecting the number of hours each women is prepared to invest, and refuge
income from other sources. These factors will cover a +/-50% investment
change as indicated above.
The sixth step is to draw conclusions from the model.
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The key conclusions will come from the variability in income from
the inherent variability of the number of women workers and the variability
of other income sources and particularly the chances of low income and low
numbers coinciding. Because of the stochastic nature of these inputs
conclusion must be based on a statistical interpretation of several runs. It
would be sensible to look at a frequency distribution of the number of
occasions that the reduced number of women coincides with low other
income.
Further conclusions will come from the sensitivity analysis.
This will show how easy or difficult it would be for the adverse
coincidence to be rectified by additional discretionary investment.
What the model will not do is to tackle the thorny problem of how
discretionary exchange is encouraged or discouraged. However, at least the
effects of any investment can be modelled.
It would be appropriate to draw a graph of average income verses
discretionary investment to help visualise the effect of increasing levels of
investment, say, in increments of 10%. If the effect on income is relatively
flat (i.e. insensitive to the changed input) the initial conclusion maybe
robust.
The difficult seventh step is to translate the model output into real
options.
This is the key to how the model output is to be used. It involves both
understanding the model and understanding the options in real life with all
their associated practicalities (or impracticalities!).
A first caution applies to the financial measure of return on
investment. Because the model does not cost the input of hours the return on
investment could be unusually high and conventional yardsticks for
comparison cannot apply. A return of 45% when a Post Office account is
only paying 5% is not a valid comparison.
The second caution is that in all investment evaluations there are
always alternative choices for the investment of the resources concerned; the
model is silent on possible alternatives. (Apart from the attempt to limit the
total discretionary investment).
The support group should be made aware that the proposal involves
an element of risk reduction through portfolio investment as the equipment
will be used for a variety of products not only cakes but also, pies, biscuits
and other confectionery. Similarly, although the model has been written for
cake it is also applicable to the other varieties with suitably changed data
inputs. It maybe that when available hours are short it is more advantageous
to concentrate on the product(s) which has lower input hours per unit of
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sales revenue. Thus there is an issue associated with an optimal mix of
products.
The question for the support group is do they approve the proposed
investment request. Realism does not only mean addressing the initial
worries of risk of low numbers of workers and low other income but also
addressing the consequences of refusal, particularly the effect on the women
if their idea is turned down. Cognitive mapping may help the support group
to gauge such consequences remembering that orientation to work, or
motivation, can be a complex mix of friendship, power or fulfilment as well
as money.
In bridging to reality it is always helpful to look for hidden agendas,
espoused theory may not be theory in practice and the motives of either
group could be influenced by an interest in the sale of the manufacturing
equipment itself! For example, a brother who makes a good profit selling his
food mixers!
Lastly it is important to ensure the support group is not seduced by the
quantitative nature of the model. Numbers often give an unintended aura of
accuracy. To dispel this impression it may be possible to impress upon the
group the need for careful judgement by soliciting from them their opinions
on the scope for further discretionary exchange and using such figures as the
factors in the sensitivity analysis.
The final step eight is for the support group, the decision is theirs!
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QUESTION 2
As a member of one of the groups engaged in the dialogue project
targeted at decision makers concerned with nuclear armament/disarmament,
I propose to analyse the situation using the Soft Methodology described in
the Summer School Student Handbook.
The methodology is outlined in fig. 4.
Step 1, the unstructured situation.
The dialogue project is described in Block 7.
Step 2, the rich picture and problem themes.
My rich picture of the situation is show in fig. 5, and I identified the
following problem themes:1. no cost/benefit analysis of the current strategy; with escalation
resulting from a system with no monitoring system - no negative
feebabck loop, an absence of performance measures leading to sub
optimisation where current objectives make everyone worse off.
2. faceless unaccountable decision makers; this could be the result of
the system being run as simple goal directed when in reality it is a
mulitiplestakehoder system effecting everyone
3. helplessness of Joe Public who pays the money and suffers the
appalling consequences of nuclear destruction; the issue is how
best to influence big systems, suggesting Joe is ineffective as a
change agent.
Step 3, the root definition.
The problem theme developed was Joe’s helplessness and how best
change agents should operate. My root definition of a notional system which
maybe relevant is:‘A system to enable Joe Public (the tax payer) to influence the
decisions made by key people, who are engaged in conflict with the enemy,
to avoid defeat’.
I did a CATWOE check on this definition:The customer is Joe who would benefit from the ability to influence.
The process involved is the decision making process transforming
options into actions.
The world view is one of unresolved conflict between adversaries.
The owners who have the power to change the system are the key
decision makers.
The environmental constraints are the enemy who, given the chance,
will engage in aggressive activities resulting in destruction.
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Identifying the actors caused me some difficulty, as it is clear that the
people who would carry out the enabling activities would be both Joe and
the decision makers themselves. Both would have to be involved.
Step 4, the conceptual model.
Fig. 6, shows my conceptual model.
The important verbs identified in the root definition which resulted in
subsystems in the model were - to influence, to decide, to engage and to
avoid.
At this stage I iterated and looked more closely at the decision making
system which appeared to involve a feedback loop. This resulted in a second
conceptual model based on the control model, shown also in fig. 3.
The bottom part of the model show the activities where resources are
invested in a system to engage the enemy and the output is avoiding defeat.
The upper part of the conceptual model is the decision making process
where actual outcomes are compared with targets which result in an
appropriate response.
Step 5, compare the conceptual model with reality.
In comparing each item in turn several ideas for change emerged.
Firstly the idea of withholding tax to directly stop the flow of funds
into the armaments industry was an option.
However before thinking through the practicalities of this I iterated
and requestioned the whole system; in reality counting bombs appeared to be
the set point and the method of engagement? The measure of performance
appeared to see the absence of war as a victory. The set point in a democracy
should be the wishes of the people, in reality there was no means of
establishing such wishes. Absence of war is a rather negative objective,
peace and co-operation would be far more positive. The response appeared
to be almost automatic. Defence of the realm involved equipping yourself
with enough fire power to match your opponent in conflict. This was
undoubtedly the conventional wisdom. The decision makers were simply
implementing the conventional wisdom. It was not the decision makers who
should be the target of influence but conventional wisdom.
This gave me a host of new insights. I chose to analyse the insight that
the decision makers were not the key, they merely reflected public opinion,
public opinion should be the target for our efforts.
The dialogue project should be concerned with identifying the best
strategies, or behavioural options, for influencing the conventional wisdom,
there were far more people involved than a limited number of key decision
makers.
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Big systems appear to the participant as massive monolithic power
groups, with the odds stacked against his small voice reason. There is a
cognitive dissonance, the same reality is viewed from many different
perspectives and when beliefs and reality clash there is a problem.
To resolve this problem and get to grips with changing public opinion
we must understand how different perspectives emerge. Reality is highly
complex and the human brain must simplify if it is to function. The brain
produces a model of reality, that is, a simplified representation for a specific
purpose and, as such, it has only limited application. We expect too much
from the model in our brains, it is only one view of the world, only one
perspective. Modelling difficulties arise from selection and inaccuracy of
data, the model structure, in that perceptions are at a particular level of
detail, with a boundary defining what is of interest. However, the
environment is not benign, it cannot be excluded, there are connections and
interactions, resulting in emergent properties and unintended consequences
of actions.
With this holistic world view, novel insights emerge. The nuclear
armament big system functions like most systems; outcomes are the result of
a host of specific satisficing decisions, chosing the best option available at
the time. The systemic properties then emerge as a consequences of the
many interactions of these components.
It is clear from this perspective that the original strategy of isolation
the individual decisions that result in policy was right. However, the
decision makers are not only those at the top of the organisation. The basic
error was to assume a top down, command view of the world.
This perspective is very plausible, particularly for scientifically
trained western Europeans. The success of science is the result of a
reductionist approach where the environment is excluded and models can be
developed by isolating the effects of specific variables. This approach falls
down when complex human activity systems are involved.
The novel approach is to widen the boundary look at the totality, the
myriad of decisions which together, as a whole, result in the immorality and
hopelessness of nuclear conflict. We have changed the focus and can look at
a different level in the system. Initially this may appear to make the problem
worse because instead of targeting a few top decision makers we are now
looking at many much smaller decisions both inside the original system and
outside in the environment.
However, all is not lost because ‘good’ strategies may be popular, if
there are opportunities for people to benefit from participation, their
investment in time and persuasion will produce a good return in term of
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satisfaction and contribution. They become stakeholders involved in social
exchange, where co-operation brings more benefit than conflict.
Step 6, debate the feasible and desirable changes.
The appropriate strategy to propagate is a tit for tat strategy. This is a
nice strategy. Essentially it involves co-operating with adversaries until such
time as they become aggressive, (in game metaphor language until they
defect), and then react with force. The strategy can be forgiving in the sense
that if the adversary ceases his aggressive action we revert to a co-operative
position. Initially this tit for tat strategy can be sold to the nuclear lobby on
the grounds that they are not wrong but their weapons are purely for reaction
to aggression.
However, if the nice strategy is made explicit, co-operation will
emerge as the way forward, everyone will gain, it is not a zero sum game,
but the understanding is that force will be met by force. The espoused theory
must be seen as identical to the theory in practice. But the crux of the nice
strategy is that once participants see the benefits of co-operation they will
learn and have good returns from their investment; disarmament then
becomes a realistic probability, another co-operative action.
The way the nice strategy propagates from small decisions, anywhere
within the big system or outside it, is through a process of colonisation. Like
minded people, only a small group to start with, can adopt appealing nice tit
for tat strategies of co-operation and they will spread as people learn. The
key is the benefit of co-operation, the increased return on investment, not in
financial terms but in terms of social exchange theory.
Big systems are not changed from the top down they evolve from the
perceived benefits of co-operation from any group of like minded people.
Starting from small beginnings we can colonise the world, not with guns and
top down commands but through the spread of benefit.
After this analysis I was confident my voice could be heard. Of the
options before me of voice, exit or loyalty. The choice was now easy.
On further reflection (iteration!), I realised the strength of my
argument could be increased by noting that the Strategic Defence Initiative
in the US provoked a reaction in the USSR that resulted in the understanding
that co-operation was the way forward because the arms race was too
expensive. The peace dividend has become conventional wisdom!
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