Abstract for: CEO and Board Trust: Independent Validation of Strategy in the Face of Complex System Behaviour

The boardroom hears many voices, but which of those can be trusted? It is the role of the CEO and board to ensure that the integrated system of resources, talent, production, operations and supporting infrastructure is in place and capable of executing the organisational strategy in context of the business model and external environment. A system dynamics based strategy wind tunnel was found to be the ideal tool for independent verification. The system dynamics model confirms that the resource allocation and supporting infrastructure allows the operational engine delivers what the market requires given the strategy, business model and market behaviour. In addition it becomes possible to assess the robustness and responsiveness of the strategy and business model to withstand normal stochastic behaviour and well as responding to large system shocks. The process results in the development of strategies that are not just acceptable for the ideal situation, but also feasible under the worst scenarios. The advantage is a broad strategic plan that can also be adapted and a CEO and Board that are tracking the key variables that will cause less optimal scenarios to emerge. In essence the CEO and Board develops resilience. System dynamics does not only provide the means to create an holistic representation of the organisation, but also a dynamic simulation that can be used as a wind tunnel to test the strategy behaviour in the context of various scenarios.