Discovery Limited is without question one of South Africa’s most successful companies. But why?
This isn’t simply my opinion. Pretty much everyone I speak to talks favourably about Discovery, whether referring to their growth, profits, staff satisfaction or products.
And what is even more impressive is that they've succeeded by focusing on something their competitors did not.
Purpose.
In fact, Discovery’s success can be traced right back to Adrian Gores original vision of building a company to help people live longer, healthier lives.
This was a fundamental differentiator to the approach every other financial institution was taking at that time.
Whilst every other CEO was focused on implementing Jack-Walsh-styled strategies, where being the biggest or the best or the fastest-growing was the goal, Adrian took a radically different (and at that point untested) approach.
Earlier this year I got the opportunity to interview Adrian and ask why he felt a purpose-led enterprise would win out and how he convinced the more traditional profit-focused investors that his idea was one to back.
That discussion will live with me for a long time, as I learnt more in one hour about the key to business success than perhaps I’d learnt in my entire career. It also reaffirmed my belief that purposeful companies outperform over the longer term.
Now, if you'd like to read the full interview, I've got some great news!
Firstly, the whole interview will be published in Chris Skinner's upcoming book, Digital for Good.
This is so hot off the press that there aren't even any promotional sites set up yet for me to steer you to if you wanted to learn more.
However, if you want a sneak preview of the chapter, then read on...
Before you do though, it's worth mentioning that you'll also be able to get some insights on Discovery's business model, from my interview with Hylton Kallner (Discovery Banks CEO).
I’m particularly excited about this fireside, as Hylton has been at Discovery since the start, so not only will I be asking him to share his perspectives on why Discovery has been so successful, I’ll also be exploring whether this idea of purpose-over-profit can be applied in banking.
(We already have over 1,000 registrants, but it's not to late to sign up as thankfully Huawei have agreed to open up a few more spaces.)
Ok. That was a longer intro than I intended.
Here is the promised snippet from the interview.
It's actually the final draft I sent over to Chris for editorial review, so it may be slightly different to the published version (and hopefully they'll have sorted out some of the grammatical errors). None the less I think it should suffice for now....
FINAL DRAFT SUBMITTED BY COLIN ILES TO CHRIS SKINNER FOR EDITORIAL REVIEW
Interview held on 20th Jan 2021 with:
- Adrian Gore, founder and CEO of Discovery Group
- Chris Skinner, Best Selling Author
- Colin Iles, Founder Innovation Catalysts
[Intro to be added introducing the fact that Discovery's core purpose is to make people healthier and enhance and protect their lives.]
[Opening Question]
Colin: When was it that you concluded building a strong purpose would be a better business model than merely chasing profits? Adrian: Actually, I was lucky. This idea of building a purposeful organisation was really with me since the inception of Discovery, formed by the events in the early 1990's in South Africa. Nelson Mandela had just taken power, and there was obviously a strong drive to develop an egalitarian healthcare system, one that was perhaps similar to the aims of the Obama Care act. In those days, there were nowhere near enough doctors and medical professionals to deal with the terrible levels of disease. Diseases like HIV and Diabetes were incredibly prevalent. So, rightly, there was no way you could start a system that precluded those who were unfortunate enough to have pre-existing conditions. We collectively couldn't end one period of discrimination for another.
All this created a situation where we couldn't directly actuarially risk-rate people to set individual premiums. We, therefore, had to work out how to create a sustainable health insurance model that took cognisance of these underlying factors. Our conclusion was we had to find a way to make people healthier, to keep them in the risk pool and reduce the demand for healthcare.
Therefore, Discovery had to start out as purpose-led and values-driven from the get-go. But this purpose was formed on a deep conviction that it was the only way we could design a business model that would work.
So, it's important to understand this isn't a soft fluffy idea. It came out of the realities of the country.
In fact, when I look back, I'm still amazed at the simplicity of the idea that we figured out and decided to run, with literally a handshake. I actually think that we developed quite a beautiful insurance model – and I know that might sound like an oxymoron for normal people who find insurance anything but beautiful, but I really think it is. By focusing on helping people live longer, we were able to create a virtuous circle, which increased our own profitability.
Our goals, and our investors’ goals, are completely aligned to our clients’ goals. There is no dissonance at all.
[diagram to be inserted]
In other words, if you can make people healthier, it's good for them in the most profound way but, at the same time, it's good for us.
It was about five years in, when we really started to focus more deeply on this realisation. We started to ask whether we could use part of our profits to incentivise people to try and become healthier, and that was what led to the creation of the Vitality model.
[side bar explaining vitality healthcare scheme]
If we took money from the profit pool, incentivised people to join gyms by subsidising their memberships, or paying for preventative screening at clinics, we felt it would actually generate more profits over time. Colin: Can you explain how entrenched purpose is within Discovery? For example, I've spoken to other senior executives who've said that you start virtually every meeting restating your company’s purpose? [insert company purpose: Discovery's purpose is to make people healthier and enhance and protect their lives] Adrian: Absolutely, virtually every presentation I give starts with the restatement of our purpose. In fact, in the 1990s and early 2000s, when purpose wasn't yet an entrenched business concept, I'd start all my analyst and investor presentations with a briefing about our purpose. In those days, it was completely unheard of. Analysts were all about EVA and return-on-capital. This fluffy intro was an anathema for many of these guys, but we have always focused on purpose and values. I think most of our 12,000 employees will know the values, but all of them will know the purpose for sure.
Colin : How important has purpose actually been to how decisions are made within the company?
Adrian : to be continued...
Ok folks. That's all I'm allowed to share for now, but if you've signed up to either Chris's or my mailers, I'm hopeful we will be sharing more over the coming months. Stay safe,
Col.
p.s. Discovery isn't the only South African company featured in Chris's book. More on that later...