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Creating a Flexible Strategy Using Causal Diagrams
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Overview
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Agenda
What is Causal Loop Diagram ?
How it can help you ?
How to construct CLD ?
Examples of how it helped to improve strategy ?
Simulation tool
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What is Causal Loop Diagram
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History
The use of nodes and arrows to construct directed graph
models of cause and effect dates back to the invention of
path analysis by Sewall Wright in 1918
Popularized in System Dynamics. Methodology and mathematical modeling technique for framing, understanding, and discussing complex issues and problems.
The first formal use of Causal Loop Diagrams was explained by Dr. Dennis Meadows at a conference for educators
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Why to use that ?
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Helps to see the whole
How our system is working so that we have drop in productivity ?
My concern is productivity ? How to fix that ?
YOUR CLIENT YOU
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Measure your concerns qualitatively
Productivity drop? Is it subjective ?
I see drops in rate of # completed tasks and # labor costs are growing
YOUR CLIENT YOU
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Align understanding of systems
In general I see that system is working this
way
I would add some more
variables to that
YOUR CLIENT YOU
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Empathize
Yes, we can. Let’s think how we can
improve your strategy to
minimize risks
Unfortunately we have to cut
salaries
YOUR CLIENT YOU
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Discover self-reinforcement loops
My fear is that by cutting salaries you will balance total costs for
short time
Thanks, I see that potential staff turnover will
increase total cost again
YOUR CLIENT YOU
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Pro-actively improve your system
My fear is that by cutting salaries you will balance total costs for
short time
Thanks, I see that potential staff turnover will
increase total cost again
YOUR CLIENT YOU
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Key elements
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Capture potential variables
We have to increase number of cost
cutting initiatives because some
budget pressures
YOUR CLIENT
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
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Find relation between concerns
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
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Polarity in relations
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
-
+
+
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Balanced loops
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
-
+
+
B
Reduce Total Costs
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Further elaboration
YOU
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
-
+
+
B
Reduce Total Costs
I feel something wrong with
that
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Self-reinforcement loops
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
-
+
+
B
Reduce Total Costs
R
Motivation to
change job
-
Stuff turnover
+
Workforce
Knowledge
-
Productivity
+
-
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Delayed effect
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
-
+
+
B
Reduce Total Costs
R
Motivation to
change job
-
Stuff turnover
+
Workforce
Knowledge
-
Productivity
+
-
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Update you strategy
Cost cutting
initiatives
Total Costs
(budget)
Salary rate
-
+
+
B
Reduce Total Costs
R
Motivation to change
job
-
Stuff turnover
+
Workforce
Knowledge
-
Productivity
+
-
Launch motivational program
TestKnowledgebase
Reduce load
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Examples
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Example #1
Helped Project Manger to show stakeholders many side-effects of selected strategy
Client abandoned strategy with reducing salary
Client changed development strategy to focus only on critical business
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Example #2
Helped Agile Consultant to show an importance of slack
time for learning
Client updated marketing strategy to less aggressive
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Example #3
Helped to show
how new marketing
initiative would
influence company
performance
Client improved
annual strategy to
focus on service
quality, not number
of subscribers
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Software simulations
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http://vensim.com/
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Vyacheslav Moskalenko
Luxoft Agile Practice
Luxoft Agile Coach
Kiev, Ukraine
Member of Scrum Alliance,Certified Scrum MasterCertified Scrum Professional
Member of ICAgile,Certified ICAgile Coach
Member of scrum.org,Professional Scrum Master