Systems Thinking and the Cost of Emotion

gadhok-spaceRicardo Valerdi By Cody Romano
July 8, 2011

Professor Valerdi will deliver a presentation on August 22 as part of the MIT SDM Systems Thinking Webinar Series. Details and registration info are here.

Ricardo Valerdi, until recently a faculty member in MIT’s System Design and Management (SDM) Program and now an associate professor at the University of Arizona, surprised his SDM students in a lecture hall earlier this year when he jotted "How to Calibrate Your Optimism" in large letters across a whiteboard.

"When you start talking about psychology," says Valerdi, laughing, "engineers usually feel uncomfortable at first. They’re used to the technical approach — in understanding the math behind the model. But the psychological aspects can be equally, if not more, important."

Since he started teaching SDM’s Cost Estimation and Measurement System course four years ago, Valerdi has frequently posed a unique and challenging question to his students: how does human decision-making, which includes factors like optimism and cynicism, influence the cost of complex systems?

To help engineering students answer this question, Valerdi supervised 20 SDM theses during his time at MIT. His advisees’ projects vary in topic from improving healthcare in the Boston area to estimating the costs of launching a miniaturized satellite.

While serving as a research associate for MIT’s Lean Advancement Initiative, Valerdi also mentored graduate research assistants. One of his mentees, in collaboration with Assistant Professor Jessika Trancik of Engineering Systems Division, is currently investigating whether or not ocean thermal energy conversion could be made cost-effective enough to compete with other renewable energy sources.

Ricardo Valerdi, with some of his advisees, including SDMs Ellen Czaika, Taroon Aggarwal, Hassan Bukhari, Gaurav Agarwal, Charbel Rizk, and Denman James. The other students are from TPP and Aero/Astro. Professor Deborah Nightingale is holding Rocco Valerdi, Ricardo’s son.
Photo courtesy of Briana Valerdi

"MIT encourages people from multiple disciplines to work together to solve extremely complex systems problems," Valerdi says. "As a platform for research, it really opens doors for engineers to impact government and industry."

A former systems engineer for Motorola and senior technical staff member for The Aerospace Corporation, Valerdi remains actively involved in industry and government projects. He sat on the Board of Directors of the International Council on Systems Engineering (INCOSE), a society in which academic and professional engineers collaborate and discuss issues related to complex systems. At the society’s annual symposium in Denver this past June, a panel of technical experts from around the world honored him with a Best Paper Award.

Valerdi’s paper proves, through statistical analysis, that a group of experts can generally reach a consensus after completing three rounds of surveys using the Wideband Delphi Method. The method, which allows experts to share opinions and review a general summary of their colleagues’ feedback, is designed to elicit unbiased responses to tough questions. By discovering the necessary number of survey rounds, Valerdi could expedite the development of cost estimation models, which often depend on experts’ feedback.

With extensive experience in academia and the corporate world, Valerdi recognizes a need for synergy between both arenas. Earlier this year, he and MIT Professor Deborah Nightingale imagined a publication that would strike a balance between practical and theoretical, guiding readers on a two-pronged expedition into how theories of enterprise transformation work and how they impact real organizations. To realize this goal, the researchers pitched their concept to INCOSE and the Institute for Industrial Engineers (IIE). "Everybody wanted to sign on," said Valerdi.

The Journal of Enterprise Transformation (www.tandf.co.uk/journals/ujet), successfully co-founded by Valerdi and Nightingale, is now affiliated with both IIE and INCOSE, marking the first-ever large-scale collaboration between the organizations. Upcoming articles examine real-world enterprise transformation issues affecting, for example, Starbucks, Reebok, and the U.S. Army.

"When engineers read our journal, it will provide them with insight into issues that are being discussed in the corner office, so-to-speak," says Valerdi. "By understanding how systems thinking enables successful enterprises, they can learn to architect organizations that create more successful products."

Ricardo Valerdi
Photo by L. Barry Hetherington