System dynamics is a methodology developed for studying and managing complex feedback systems, such as one finds in business and other social systems. The concept had been developed by Professor Jay W. Forrester at MIT in the early 1960s. At that time, he began applying what he had learned about systems during his work in electrical engineering to every day kinds of systems.
Traditional analysis focuses on the separating the individual pieces of what is being studied; in fact, the word “analysis” actually comes from the root meaning “to break into constituent parts.” Systems thinking, in contrast, focuses on how the thing being studied interacts with the other constituents of the system—a set of elements that interact to produce behavior—of which it is a part. Therefore instead of isolating smaller and smaller parts of a system, systems thinking involves a broader view, looking at larger and larger numbers of interactions. In this way, systems thinking creates a better understanding of the big picture. This results in sometimes strikingly different conclusions than those generated by traditional forms of analysis, especially when what is being studied is dynamically complex or has a great deal of feedback from other sources, internal or external.