System dynamics is a method for studying the world around us. 
It deals with understanding how 
complex systems change over time. Internal feedback loops within the 
structure of the system influence the entire system behavior

System dynamics is a method for studying the world around us. 
Unlike other scientists, who study the world by breaking it up 
into smaller and smaller pieces, system dynamicists look at 
things as a whole. The central concept to system dynamics is 
understanding how all the objects in a system interact with 
one another. A system can be anything from a steam engine, 
to a bank account, to a basketball team. The objects and 
people in a system interact through "feedback" loops, 
where a change in one variable affects other variables over time, 
which in turn affects the original variable, and so on.

An example of this is money in a bank account. Money in the 
bank earns interest, which increases the size of the account. 
Now that the account is larger, it earns even more interest, 
which adds more money to the account. This goes on and on. 
Another example of a simple feedback loop which we have all 
experienced is adjusting the water tap to reach a desired 
temperature. You turn the faucet, feel the temperature, and 
compare it to the desired temperature. You continue to adjust 
the water, with smaller and smaller adjustments, until you reach 
the desired temperature.

What system dynamics attempts to do is understand the basic structure 
of a system, and thus understand the behavior it can produce. Many of 
these systems and problems which are analyzed can be built as models 
on a computer. System dynamics takes advantage of the fact that a 
computer model can be of much greater complexity and carry out more 
simultaneous calculations than can the mental model of the human 
mind.

Two examples of important questions addressed by system dynamics models
 are:

What causes American cities to degenerate? And what can be done to 
revitalize these stagnant urban areas? (Forrester, Jay W. Urban 
Dynamics. The MIT Press, Massachusetts 1969.) 
Can the Earth's resources support mankind, with its present economic 
and population growth rates, in the next millennium? What can be done 
to confront possible global collapse? Is a sustainable future possible? (Meadows, Donella and Meadows, Dennis and Randers, Jorgen and Behrens, William W. The Limits to Growth. Universe Books. New York: 1972. and Meadows, Donella and Meadows, Dennis and Randers, Jorgen. Beyond the Limits. Chelsea Green Publishing Company. Vermont: 1992.) 
What is System Dynamics
System dynamics is a methodology for studying and managing complex feedback systems, such as one finds in business and other social systems. In fact it has been used to address practically every sort of feedback system. While the word system has been applied to all sorts of situations, feedback is the differentiating descriptor here. Feedback refers to the situation of X affecting Y and Y in turn affecting X perhaps through a chain of causes and effects. One cannot study the link between X and Y and, independently, the link between Y and X and predict how the system will behave. Only the study of the whole system as a feedback system will lead to correct results. 

The methodology  identifies a problem, 
 develops a dynamic hypothesis explaining the cause of the problem, 
 builds a computer simulation model of the system at the root of the problem, 
 tests the model to be certain that it reproduces the behavior seen in the real world, 
 devises and tests in the model alternative policies that alleviate the problem, and 
 implements this solution. 


Rarely, is one able to proceed through these steps without reviewing and refining an earlier 
step. For instance, the first problem identified may only be a symptom of a still greater 
problem.

The field developed initially from the work of Jay W. Forrester. His seminal book Industrial 
Dynamics (Forrester 1961) is still a significant statement of philosophy and methodology in the 
field. Since its publication, the span of applications has grown extensively and now encompasses 
work in  corporate planning and policy design 
 public management and policy 
 biological and medical modeling 
 energy and the environment 
 theory development in the natural and social sciences 
 dynamic decision making 
 complex nonlinear dynamics 




What is the relationship of System Thinking to System Dynamics
Systems thinking looks at exactly the same kind of systems from the same perspective. It 
constructs the same causal loop diagrams. But it rarely takes the additional steps of 
constructing and testing a computer simulation model, and testing alternative policies in the 
model.