System Dynamics was formed at the Massachusetts Institute of Technology in the late
1950s by Professor Jay W. Forrester. Forrester (1961) initially defined
System Dynamics as: "The investigation of the information-feedback characteristics
of (managed) systems and the use of models for the design of improved organisational
form and guiding policy". System dynamics is a method for studying the world around
us. The main concept to system dynamics is to understand how all the objects in
a system interact with one another. A system can be anything from a car engine,
to a bank account, to a health economy.

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 tap, 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 therefore
understand the behaviour it can produce.

Many of these systems and problems, which are analysed, 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.