Founder and CEO of the Discovery Group, Adrian Gore believes the company, created on the simple premise of making people healthier, can act as a force for good through its core purpose. He was speaking at a forum at the Gordon Institute of Business Science (GIBS).
The group’s Shared-Value Insurance model, which pursues financial success in a way that benefits society, has the ability to monetise improvements in social risk, thereby creating a virtuous circle.
The Discovery Group, which was recently ranked 17th out of 50 companies on the Fortune Change the World List, was initially launched as Discovery Health, with a focus on the customer and the use of incentives to make people healthier. “This was the simple, deep belief of the people who built the company. The statement has created and framed the journey,” Gore said.
“We began with the end in mind,” he explained, which included promoting wellbeing through incentives such as free gym membership and enabling members to earn healthy currency, creating the Vitality programme.
Understanding risk behaviours
Gore said the breakthrough from an actuarial perspective was applying the data gathered from the group’s health operations to the premiums of Discovery Life. “The traditional life insurance model is broken, as most risk is behavioural.” The understanding that most risk is pre-existing has begun to gain traction globally, as 80% of the disease burden is created by behaviours such as unhealthy eating, smoking and drinking.
By integrating the shared value model, behavioural change was able to enhance the life insurance model. “Claims are lower, people are healthier, which create a virtuous circle,” he said.
Discovery’s international operational expansion into Asia, North America and the United Kingdom through partnerships allowed the group to participate in diverse markets: “We wouldn’t be able to build an insurer in Asia single handedly. Through partnerships we can participate in those markets, while changing tens of thousands of lives,” Gore said.
While promoting health and wellness among the broader South African society was a worthy aspiration, Gore said the group was still limited to its particular base and didn’t have designs on the lower income market. “There are many ways we can strengthen the public system if we can build a National Health Insurance system that is sustainable. But it is not a reality that medical schemes extend further down,” he said.
Data and innovation
Technology as a disruptor and an enabler, including wearable devices and data, remained a global trend in the health insurance space. Gore said while Discovery’s business is data centric as data is critical in informing product creation; he is “not convinced that it is absolutely everything.”
The business model of Discovery Bank, due to launch in the coming year, is based on the belief that the group could create a unique offering, leveraging its exceptional understanding of its client base, and not on a belief that existing banks are inefficient, Gore said. “If anything, our banks have demonstrated resilience in a difficult market and are not a weak industry. We have a behavioural mindset and a belief that it will help our customers,” he added.
Ethical business in South Africa
There is a global movement for business with a purpose, and widespread revulsion with the notion of enterprise only for the sake of relentless profit following the 2008 financial crisis. Companies have to have an authentic purpose to gain traction with customers, and it is more inspiring for a team to work towards a purpose than just shareholder returns, Gore explained. “If possible, entwine your business model with what is good for your customers.”
As a member of Business Leadership South Africa and the CEO Initiative’s Small and Medium Enterprise work stream leader with Bidvest founder Brian Joffe, Gore said the country is “facing dramatic threats.”
“South Africa is going through a really problematic time. The national narrative is overwhelmingly negative and business and civil society need to fight hard.”
However, Gore added it is also necessary to seek out positive signals in order to form a realistic sense of where we are going: “Business Leadership South Africa, the trade unions and civil society all have an absolute resolve to get the country on the right track.”
“I have an extreme view that business must be all good,” he continued. “You don’t have to cut corners to build a great business. We are really at war with corruption, wherever it is; and business should be a force for good.”
It is in difficult, complex environments that purpose-built businesses are formed, Gore explained. “It is in negative times that opportunities are usually underpriced. I believe in action, not in sitting on the fence.”