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Auto Scenario Future Planning What do we look like in 2025?

AAA INSURANCE LEADERSHIP INSTITUTE. Auto Scenario Future Planning What do we look like in 2025?. ORGANIZATION EFFECTIVENESS & PLANNING. EXECUTIVE DEVELOPMENT PROGRAM. EXECUTIVE DEVELOPMENT PROGRAM. Action Learning Project – Cohort I March 9, 2012. Executive Summary. Cohort Team Members:

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Auto Scenario Future Planning What do we look like in 2025?

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  1. AAA INSURANCE LEADERSHIP INSTITUTE Auto Scenario Future PlanningWhat do we look like in 2025? ORGANIZATIONEFFECTIVENESS & PLANNING EXECUTIVE DEVELOPMENT PROGRAM EXECUTIVE DEVELOPMENT PROGRAM Action Learning Project – Cohort I March 9, 2012

  2. Executive Summary • Cohort Team Members: • Matt Hardin – Insurance Operations/Partner Club Sales & Service • Deirdre Henry – CFO Division • Linsay Hohmann – Insurance Operations/Product Management • Vilayanur P. (VP) Krishnan - IT • Tom Lucas – CAO Division • Bob Valliere – Executive Sponsor

  3. Summary • This team was asked to answer several difficult questions including: • How do we plan for the long term in a rapidly changing and uncertain world? • What products do we create and how do we deliver an operating model for those products to maintain brand relevance over time? • Our research led us to a methodology called futurist scenario planning which enabled us: • to respond to these questions despite the difficulties of not being able to predict the future; • to model four different future visions/responses/scenarios which were based on assumed significant drivers of potential change; and, • to come up with an elegant and deceptively simple way to analyze and agree on potential drivers for change, identify issues associated with each and posit outcomes, which can then be used to inform our company’s strategic direction.

  4. Framework for Future Scenario Planning • Scenario Planning is a strategic planning method used to make flexible long-term plans. It is in large part an adaptation and generalization of classic methods used by military intelligence. • The process has a handful of major steps: • Decide on basic assumptions and key drivers for change • What question must be answered, over what time frame? Map basic trends or relevant driving forces • Bring these elements together into a viable framework and produce initial mini-scenarios • Check your work by identifying the extremes of the possible outcomes. Do the forces describe uncertainties that can produce probable scenarios? • Reduce to two or three scenarios • Assess the scenarios – are they relevant for the goal and are they internally consistent? • Analyze impact and identify issues • Converge towards a scenario which addresses the fundamental issues facing the organization. Assess options and alternative actions.

  5. Scenario Planning Methodology • Key Driver #1 (75%) • Key Driver #2 (25%) • Key Driver #2 (50%) • Key Driver #1 (50%) Key Driver #1 • Very little to no impact of change • Key Driver #2 (75%) • Key Driver #1 (25%) Key Driver #2

  6. Our Future? Imagine the Possibilities. . . • The Social Network • Increased use & reliance on mobile devices for all facets of life • In case of accident, use social media apps to get help • Reach out to Facebook community for buying referrals • Bladerunner • Drivers focused on their technology will have more minor accidents • Personal avatar monitoring your driving behavior and provide feedback. • Shift in vehicle buying preferences to focus on technology and connectivity • Pleasantville • Cars look similar to today • Gen Y-ers have grown up to be much like Baby Boomers • Technology change has been slow • The Jetsons • Sophisticated data analytics drives pricing which has negative impacts on premium, ability to pool/spread risk • Increased product introduction and innovation. Product no longer looks like it does today – has extras built in (i.e. ERS) • Advanced technology in claims reporting/handling with a virtual claims adjuster Gen Y Demographic Changes Vehicle Technology Changes

  7. Recommended Next Steps • We think the most likely scenario is the Social Network; therefore: • Continue to research the impact of the high degree of expected demographic change • Confirm that personal technology adoption will outweigh the impact of vehicle technology change • In addition, we believe the company will need to: • Use advanced data analytics to obtain insights for product differentiation and product relevance for the Gen Y demographic • Use vehicle technology changes as a basis for product differentiation

  8. We trusted and channeled diversity to drive a high-performing team • How to build on one another’s thoughts – driven by building trust, mutual respect and teamwork • By challenging and encouraging one another we were able to continually innovate and iterate for solutions • We asked for feedback – what worked and what could be improved upon – to make continuous improvements in the team’s results • By making conscious efforts to focus on our opportunities, we were able to make positive behavioral changes • We made the time to step out of our “day jobs” to be successful • By knowing our peers’ working , thinking and learning styles, we were able to leverage each other’s strengths • We expanded our network!

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