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Permalink Reply by Noah Im on May 2, 2012 at 2:49pm

I think applying system dynmaics concept into business model research is quite intersting.

Simulation is performed under quantitative data and mathmatical equations. But, I believe transforming qualitative data from business model canvas to quantitative one is quite difficult.

What data do you use for the simulation? how would you collect them?

 

Thank you.

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Permalink Reply by Ramtin Ghasemipour-Yazdi on May 2, 2012 at 3:46pm

Hi Noah,

yes, the transformation is the critical path!

In fact we have defined / adapted a own method (process + tools) accompanying this work which is based on CRISP-DM – the more or less industry standard process for Data Mining Projects….we view System Dynamic and Data Mining as the different side of the same coin…

Roughly Outlined we

• Use the BM Canvas to understand and define the business
• Create a data quality report to understand the available data (ERP Systems and in our case very often Web Analytics)
• Use strategy tools (porters 5, etc) in combination with industry trends and BM pattern to ideate
• Develop and reuse available System Dynamic models that fit the involved pattern (we have a database for matching)
• Validate the model with the DATA from original sources
• Evaluate and Assess by defining different scenarios and Monte Carlo Simulation
• The SD simulation and sensitivity Analysis is done with Powersim Software

I appreciate any feedback and comment and I am happy to answer aspects in more detail! (Btw. I am thinking of writing blog style articles about our work – would you be interested in reading?)

Best,

Ramtin

 

P.S.: I am convinced that System Dynamic, as a “living intellectual” remain of Cybernetics is a appropriate mechanism of steering and controlling the development and implementation of business models….

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Permalink Reply by Noah Im on May 3, 2012 at 5:37am

Hi, Ramtin

 

Thank you for you quick and kind response.

Yes, I would be very interested in reading article about your works.

 

Regard to your comments, I have some more questions to ask.

1. Do you use casual loop diagram to illustrate the business model? or just adopt the BM Canvas?

2. After understanding the business model using BMC or whatsoever, do mean that you will create another simulation model based on the data available (eg. ERP) which is apart from the BMC? using stock and flow diagram?

3. What if the firm is just startup company without any data, then how do you assess the business model?

4. What do you mean by using strategy tools in combination with industry trends and bm pattern?

 

I would be very appreciated if you answer the questions above.

Thank you

 

Noah

 

p.s. I strongly believe System Dynamics model can be applied in business model research. However, applying the characteristics of feedback, link polarity and delay is quite tricky and sitll not sure these can be applied in business model. By the way, I am currently trying to build a framework which can give a guideline to illustrate and assess business model using casual loop diagram.

 

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Permalink Reply by Ramtin Ghasemipour-Yazdi on May 7, 2012 at 12:54am

Dear Noah,

now I had some delay…Regarding your questions:

ad 1) I had both – depended on the project.

ad 2) I am not quite sure if I fully understood your question, but yes: After creating a “paper model” with the business model canvas I create a computer simulation model with stock and flow diagrams, delays and a lot of functions; using Powersim Business Simulation Software.

ad 3) most of my clients are start-ups. We are focusing on modeling the value and the growth hypothesis (in regard to the Lean Startup from Eric Ries). Of course they don’t have the data at the very beginning - but very soon they have some. And than the data verifies their assumptions - or disapprove them...

The main benefit of the SD model is the EXPLICIT representation of the underplaying assumptions.  (eg. Initial Users, User Growth rates, etc.). First we can use the model to simulate the impact over time and at a later stage we can also use it as a controlling  instrument while the project progresses. To know where the hypothesis came true and to understand where its time for a change.

ad 4) I have a database with industry trends and business model patterns (like long tail, SAAS. etc.) which I use to verify against.

I hope I could express myself clearly...

Btw. your framework sounds very interesting. Do you have more information on that? Is it a conceptual framework (set of theories & rules) or do you also have some software?

Best,

Ramtin

P.S.: Than I will keep you posted on the articles...

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