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The
Systems Thinking Puzzler
by Chris Soderquist
In this
month's Systems Thinking Puzzler, we ask you to play the role of consultant
(for many of you, acting as a consultant isn't an act!). It's the beginning of
2003 and you've been asked by an auto manufacturer to help them forecast
potential sales of their most popular vehicle, their four-door family sedan.
One of their internal consultants has developed a spreadsheet to forecast sales
and customer base for the sedan. You've been given the spreadsheet shown here:
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End of Year
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Customer Base
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New Customers
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Retention Rate
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Returning Customers
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Lost Customers
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2002
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100000
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2003
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104000
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10000
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0.35
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7000
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13000
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2004
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107760
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10000
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0.35
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7280
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13520
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2005
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111294
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10000
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0.35
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7543
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14009
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2006
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114617
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10000
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0.35
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7791
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14468
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2007
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117740
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10000
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0.35
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8023
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14900
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The
following assumptions have been used to develop the spreadsheet.
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Every
5 years (on average) an owner of this sedan will decide they'd like a brand,
spankin' new sedan.
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The
sedan has been so popular that 35% of all customers who currently own the sedan
decide to purchase the newer model of that sedan. These are referred to as
returning customers.
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The
company has actually seen constant sales to new customers. This has been a
concern, but since retention is much higher than for any of their competitors,
they feel quite pleased by the long-term prospects for this vehicle.
The
manufacturer is ecstatic with the growing customer base, which represents a 3 -
4% annual growth. The auto manufacturer wishes to explain the reason for their
optimism to the Board-and you've been chosen to develop the "vehicle" for
explaining this optimism.
You
look at the spreadsheet and think that the skills of Systems Thinking will help
you better understand the assumptions the spreadsheet modeler has made. The
spreadsheet, although a great tool for viewing numbers, hides the assumptions.
You've been asked to develop something that brings the assumptions to the
surface, so that others can understand and test them. You plan to build the
simplest model possible that captures these assumptions. That's your challenge!
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About
this Feature
A distinguishing characteristic of highly-skilled systems thinkers is their
ability to quickly get to the heart of an issue, problem, or process. Perhaps
you've seen it in action, or perhaps you've experienced it yourself. Skilled
users of the thinking skills, language and toolset typically are very good at
focusing problems, at posing good questions, at untangling complexities, and at
generating high-leverage insights.
Just as you can get stronger by exercising, you can
improve your ability to do systems thinking by practicing. This feature is a
practice field for developing that capability. Each month, we'll present you
with a puzzle-a real-world case that can benefit from the application of
systems thinking. We'll ask you to spend a couple of hours (maximum) to work
through the case, capturing the essence of the issue. In the next month's
issue, we'll provide you with one approach to the solution of the puzzle. So
each puzzle gives you two chances to learn-first, as you work the puzzle, and
again as you compare your approach to ours.
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