Financial Crisis Spurs Interest in Systems Thinking, SDM

Dmitriy Lyan By Kathryn O’Neill
May 26, 2011

MIT’s System Design and Management Program (SDM) hasn’t had a lot of applicants from the financial services sector, but Dmitriy Lyan, SDM ’11, says being a portfolio analyst cemented his interest in systems thinking and the SDM program.

"When the financial crisis hit, I was in the front seat of the debacle because my company was specializing in selling credit protection for corporate debt through credit default swaps," he said. "It was fascinating to see how [the crisis] unraveled; it gave me perspective on how interconnected and complex the global financial system is."

The 2008 crisis illustrates how "the preference for maximizing short-term profits over long-term sustainability can lead to detrimental systemic consequences that impact economic, health, and political systems," Lyan said.

Raised in the former Soviet Union, Lyan had already lived through years of political and economic upheaval, learning first-hand about the complexities involved in restarting an economy after near collapse—as well as the impact on the everyday lives of people. When the global economic crisis struck in 2008, he said, "I realized a lot [of the problems were] driven by the lack of understanding and appreciation of complexity imbedded in systems. That’s what triggered my interest in learning how to analyze complex systems."

An undergraduate computer engineering major, Lyan already had a master’s degree in financial engineering when he applied to SDM. "Financial engineering is a multi-disciplinary field that employs applied mathematics and computational modeling in developing innovative financial instruments and analyzing complex financial risks," he said.

After receiving his master’s, Lyan first went to work evaluating securities for Lehman Brothers and then moved on to lead the design and implementation of risk management and investment idea generation systems for Primus Asset Management.

But, when the economy soured, he became interested in learning more about systems dynamics. An online search led him to MIT’s Systems Dynamics Group and the work of Professor Jay Forrester of the Sloan School of Management. "He was talking about how our understanding of purely technical systems greatly exceeds our understanding of social systems," Lyan said. "Social systems are far more complex than technical systems and their study represents a rich research area."

Lyan then came across SDM. After reviewing the SDM website, Lyan then sampled several SDM courses via MIT’s OpenCourseWare website and was immediately impressed by the program’s mix of technical, leadership, and organizational skill-building. "SDM is a great program that is unique in its systems thinking focus founded on solid management and engineering disciplines," he said.

The program has more than lived up to his expectations, Lyan said. "The academic rigor that the classes offer, the caliber and professional experience of students in the program, and just the overall environment and energy of the place is inspiring. Everyone is passionate about what they want to get out of their education."

For Lyan that means learning to develop high-performing businesses with the dual purpose of contributing to the society and making money. "That has been my goal since I came, and classes have been in line [with that goal]," he said, adding that the courses in integrating lean enterprise and enterprise architecture have been particularly helpful.

"I envision either joining a startup or creating my own company that invests in and develops startups," he said. "Having an understanding of how to design and manage complex systems is crucial in developing successful and sustainable businesses."

Dmitriy Lyan
Photo by Kathy Tarantola Photography