AVL Subisidary Uses Math To Take Guesswork Out Of Auto Investments

PLYMOUTH -- A 2-year-old subsidiary of the Austrian auto supplier AVL aims to use sophisticated mathematics to take the guesswork out of profitable technology investments.
 
Scenaria Inc. is an example of "intrapreneurship," or starting a new business within a larger, existing company. It's up to 20 employees now and is hiring.
 
Scenaria is led by president Sandy Stojkovski, a longtime veteran of automakers and auto suppliers with mechanical engineering, systems engineering and MBA degrees, all from the University of Michigan.
 
Stojkovski said Scenaria grew in part out of experience gained while with the Van Buren Township American headquarters of the British engineering firm Ricardo, Inc. in energy efficiency optimization, using models to make technical decisions about best value fuel economy improvements.
 
Scenaria takes a broader strategic view, analyzing the economy, technology developments, regulators, consumer tastes and more to "enable the right products to get to market faster. To borrow from some recent movie analogies, it's our version of Moneyball. We're helping clients get a holistic view of the big picture to make investments in technology, products and capacity that are robust to uncertainty."
 
Stojkovski said Scenaria replaces the "five smart guys in the room" method of strategic
planning, where the guys "develop a consensus view of the future and then create a gut based plan that works for it."
 
Scenaria, on the other hand, aims "to be objective, to capture not ignore uncertainty and complexity, and to quantifiably stress test potential plans against a consensus view and all possible combinations of scenarios. We use complexity science as the backbone of our models."
 
With Scenaria's methods and tools, "You don't have to be good at predicting the future, you just have to be good at making strategic decisions that make you more successful across a broader range of possible future events."
 
Stojkovski offered two examples of how Scenaria's predictions have differed from cnventional auto wisdom in recent years.
 
"A few years ago when the (new fuel economy) regulations started to be promulgated,
there was a lot of hype that the U.S. market was going to see this huge influx of small cars
and consumers would want a lot of small vehicles, driven by the regulations," Stojkovski
said. "But we were able to look through our models and say, 'Hey, that makes absolutely no sense.' We could see absolutely the opposite, that vehicle footprints would get wider and longer as wheelbases got pushed out ot the corners, because the targets would be easier to make if you did that. All the recent vehicle introductions you see include footprints that are bigger than previous generations."
 
Stojkovski also said Scenaria models predicted the failure of early investments in advanced Li-Ion automotive battery companies because of the still poor consumer value proposition from current generation electric or plug-in hybrid cars.
 
"A pathway to electrification is inevitable," Stojkovski said, but she said that while cars like
the Chevy Volt are "a good step from which GM can learn a lot, future generations will be much, much better."
 
Scenaria's staff is split about 50-50 between "seasoned management consultants and strategic thinkers, the MBAs, and the PhDs who are all about software design, simulation, analytics, and visualization." She said the company is hiring in both areas at present.
 
And take note, the company is attempting to diversify -- away from Wolverines. Stojkovski joked that "if we have a diversity problem, I think it's because we may have too many people with U of M degrees. Go Blue!"