Listed financial services company, Discovery has been identified as one of 100 companies that can challenge for global market domination due to its innovative thinking and use of digital technologies.
The Boston Consulting Group (BCG) identified a new class of 100 “global challengers,” many of which are leaders in digital innovation and adoption as well as in their home markets and globally.
The new report shows that digital leadership is increasingly an emerging-markets phenomenon as consumers and companies embrace online technologies and tools.
In its report, BCG singled out Discovery as part of a growing number of emerging-market companies that are no longer content simply to compete head-on with global multinational corporations.
“They are using their digital capabilities to establish alternative business models and ecosystems built on the belief that their way is better—for themselves, their customers, their partners, and their investors. In the process, they are providing new and exciting models for others to follow.”
The report pointed to five examples of leaders in digital innovation “that have blazed eye-opening trails by building ecosystems, directing technology at customer solutions, using digital technology to fill market voids, and continuously innovating with a customer-centric focus”.
Two companies are global challengers (China’s BYD and South Africa’s Discovery), Tata Consulting Services (TCS) became a graduate in 2016, and Tencent and Alibaba are new global challenger graduates, BCG said.
In its 2016 list, BCG identified Aspen Pharmacare, Bidvest, Anglo American, SAB Miller and MTN as being challengers, along with 2018 representatives Sasol and Discovery.
In one telling statistic, BCG found that almost 60% of the companies on the 2018 global challenger list are either digital natives or significant digital adopters, compared with only 17% that made significant use of digital technologies in 2012.
“These companies are achieving their leadership positions by leapfrogging their developed-markets counterparts,” the group said.
Some companies are innovators in digital technologies—bringing their inventions to market, building major businesses on new tech foundations, and taking share from developed-market competitors.
Others innovate in their use of technology to develop new products and services in more traditional industries or to upend traditional ways of manufacturing or delivering products and services.
Discovery, the report noted, is a pioneer in the business model of shared-value health insurance, which encourages healthy living through health-promoting behaviour.
“With 2016 revenue of more than $3 billion, Discovery is South Africa’s largest health care funder, managing 14 schemes. From 2013 through 2016, it grew at a rate of more than 20% a year, compared with an industry rate of 6%.”
With more than 3 million members, Discovery Vitality (of which Discovery owns 75%, with Humana holding the balance) is the world’s largest incentive-based wellness solution company. It is active in South Africa, the UK, the US, and China.
Discovery’s Vitality program encourages healthy behavior through such benefits as discounts on gym memberships and healthy food, reward points for preventive care and checkups, and incentives to use its online platform to maintain personal health records and track diet and exercise.
“Big data and advanced analytics are critical to Discovery’s business model, allowing it to build a picture of clients’ lifestyle choices and behaviours as they relate to health and disease,” the report said.
The company, it went on, uses multiple types of information, including unstructured data from such sources as websites and smart devices, to gain an understanding of its clients.
Discovery recently partnered with PHEMI Systems, an analytics company specialising in large, unstructured data sets, to further analyse how behaviour affects an individual’s risk profile.
It is using the resulting insights to fine-tune the incentives system. Discovery is working with Fitbit, Nike, and Garmin on novel tracking possibilities and is expanding its incentive and tracking system to other insurance products, such as car insurance, where it uses telematics to track vehicle usage and driving behaviour.
The report further pointed out that in 2017, Discovery launched an app that uses digital technology and AI to allow members to engage with doctors in South Africa and internationally. Patients identify their condition or ailment and then get information about treatment options and urgency.
The company is now introducing a service that uses AI to predict medical risks before they arise, providing new decision-making capabilities for physicians and allowing for treatment of diseases and other medical conditions.
Discovery also has automated processing for 30 medical conditions covering about 40% of its paper applications. The company now processes up to 100,000 transactions a day.
The report is published at a time when Discovery is live-testing its banking capabilities, testing “system infrastructure, operating processes and regulatory engagement”.
The insurer will launch its proposed banking offering to the public later in 2018, and is expected to be largely digital give its lack of brick and mortar infrastructure.
“Going forward, we believe the global challengers are well positioned to use their digital assets and advantages to capitalise on a number of the defining characteristics of emerging markets,” said Michael Meyer, a BCG partner, the firm’s head of Singapore, and a report coauthor.
“For example, these markets contain the world’s last remaining pools of high demographic and economic growth, which the global challengers can access with efficiency and value-based productivity. Consumer-focused companies can connect more easily with a fast-growing base of digitally savvy consumers open to using new technologies.
“Policymakers and regulators in many developing nations are seeking to foster digital innovation with favourable regulatory environments, which facilitate the development of digitally enabled workforces, collaboration in digital ecosystems, and growth.”
Global challengers develop their digital capabilities in three main ways:
- They are active investors in internal innovation programs and research and development.
- They pursue partnerships and join digital ecosystems or establish their own.
- And they acquire digital capabilities through M&A and private investments in startup companies and technologies.
“All are proving to be highly productive avenues to digital development,” BCG said.