Tuesday, March 30, 2010

Integrative Thinking Practium - Agent Based Modeling

At the beginning of the course I was a bit confused. At first I thought I didn't really understand what was happening. And then our class today started by describing a model of sand falling on a table. I was further confused as to how this was in any way related to business.

With a few changes in our frame of mind, "sand falling on a table" became a metaphor (or analogy?) for customer arrivals at a business. Pile height became analogous to company capacity constraints and pile location became geographic properties of companies.

Suddenly, we actually had a working model for the growth of an industry into equilibrium which encompassed such ideas as customer movement from one business to another. With a few more tweaks, the model was even able to show the decline of an industry (and death of underperforming companies).

I think my favourite part of this class was that it showed us in a very intuitive way how the models of our business work in more practical sense which are based in math, but don't require formulas.

I do apologize for my explanation as I don't feel it truly does justice to the class, but it encorporated topics we had learned in economics, operations management, managerial accounting, strategy I and II (Prof Ryall even made references to Anita McGahan's research).

No comments: