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INNOVATION AT PROGRESSIVE ± Pay As You Go Insurance1
. seemed to be comparable to the concept of cellular division. They knew they had great software. data mining and statistical analysis. incrementally attained. but most importantly they had great assets. As an insurance company. Their methodology seemed to have a close correlation to the design rules for innovation. ³no company outperforms its aspirations´. namely their ³Claims Workbech´. Their business definition was fairly elastic. As Hamel suggests they defined GBETTER GRADES themselves on the basis of competences and assets. They had the unique ability to finely segment using the appropriate information. According to Hamel. which were their employees. The managers had an on-hands advantage and the results were. The basis for the implementation of their fast service. each unit being responsible for their own claims. REAGAN PLAN The Reagan Plan: Why Deficits Didn't Matter .Progressive had captured 10% of the market and as the largest writer of auto insurance wrote 80% of its insurance premiums through independent agents. as expressed by Gary Hamel2. These efforts seem to set the preconditions to success.. Their Immediate Response Program (IR) which utilized over 350 local claim offices and over 1400 IR vehicles. it displayed strong characteristics of success. they seemed to have all the prerequisites necessary to expand their market share. they had good data. Progressive showed that they had a cause and did not only run a business. an open market for talent. Their philosophy was to hire the best and pay the most. This model provided the opportunity to nurture the entrepreneurial abilities of the agents. was that overall it would cost the business less and more importantly provide their clients with immediate service in the most efficient and equitable way. possessed the necessary proprietary software and the challenging strategy. expansive and changing. For Progressive their goals were ambitious but they were able to prove that they could outperform the average.
Ronald Reagan was every man's president. All of us working on Reagan s economic plan were talking about tax cuts. The plan was very simple: set up incentives to encourage people to move their money . he said. and inflation cuts. I wouldn't be here. and the factory worker to try to make things better. I recently spoke to a taxi driver from Russia about Reagan. spending cuts. Reagan was the blue collar worker's president. regulation cuts. The Gipper believed that you had to energize the taxi driver. the waitress. Without President Reagan. Reagan s confidence in people is what made him embrace Supply Side Economics from the start.
tax shelters and inflation hedges were the investments of choice. Reagan once wrote: y Only by full appreciation of the critical role the State of Israel plays in our strategic calculus can we build the foundation for thwarting Moscow's designs on territories and resources vital to our security and our national well-being. I believed then. like gold or antiques. Russia made all of their money by selling commodities: gold. making them much more amenable to compromise. This made tremendous opportunities in the financial markets and in financial jobs. he took away the incentive for people to hide their money in tax shelters. On the home front.from hard assets that don t contribute to growth. chromium. like gold and other hard assets. That s exactly what happened during Reagan s presidency and has continued to happen since then. I published an article in The Wall Street Journal called Why Interest Rates Must Fall that explained why. With a total asset base of $130 trillion. Doom and Mr. that makes a $26 trillion tidal wave that moved out of hard assets and hit the financial markets. The most important thing in determining interest rates is what assets people want to own. In 1981. There are still people worrying about current deficits driving interest rates up and triggering inflation. What still matters most is the size of the asset base. Back then were the days of Dr. In order to have economic growth. People will want to own securities if: 1) you don't tax them on their security income. and still do. oil. and 2) you don't subsidize them for owning something else. and other hard assets. Lowering inflation was also a significant weapon in winning the Cold War. people could no longer get rich watching their house increase in value lowering inflation took away the ability of people to earn money without working. Gloom. people have moved 20% of their wealth out of hard assets into securities. The Reagan economic plan bankrupted the Soviet Union. and compared to the total asset base of $130T. By lowering inflation. The size of that shift makes it a much more important story than anything about budgets and deficits. Wall Street pundits who were worried about deficits and interest rates. By lowering tax rates. When Reagan came in. the Reagan plan forced people to change from being a real estate moguls to being Warren Buffet if they wanted to make money. The money that moves from those non-productive assets will fatten up the financial markets and make money available to grow businesses. . That was no accident. What was the 1982 Reagan Plan? Ronald Reagan was the first President to see Israel as a valuable ally in the Cold War. you have to make capital available to businesses. Reagan changed the entire incentive structure for owning assets. that the deficit means nothing for interest rates. Since then. the deficit is not big enough to matter. to securities.
make energetic attempts in that direction -. In a speech delivered on September 1. even with the PLO's participation. followed by Israels invasion of Lebanon in June of 1982. Arab Governments were reluctant to become identified with American political objectives. Prime Minister Menachem Begin and the Likud opposed it. while the Arab states refused to join the "strategic consensus" that Alexander Haig tried to create to oppose Soviet expansionism in the region. In fact. The Iranian revolution and the Soviet invasion of Afghanistan gave the ideas some credibility. and the National Security Adviser. Influenced by the State Department's Bureau of East Affairs. In September Begin wrote to Ronald Reagan: . but Israel had not been notified by the Reagan Administration until right before the speech. Ambassador Philip Habib assured Shultz that Syria was ready to negotiate its withdrawal from Lebanon. at least. He labelled his position as the "next step" in the process that was begun with the Camp David Accords to pave the way for autonomy for the Palestinian people.to retain US influence in the Arab world. Jordan. William Clark that favored a pro-Arab tilt and a top priority effort to find a negotiated settlement of the Arab-Israeli conflict. Although Labor leader Peres expressed support for the plan. The stage was thereby set for an experiment by a section in the State Department. The series of clashes along the Israel-Lebanon border. Jordan was believed ready to enter negotiations.resigned. Unfortunately for peace. turned the attention of the Reagan Administration toward the Israel-Arab conflict. Jerusalem would remain undivided.a leading advocate of close relations with Israel -. Egypt and the PLO's Arafat had been consulted in preparation of the plan. but Arab leaders were not motivated to respond to the American initiatives. Saudi Arabia. Reagan Administration attempts to align Arab Middle Eastern states with the US and blunt potential Soviet moves in the region were faltering. Begin reacted very negatively. In June 1982 the Secretary of State. There was also an important domestic political component or Reagan. George Shultz." He proposed a five-year transition period for "the peaceful and orderly transfer of domestic authority from Israel to the Palestinian inhabitants of the West Bank and Gaza" and a freeze on new Israeli settlements during that time. the American Secretary of State had met with Israeli Foreign Minister Abba Eban a few days before and concealed the imminent announcement from him. all these assertions were proved erroneous during 1983.or. they argued that there was a major opportunity for a breakthrough to peace. its final status to be decided through negotiations. possibly with the permission or.The Israelis cultivated Washington's perception of their capability to deter the Soviet Union. they hoped. calling the plan "national suicide for Israel". under the leadership of Assistant Secretary of State Veliotes. supported by the incoming Secretary of State. By mid-1982. but there was progress toward military cooperation since this directly benefited the Arab states. He spoke of ""the legitimate rights of the Palestinian people and their just requirements. 1982 President Reagan outlined a proposed solution for the Arab-Israeli conflict. Alexander Haig -. The policy was meant to show the Arabs that America was trying to respond to their grievances. Self-government by the Palestinians of the West Bank and Gaza would be in association with Jordan and not a separate state. The Reagan plan approach grew out of the belief that the US must show progress towards solving the Arab-Israeli issue -.
html . recovering from the blows it had suffered during Israel's 1982 invasion of Lebanon. I believe they won't. each township and village and. that portion of our homeland. President. Mr. an ally does not put his ally in jeopardy. where we developed a rather rich civilization which we took with us in our hearts and in our minds. with God's help.' Such being the case. and in a war of most legitimate self-defense in 1967. President. we liberated. There are cynics who deride history. where our prophets brought forth the vision of eternal peace. last but not least. the US-Israel alliance was strengthened. a friend does not weaken a friend. and this simple historic truth will never change. and Syria was again identified as the prime obstacle to regional stability. with it.time. after being attacked by King Hussein. you and I chose for the last two years to call our countries 'friends and allies. every town. to become reality. From them you can hit every city. Geography and history have ordained that Judea and Samaria be mountainous country and that two-thirds of our population dwell in the coastal plain dominated by those mountains. but I will stand by the truth. And the truth is that millennia ago there was a Jewish Kingdom of Judea and Samaria where our kings knelt to God.' Mr. 'For Zion's sake will I not hold my peace.y What some call the 'West Bank. and for Jerusalem's sake I will not rest. by invasion. http://www. and.949092-2. is Judea and Samaria.com/time/magazine/article/0.00.'(Isaiah 62). Consequently. y y y y The Reagan Plan was finally rejected by Jordan and the PLO in April 1983 -. our principal airport in the plain below. on our long global trek for over 18 centuries. They may continue their derision as they wish. King Abdullah conquered parts of Judea and Samaria in 1948.9171. By aggressive war. we came back home. This would be the inevitable consequence were the 'positions' [Begin refers here to the Reagan Plan which called on Israel to withdraw to the 1967 lines] transmitted to me on August 31. 1982.a development that discouraged Washington about prospects for settlement of the Arab-Israeli conflict and the reliability of Arab "moderates".