System Dynamics (SD) is a modelling methodology created in the 1950s by Prof. Jay Forrester at the MIT Sloan School of Management. It successfully transferred approaches previously used to manage complex non-linear technical systems to the economic, social and environmental realms. The rationale of this transfer being that these systems too, are complex, highly non-linear systems that are notoriously difficult to manage. Central to SD are special graphical representations (causal models) that aid in understanding complexity rather than oversimplifying it as well as computer simulation models. A well-known example since the 1970’s is the report to the Club of Rome “Limits to Growth”, which drew its central conclusions from a System Dynamics Simulation model.

The methodology is especially suited for interdisciplinary analyses of dynamic developments in socio-technical-economic systems that are given rise to by today’s society and its technology innovations. This suitability results from the ability of SD to take into account the non-linear feedbacks that exist between different components of these systems as well as transitory effects. This, together with the development of potent simulation software including user-friendly graphical interfaces has made System Dynamics a very important instrument for scenario analyses and policy analyses.

The experts at M-Five therefore apply System Dynamics for model-based analyses of mobility and the macro-economic system in Germany and in the EU. These applications demonstrate the usefulness of System Dynamics models for strategic decision-making in politics and industry at national and European level, for instance concerning impact assessments of the German climate policy, the employment impact of the ongoing mobility transition and the European transport policy

SD is characterized by a strong relation to stakeholders and their problems and is therefore thus far the only modelling method that has – in the 80’s and 90’s – been developed into a fully-fledged participatory variant called Group Model Building (see description of GMB).