The Logic of Models and Interventions, MIke Moldoveanu

Breaking the Code of Change II, Rotman School of Management, August 2-3, 2000

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing ( at the IBM Advanced Business Institute (

Mihnea Modoveanu, Rotman School

Wants to talk about causal models behind the causal models.

May not agree with everything, but easier to ask for foregiveness than permission.

Purpose of the presentation:

Won't talk about the proof of theory, or the predictability.

Causal models, to take us from unbearable present --> desired future.

Dorner (1999), The Logic of Failure

Porter (1996) What is Strategy?

A causal model is series of propositions (which should be consistent).

Two flows:

How to choose a model: 3 criteria:

Then models that are better on all three criteria would motivate more use of the model.

Empirical base

Question: Models as consistent with what's already in their head?

Computability failures:

Primates are trusting creatures, and humans are trusting.

Computabiity criteria:

Practical failure of computability:

Which lead to P problems, and which lead to NP problems?

Managers will choose to use models that solve P-hard problems.

Minimum vertex cover NP-hard: is equivalent to diagnostic analysis, data with hypothesis.

Software design: Are the goals compatible with the constraints?


Uncomputable problems:

Reflexive equilibrium:

Complexity classes:


Observability and controllability

Theories on (1) computability (2) controllability and (3) observability:

Question: Can NP-hard problems be reduced to P-hard?


Need to avoid vicious circles:

Tradeoffs between computability, controllability and observability.


Question: Can we replace a NP-hard problem with low dimensionality over P-hard high dimensionality problems?

Mike Porter: IO theory didn't capture everything that managers knew. Five forces created buckets, both increasing complexity and reducing complexity.

People shy away from unjustifiable choices:

Discussant: Glen Whyte



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