Knowledge Management • ©1995,1999 APQC138KNOWLEDGE MANAGEMENTPROFILESUSAA, Inc.BACKGROUNDUSAA was founded in 1922 by a group of military officers. The goal was to be anassociation which provides excellent insurance service to military officers. Even today,USAA’s primary goal is to offer unmatched service to its members to obtain unmatchedfinancial strength. USAA’s activities are driven by a strategic plan which is deployedtop down.Knowledge Management started in the late 70s with the introduction of a1-800-number system at USAA. This milestone was the key enabler to change its for-mer 30 percent of membership conducting business by phone to 90 percent today. Thegoal was to conduct the transactions with customers in one session with no need fora call back. Consequently, the account representatives had to be very knowledgeable.The CEO is the champion for KM.The driving forces for KM are:• Satisfy the members’ requests in one sitting,• Provide excellent service to members, and• Manage through planning—articulate the business strategies and communicatethese to the employees.At USAA, KM starts at the top. The mind-set must be that information/knowl-edge is an asset which belongs to the company. Data structures have to be developedto offer free access for all the employees in order to create the necessary dialogue.Peoples’ attitudes must be that “sharing is healthier for everyone.” Employees need tofeel a strong commitment to members to obtain the highest service level.KEY APPROACHESPlanning ProcessTo support USAA’s business strategy, the entire corporate strategic planning processhas been automated, as well as catalogs and reports, corporate strategies, objectives, andmeasures.SNAPSHOTIndustry:InsuranceHeadquarters:San Antonio, TexasRevenue:$6 billionEmployees:16,000139Knowledge Management • ©1995,1999 APQCPROFILESEvery spring, USAA conducts a strategic planning conference to establish a six-yearhigh-level strategy. In the fall, an operational planning conference details the planfor two years.The strategic plan establishes central goals regarding the six Key Result Areas(KRA). The KRAs are (in order of priority): 1. Service2. Financial strength3. Product value4. Resources5. Growth6. Public outreach (framework which addresses local, state, and federal involvement)These goals are deployed throughout the organization. Specific objectives areformed at each level. All the activities of every employee must support the plan.The planning process is centralized with the CEO as the driving force of the plan-ning process. There are specific plans for each business unit. All of them, however,support the same corporate goals. Two committees ensure that all product lines com-ply with the organization’s mission which is meeting the six KRAs. There are special objec-tives in the plan that ensure that each product line has incentives to share knowledge.Initially, the plan consisted of a number of text files. However this structurecaused a problem in that changes were not immediately reflected everywhere. Toovercome this, a relational database was created using Paradox. Now, the plan is on-line and all the documents are linked. Changes are reflected immediately. This alsoallows better analysis because goals and objectives are linked. In addition, the creationof reports has been automated.The plan is updated periodically to adapt to changes. It is a living document.Customer FocusUSAA’s Customer focused Knowledge Strategy is deployed through its extensivemember/customer knowledge base. This knowledge base is shared across lines ofbusiness and provides key input into ongoing business redesign efforts, product devel-opment, and market strategies.Data is collected to represent as clear a picture of a customer as possible. It isstored in several customer information files. The strategy is to overcollect data andsave it for further use. In the long run, USAA wants to move to 1:1 marketing. Thedatabases are used to segment the market using a propensity approach. The customerbase, through member surveys and focus groups, drives the strategy. Every contact has an opportunity through USAA’s comprehensive customer feed-back system The system is designed to quantify feedback and improve overall knowl-edge of the customer base. This feedback system allows USAA to maintain andincrease an already high customer satisfaction, track market factor and organizationalconsiderations on a daily basis, and and update each customer contact employee on anyrelevant items. This enterprise-wide customer database is considered very importantto USAA, second only to the telephone system.Knowledge Management • ©1995,1999 APQC140There is a significant cultural shift happening at USAA. USAA is going to moveto a pay for performance system. Special capabilities, accomplishments, and self-improvements are being recognized. KM is currently recognized in many ways: byintrinsic rewards and bonuses, lunch budgets, partners in excellence program,Recognition lunches, peer recognition programs (called PRIDE).With the greater empowerment of employees, middle management has perhaps beenimpacted the most. Their roles have shifted from directing and controlling to enablingand coaching. USAA believes the new automated planning system will increase com-munication and participation by managers in dealing with their employees.RESULTSKnowledge Management enabled USAA to increase conducting business by phonefrom 30 percent of membership to 90 percent today. USAA has established 10 alliance partnerships with other companies to createsynergies and learn new market concepts.The automation of the plan has improved the linkage between planning perfor-mance and business performance. This improvement was not measured. However,there is a clear qualitative impression that the plan is better focused and the distrib-ution is more widespread.LESSONS LEARNEDKM is an evolving and continuing process. USAA did the things it thought seemedright at the time.PROFILESExamples of USAA Knowledge Management BenefitsKnowledge ManagementActivitiesInternal Benefits(Operational Improvements)External Benefits(Customer and Market Reaction)Bottom-LineBenefitsIntermediate Benefits and EffectsKey Result