How Discovery Keeps Innovating

May 22, 2015 McKinsey Quarterly

By Adrian Gore; commentary adapted from an interview conducted by Jill Hellman.

CEO Adrian Gore describes how the South African company has been shaking up its industry through business-model innovation and explains what helps to catalyze new ideas.

In 1992, Adrian Gore founded Discovery with an idea for a health-insurance model that would make people healthier. The South African start-up quickly grew into a global player, with a market cap of over $8 billion and a foothold in major markets, including the United Kingdom and China. In the commentary that follows, Gore reflects on the Discovery Group’s sources of innovative energy and on the organizational efforts required to maintain that energy as the company grows. (For more on these issues, see “The eight essentials of innovation.”) One key, says Gore, is that rewards and risk taking go hand in hand at Discovery, which puts its money where its mouth is by making an innovation score part of each manager’s performance evaluation and by conducting an annual competition to identify creative new ideas.

When I started out as a young actuary in a life-insurance company, South Africa was moving from an apartheid state to a proper democracy and facing some serious challenges, particularly in healthcare. There was an undersupply of doctors, an unusual combination of disease burdens, and a new regulatory environment that had zero tolerance for the discrimination of the past, and rightly so. This meant you couldn’t rate customers on preexisting conditions. Finally, unlike most countries, where a national system partially covers risk, there was no unified public health-insurance system at that time.

When you put those four things together, sustainably financing healthcare becomes a very complex undertaking. When we formed Discovery, we asked the question, “How do you innovate and build a health-insurance system that can work in this kind of environment?”

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