Loop‐based strategic decision support systems

Abstract

AbstractThis paper gives an introduction to a recently developed strategic decision support methodology, which makes it possible to represent rule‐setting and rule‐fulfilling decision‐making processes in companies with their structural and behavioral differences. This new methodology also allows us to simulate evolutionary processes in company systems based on these two forms of decision‐making. The new strategic decision support methodology combines the continuous feedback loop concept of system dynamics with discontinuous logical loops, which we call spiral loops. The spiral loop concept, which is based on new developments in evolutionary theory and in the field of artificial intelligence, is used to represent the rule‐setting strategic decisions, which generate qualitative change and evolution. The continuous feedback loop concept is used to model the rule‐fulfilling policy decisions of companies, which can generate quantitative changes in interaction processes. In order to demonstrate how loop‐based strategic decision support systems work in principle we show the ‘portfolio simulation model,’ which helps us to explain and to design the evolution of multibusiness firms in duopoly markets.