2006 - The Tipping Point for Simulation Science.

For the past fifty years or so, Simulation Science has been extremely niche. That is going to change. We are at the tipping point for Simulation Science.

The seeds of simulation science were sown in the 1940's and 50's. Pioneers such as Noel Wiener, A. Rosenblueth, J. Bigelow, J. Von Neuman, M. Mead, W. McCulloch, W. Pitts, J. Lettvin, L. Von Bertalanfy, J. Rachewsky and A. Rappaport spawned scientific theories and numerous innovations including cybernetics, data processing, controls, servomechanisms, bionics, industrial robots, and artificial intelligence. By the early 1960's, the advent of computers provided visionaries such as Jay Forrester with the tools to unlock the mysteries of complex systems. Over the next three decades, Donella Meadows and Peter Senge popularized insights from system studies. In the late 1990's, John Sterman and Kim Warren codified simulation insights into practical management science.

System Dynamics and complexity science has rightfully remained niche because the people who pioneered the field are excellent scientists and since the 1970's have cautioned people from making too bold claims. I've heard this from Jay Forrester and others within MIT at dinner conversations and during SD conference meetings. Since the 70’s it seems like the SD community motto has been: Better to under promise and over deliver than the other way around as Artificial Intelligence discovered in the 1980s.

Always remember that System Dynamics (a subset within the Simulation Science space which is made up of other techniques such as agent-based modelling, discrete-event simulations, etc.) was seasoned in the controversy of The Limits to Growth and this experience impacted many of the early pioneers of the ideas. Good progress on the uptake of system thinking was built up by Peter Senge in the 90's with The Fifth Discipline. This spawned a movement in system thinking, but did not truly enable it in practice because the technology of the 1990's was too immature (although almost ready) for widespread adoption of simulation development. It’s also the start of a schism between people who think you can learn systems thinking skills without developing or interacting with simulations of reality and those who don’t.

I believe that the simulation technology of the 80-90’s was too hard to use for simulations to be easily developed, so Senge and other proponents removed the need for simulation and tried to promulgate the insights that came out of simulation studies. They wanted to let people in on the secrets of system insights, without burdening them with the mathematics of creating simulations or even the experience of interacting with business simulations.

But, system insights are often hard to swallow and counter-intuitive -so managers really struggle to put into practice the strategies and tactics that simulation studies imply would be the most beneficial to the organization over the long-term. This slowed the uptake of Systems Thinking (which to many people seems like new age crap).

Today, simulation technology, riding many of the past two decades of technology trends, is finally mature enough for widespread adoption as an intergral part of a company’s IT and financial systems.

• Simulation Science is the bridge between the management science of executives and strategists and the data-dominated world of technologists and operations people.
  
• It is only with Simulation Science that companies can turn their terabytes of data into meaningful information that provides foresight into the future.
  
• Only Simulation Science shows the causal relationships that drive business success (or failure).
  
• You make more money with less risk.

Now is the time for Simulation Science to finally explode from being niche to being really big and important in the management of businesses. Why?

Over the past five years, I’ve interviewed many people in the Simulation Space. Let me recap as it’s important to why I believe I’ve got a unique perspective on the space.

I started my first company in 1994. It was an interactive agency. We built web sites. I created a biochemistry web site (the first on Yahoo!) and it got noticed by PC Computing and OMNI in 1995. It seemed to me then that the Internet was at a 'tipping point' after a long, slow incubation period and would experience rapid growth.

I was right. Growth was almost too fast to imagine. I read every business book I could find (I was 22 at the time) and it was not till I read Peter Senge's book, The Fifth Discipline, that I read anything that made sense to me. The diagrams and behavior over time graphs reminded me of my studies on enzymatic pathways while getting my B.S. in Biochemistry while investigating the molecular basis of pollen recognition.

After reading the book, I completely reorganized my businesses processes after understanding the system insights of Peter. It was my hope they would unleash my company's potential.

I happily sold the business in 1998 for 15 times my original capital investment.

In 1999, my friend Theron Gore and I spent many hours by the Eagle River in Vail, Colorado discussing simulation science. He had worked on a major simulation training project while at Anderson Consulting for a big retailer using an old version of Powersim in the early 1990’s. Theron worked on the project and he and I spent quite a bit of time over a period of two years talking about it and how simulation could be enhanced using interactive technologies like we were using on intranet projects while with Agency.com and later at Hawkeye FFwd. We loved the idea of developing really cool interfaces to intelligent simulation models.

Ever played The Sims – the video game? Its earliest origins were in a System Dynamics model. Hard to tell that now when you play it – and that’s how it should be!

Then I took two classes at MIT in System Dynamics and learned about some amazing success stories from Dr. Jim Hines and Dr. Kim Warren. I travelled to three SD conferences over five years gathering contacts and intelligence (always remaining mostly on the outskirts and quiet as I was in learning mode).

I met with people at the UN in the Secretary-General’s office and UNOCHA (Dr. John Clarke) and discussed the successes (and many failures of acceptance) of simulation in the UN through their World models and other projects. I had many interesting discussions with lots of different people throughout the agency. In collaboration with Kim and Suresh Mistry of SDS, we looked at issues ranging from the conflict in Sierra Leone to the rise of radical Islamists in Afghanistan. Interestingly, the CIA was very interested in Kim and Suresh’s work on Sierra Leone. Who knows what they are doing with simulation?

In Guatemala and Honduras I met with officials and people promulgating simulation science in Central America. There is amazing work being done in simulation and system thinking in Columbia.

Similar interesting examples can be found in Africa, Indonesia, Thailand, Hong Kong, Japan, Portugal, the United States, the United Kingdom and many other countries. Whenever possible, I fly to meet with people in the simulation space and pick their brains.

I even did a workshop with some managers in Arkansas on the application of simulation science to the management of their manufacturing company. That was the epiphany . . . if executives of a $50 million manufacturing company in rural America can see the potential of simulation science and are willing to invest $15,000 just to learn more about it, then I knew this was going to be absolutely huge.

So, while in the ivory tower of academia at Wabash College, I kept deepening my relationship with Kim (who I believe is a management guru on par with Michael Porter and with far more broad appeal than Peter Senge) and monitored the space.

It’s through my relationship with Kim that I learned of many successful stories of the application of Strategy Dynamics to management challenges. It’s truly amazing and easy to do stuff (if you’ve got the right training).

In two months of work, Kim’s approach can uncover the heart of a problem and lead management to a consensus where more traditional approaches fail. HVR can then take this work and in the same two months, build a rich simulation environment that allows the executive to test out different strategies and tactics.

It is Christina Spencer (at GSD) and Dr. Kim Warren (at SDS) who opened my eyes to the potential of bespoke simulation development and its role in general training.

It was only a matter of time before the technology matured to allow companies to quickly create simulations of their businesses for use in real-time decision making.

Pilots required to execute a dangerous move in combat will train for hours in a simulation before ever trying it in real life. Today, executives can practice in a simulation of their business before doing it in real life.

Developing simulations is neither expensive nor terribly time-consuming if you use an iterative and evolutionary approach as HVR Consulting Services advocates.

Neil Douglas and Michael Georgokopolus have done amazing work with the United Kingdom's military. They developed user interfaces that match Kim’s idea of a strategic architecture for the Military Flight Training System (MFTS), a pharmaceutical firm, Unilever, and for consultancies. It turns out that this type of visual display works well on whiteboards and that this can be easily transferred to a simulation model.

This idea of Kim’s, to use his architectures as management interfaces to simulations of businesses, has been put into practice by HVR and others on a number of military and commercial projects. For example, the Ministry of Defence's simulation of the entire training pipeline for the military flight systems is awesome. It’s really amazing to see it in action. Without it, who knows if the UK would have enough pilots in 2020 to wage an effective war? Bases all over the UK use simulations to manage both strategic and day-to-day decision making.

I interviewed Powersim Norway (a separate company from Powersim UK) and Powersim USA (another different company) and learned about their projects. Once again, many successes and some right spectacular failures. Through correspondence and conversations with Magne Myrtveit, Steiner Moen, Janecke Pemmer, Tone Haveland and Knut Vavik, I learned about the 21st century future of simulation and the ideas of SAP and Statoil in bringing simulation to the oil and gas industry. Both invested big and I mean really BIG in simulation technologies in the mid 1990's.

Since 1984, a dedicated group of Norwegians have consistently created innovations in the simulation world -- compiling equations into executable code, creating object-oriented components to power simulations, pioneering user interface development environments and the weaving of uncertainty and optimization algorithms into the simulation engine.

From the Powersim group of companies from around the world, I learned of case studies for UK MoD (multiple agencies), Training Group Defense Agency, Directorate of Army Personnel, dstl, Statoil, McDonalds, Nestle, Microsoft, Ford, Boeing, and many others.

Richard Stevenson at Cognitus and once a reseller of iThink by High Performance Systems (now iSee), also provides strong case studies: BP Amoco and BP Exploration's oil field planning; UK National Health Service (NHS) simulations to align health care and social policy in delayed discharge; supply chain development for 30 global products at an International Agrochemicals Group; simulations of the UK meat supply chain for a Major Fast Food Retailer; simulations of pricing dynamics of chemical compounds for an International Chemical Manufacturer; simulations of the market dynamics of the 3G mobile telecom technology; life cycle of direct sales simulation of insurance products for an Insurance company; simulations for Heathrow airport air traffic control, supporting business excellence projects at an International Banking Group; simulation of the value impact of product strategies on the customer base of a National Banking Group; North Sea field valuation simulations and asset management simulations for a Utility Company.

Through my relationship with Kim at GSD & SDS, Lars Finskud at Vanguard, David Exelby and Mirek Gliniecki at HVR and Alex Tregellas at Deltera Systems I’ve learned of and documented simulation studies for the UK MoD (multiple agencies), the US Department of Defense, Sandia Labs, US Department of Homeland Security, British Gas, BP, Barclays, and several other companies.

Nine times out of ten, simulation systems were successes and when simulation recommendations were ignored, management learned over time that they should have followed the advice; many proved expensive lessons.

Conversations with Shane Kite, one of the founders of Lanner Witness, a discrete event simulation tool, uncovered the intrigues, failures and successes of that part of the simulation world. You can add another two dozen or so amazing case studies of Simulation Science in action from the discrete space.

For example, the simulation of the Ras Laffan Port in Qatar to help ensure it increases its total LNG exports from 12.6 million tonnes per annum to around 27 million tonnes per annum by 2008. Vertex's service levels increased by a staggering 49% after a simulation system project. Numerous projects in the application of simulation science to analyzing Floating Production, Storage and Offloading Vessels (FPSO's), onshore fields and onshore receiving terminals have been completed. Shell's ADGENT simulation models producer and receiving terminals, shipping logistics and shipping delivery programs for both liquid natural gas (LNG) and crude oil; in one year the simulation tool has returned nearly $100 million. Even in the oil business, $100 million is not pocket change.

Simulation is powerful and necessary stuff. I view discrete-event simulation as another subset of Simulation Science. Shane now has his own business, Saker Solutions, and is helping me understand the web of connections and contacts within the discrete-event world. Much like Powersim, Lanner Witness has a track record of both successes and failures.

A literature search of the use of nonlinear techniques in the social sciences is barren when compared to the use of nonlinear approaches in the natural sciences. This is weird because nonlinear approaches are well suited to social systems that are not reducible to mechanistic thinking, who are Brownian motion!

Conclusion: After five years travelling the world, interviewing dozens of people in the simulation space and reviewing case studies going back to the earliest days of simulation (both continuous and discrete), I believe that to sell simulation science we only need to promote our successes, explain the learning from our failures, and provide companies with a clear plan for incorporating simulation technologies into their IT systems.

That is, Simulation Science faces a sales and marketing challenge plain and simple and that’s why I’m here!

Thoughts?

© Justin Lyon, 2005–
Reproduction permitted with reference to source: http://blog.360.yahoo.com/justin1028/