Structural Dynamics Modeling Techniques for Analyzing Markets (Executive Summary)

The following is taken from the abstract of a presentation by Dr. Scott Shemwell at the Strategic Consortium of Intelligence Professionals (SCIP) 12th Annual Conference, May 30, 1997.? It is presented herein as the methodology described; Structural Dynamics is an early solution used to assess the total picture and now has greater relevance in the era of Big Data Analytics.

The author continues to develop this tool set and will report progress going forward.

Market/competitive information is difficult to obtain and even when we have it, one must ask, How can we use it to maximize our knowledge? ?Typically, organizations are interested in market share, strategic direction, and product features and benefits of their competitors although there is also a great deal of additional data available. ?How do we capture this data, and what do we do with it to create value for our organization?

Competitive information (CI) is often obtained on an ad-hoc basis. ?This information is sometimes factually based, i.e., annual reports, 10Ks, and sometimes subjective materials, such as analysis of sales force call reports, etc. ?Usually, extensive documentation does not illuminate one's competitive environment to the extent that is expected. ?Frequently, companies launch major campaigns based on fallacious assumptions as a result of improper or inadequate analysis of the data. ?It should come as no surprise that many marketing campaigns fail, and often dramatically, e.g., New Coke.

Using an oil industry case study, this presentation shows industry structural and process modeling techniques that CI professionals can use to provide additional and often dramatic insight into business Structural Dynamics. ?We define Structural Dynamics as 'the morphology or patterns of motion toward process equilibrium of interpersonal systems'.

The word system is key. ?According to Peter Senge, The Fifth Discipline, markets and competitive forces must be regarded as systems. ?As such, markets will strive for (although never truly reach) stability or equilibrium. ?A behavioral process, Structural Dynamics has been difficult to measure and analyze until recently.

Emerging new thinking is integrating market behavioral models with econometric models in an effort to shed new light on latent or hidden market dynamics. ?Recently, the Nobel prize was given to several individuals for their contribution to game theory (which has been around approximately 70 years). ?The renaissance of game theory is a recognition that the description of complex system dynamics has value not only in business systems, but physical science and engineering systems as well. However, game theory in and of itself is insufficient alone and must be used in the context of other theories, i.e., marketing and systems theories.

Structural Dynamics is a statistical and modeling technique ( developed by the author in his doctoral dissertation) which integrates structural and process thinking, providing new insight into the underlying forces at work in markets. ?Although built on a strong foundation of statistical and mathematical theorems, these techniques are straight forward and easily mastered by individuals with minimal exposure io statistics. ?There are even models which require no mathematical analysis.

Statistical models require data in specific formats. ?Data reliability and validity are essential for good models and while it is not the intent of this presentation to focus on data integrity and collection techniques.

Structural Dynamics modeling techniques can provide insight into the nature of competitive systems that is beyond the capability of traditional statistical models. ?When combined with personal computers, statistical and modeling software, and access to extensive databases, new techniques such as Structural Dynamics modeling will dramatically change the canvas for CI professionals. ?Furthermore, having an understanding of these techniques will often result in changes in the way data is gathered, i.e. survey construction, as well the way that we interpret the results of our analyses.

Competitive advantage will go those firms that have better knowledge of the competitive forces in their environment. ?Our ability to measure and understand the Structural Dynamics of our industry will be a critical success factor for firms operating in the hypercompetitive markets at the beginning of the next century. ?The techniques and case study described in this presentation will hopefully stimulate the audience to employ these, and similar techniques and models to better understand their competitive environment and add shareholder value to their firm.

For more on Structural Dynamics, see our book Amazon.com: Structural Dynamics: Foundation of Next Generation Management Science (Changing the Dialogue) eBook : Shemwell, Scott: Kindle Store

? 1997-2025 Dr. Scott M. Shemwell.? All rights reserved—printed with permission.

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