Wal-Mart gave Jon-Michael Kowall some of his earliest lessons in innovation.

The USAA executive was in his early 20s, a Wal-Mart manager-in-training in metro Austin and Corpus Christi, when new customer service/supply chain technology and processes made an indelible impression. At the time, Wal-Mart had enabled the review of its supply chain using, in part, a system of just-in-time ordering. As a manager, Kowall knew his margins instantly, using a hand-held computer that would identify levels of stock on hand and advising on where to set products in the store to generate the most traffic.

“That was all enabled with technology and information that I needed to have at my fingertips,” he said, recalling his first exposure to the application of innovative technology in a business environment.

Today, Kowall is assistant vice president of Property and Casualty Innovation at USAA, a position he has held since 2014. He describes his job as one focused on understanding emerging trends in technology and on figuring out how to “bring those into specific product offerings that make our members’ lives better.” In this role, he leverages both new and emerging technologies, focusing on outside-of-the box thinking and creating strategic partnerships that might bring particular value to members.

USAA is renowned for fostering innovation in-house that benefits members and helps the company keep both high standards and efficiency. In an interview with Carrier Management, Kowall explained, from his perspective as a manager, how innovation culture at the company comes together.

Hint: USAA doesn’t start with trying to find ways to monetize ideas or reduce expenses.

“We look at how we can do things [better] from members’ eyes,” Kowall said.

All Employees Invited to Innovate

According to Kowall, USAA maintains dedicated resources for innovation within its P/C insurance space as well as the entire company.

“There are several hundred folks solely dedicated to innovation, but we believe the key is we have created an innovation culture,” he said. “We can’t just have these people walled off… Innovation is baked into the fabric of every employee.”

One way this is accomplished is through an internal program that allows all employees to have a voice in the innovation process. Employees can create an idea and share it internally. Then, other employees and peers can add to or build on the concept by way of internal social networking systems.

As the ideas work their way up the company ranks, managers also talk to members in order to both shape internally generated ideas and develop new ones, Kowall said.

“That becomes one of the funnels for us to ‘open source innovation,'” he added.

USAA has a chief innovation officer—Zachary Gipson—but Kowall noted that the insurer doesn’t just want innovation coming from the top down.

“We do have a chief innovation officer,” he said, “but there is expertise in executives in different divisions of USAA. We look at it as a community [where] there is frequent interaction” between different work groups that can lead to innovative ideas.

Internal social media platforms, face-to-face and phone conversations help promote sharing of ideas across teams, he added.

Innovative Idea to Reality

In the USAA culture, innovation is the byproduct of first looking at how to make members’ lives easier and solving problems or issues they might have.

Jon-Michael Kowall has been with USAA since 1997, when he joined as an actuarial analyst.

Since then, he’s held positions in finance, underwriting and product management, and has conducted product management in various areas.

As assistant vice president of Property and Casualty Innovation, he leads a team that develops new ideas into product reality. This can include pilot products and also strategic partnerships with outside companies.

He has 18 years of financial industry experience ranging from actuarial to underwriting, product development, finance and emerging analytics.

Kowall said that once an idea is fielded, USAA employees and executives spend some time with it to mull the experience of an innovation from the member side—to be sure it is something the member would use or do.

“Then, we test and learn,” he said. “We launch [an idea], typically in pilot mode, to make sure it works and does what we want,” proceeding in an iterative fashion until the concept is ready for full-scale launch.

Executives at USAA play a role in innovation, Kowall said, noting that the role essentially involves making it safe for folks who are working on new ideas to stay dedicated without interference, providing the go-ahead to move forward and the means to get the job done. “As an executive in this space, my job is to make sure I provide cover, clearance and resources to ensure that we are solving tomorrow’s challenges or enabling future opportunities for us to fulfill our mission for our members.”

Customer Input, ‘Tiger Teams’ and Venture Capital

Another way USAA spurs innovation is to bring groups of members into its USAA Labs program, an initiative designed to solicit customer ideas that can help shape improvements and innovations collaboratively. Internally, USAA also “matrixes” in specific teams when it develops new ideas and programs on the inside.

“When we are working on innovation launches, pilots and testing, we matrix in all the right teams needed to” get the job done—the developers, the design resources, the finance resources,” Kowall said. “What we will create are mini tiger teams that work on a specific innovative feature or launch.”

All of these efforts help make innovation part of the broader USAA culture, he noted. “We do not believe it should be a purely separate something done in a windowless building [that is] forced upon the organization.”

Beyond these efforts, Kowall added that USAA continues to use a venture capital arm to invest in innovative ideas on the outside.

“We make investments with organizations that are strategically aligned with what we are trying to accomplish,” he said.

Innovation Results

USAA’s new Automatic License+ program counts as one of the insurer’s recent successes, Kowall said.

Pitched as a free 100-hour program designed to help new drivers master their skills with the help of a coach, the program monitors a teen’s driving and gives audio feedback. It includes an adapter plugged into the on-board diagnostic port (in most vehicles from 1996 or newer), and it is paired with a mobile app on an iPhone or Android device, according to USAA.

The goal is to help give parents or the driving teacher piece of mind, through the same feedback, given after state-mandated videos and driving programs are complete and a teenager has his or her license. The program provides the young drivers “audio feedback tones” via the adapter when they accelerate too quickly or brake too abruptly, as well as other as-needed guidance. It can also remind the driver of low fuel and help to locate a car in a parking lot, among other functions.

“We are seeking greater acceptance with this newer initiative that promotes teen independence while helping teens to sharpen safe driving skills,” Kowall said.

USAA keeps the data private and uses it to better understand driving behavior and improve teen driving safety, according to its website. (It doesn’t come into play in terms of adjusting insurance rates.)

The example, according to Kowall, is the result of USAA’s innovation philosophy.

“Our perspective at USAA is technology innovation is going to continue to allow us to create new and wonderful ways to make our members’ lives better, save them money, and ultimately keep them and their loved ones safer, building on the services we offer today,” he said.