The coronavirus pandemic has presented a huge challenge for countries around the world – for many it means a complete reset of their economies. Discovery’s executive and co-founder Adrian Gore looks at the post-coronavirus future in this wide-ranging commentary which moves from SMEs to South Africa’s rating as one of the top five governments in handling the crisis. He sketches the possible and plausible scenarios in which the world could and should move post-Covid-19, including the economic and social implications of the pandemic on millions and millions of lives and livelihoods. One crucial shift he sees happening post-Covid-19 is a rush to online, from healthcare to education, dating and even banking. – Stanley Karombo
Discovery’s executive and co-founder Adrian Gore is one of those rare beings who always seems to be ahead of the curve. He has long evangelised concepts that were foreign to most businesses like embracing complexity and the championing of encouraging customers to change their behaviour, sharing tangible benefits thereof with them. In this commentary, Gore provides a considered perspective of SA’s future.
I’m not one to quote Vladimir Lenin, the founder of the Soviet Union. He is not one of our most impressive leaders, but he made an amazing remark that I read in the context of Covid- 19. He said, there are decades when nothing happens and there are weeks when decades happen and to a large extent that is kind of what we are living in.
We’ve seen depressions in the past, and recessions in the past. The global financial crisis of 2008, the dot com crash of the late 90s. This is a very different situation. Those recessions were caused often by bad behaviour of the financial sector. The housing bubble that crashed. Bad behaviour around the dot coms that boosted ridiculous valuations of company shares that then crashed.
This is very different. This is a problem of the real economy, of the mom and pop shops, of real people, not big institutions. Companies like us that serve the real economy exist because people are working hard in restaurants and running these mom and pop shops. That’s where this thing (coronavirus) is going to have an impact.
Shutting down the economy is particularly dangerous to the real economy. There are around 550,000 small and medium enterprises. SMEs pay about 6m people and the critical thing people always need to know is that it’s not the corporations that create jobs. We don’t. Big corporations are not entrepreneurial and create jobs.
Entrepreneurship and job creation is in the SME space. The SME space is vulnerable. Our statistics show that 45-75% of SMEs lose one to three months in this kind of condition. Count the loss of 1-3 months in this kind of state – SMEs are particularly vulnerable, as we move from level 5 to level 4, as you heard earlier from the speech of the minister – the kinds of things we can do, it is critical that we get SMEs working again.
I was very encouraged by the president’s R500bn stimulation package. It’s remarkably intelligent. I think the fact that it goes through the banking system to a large extent means that there’s existing infrastructure and screening of how it can be done. It will be controlled very well.
But, we’ve got to do more for SMEs as part of the SME Fund. We’ve made a call to big business through the CEO Initiative that big corporations like ours and others need to pay SMEs now. There’s a process in the environment where large corporates often pay in 60 or 90 days. It means cash flow for SMEs is particularly difficult. It’s prudent from the research, it’s one of the most difficult issues for SMEs and for failure. One of the calls we made is by last Monday, big corporations should have paid. Let the SMEs get paid their money and inject liquidity into the environment.
There are many corporates that have done it. Discovery has done it and we have paid exactly what it was. And we’ll continue to do so but we need to do more. We’ve had a scheme with the Discovery medical scheme to offer some SMEs contribution holidays. If we can add other things they pay for over time. We also worked with several medical schemes to try and help doctors. Doctors are one of the most critical groups that we have. We freed up essentially R3bn of liquidity through the scheme to prepay doctors. The doctors will come on stream again. They’ll earn a claim again and therefore, we can pay that money in advance. Unfortunately, that scheme is still kind of caught in the regulatory process. It’s not a normal structure that needs regulatory oversight so we continue to push on that front but the point that I’m making is that we don’t know the effect on the economy. I am always an optimist. We’ll muddle our way through this, but I guess if the old and the sick or vulnerable die from the virus, I would guess the analogue in the economy is the SMEs because they are vulnerable and we need the private sector as big business and as government to help the SMEs through this.
When we can think about scenarios and scenario planning, the typical way to think about that in the corporate sense, you tangle up to consider a bunch of scenarios and attach probabilities to them.
The late economist, George Shackle, had a fantastic theory called potential surprise theory. It used a similar economic theory many years ago and found that scenario planning in its traditional way is basically limited. You’ve got to predict all the potential scenarios. You’ve got to assign probabilities to them. For those used to artistic command probabilities that need to add up to one additive problem unless you can think of all the scenarios upfront. His point is that you need to think more about possibilities in an unbounded way rather than probabilities in a bounded set.
So, think about plausibility rather than probability and therefore thinking in a much broader row about the potential bad things that can happen. More importantly, the potential good things that can happen out of Covid-19. In my journey, I’ve tried to always do that in the context of our organisation. Try not to think necessarily linearly but think about plausibility, possibilities in an unbounded way.
You should think about this in a post-Covid world. A few points I’d like to make.
These are common themes, but it’s just to add a few points to some of the possible futures that we may face. And this is predicated on a fairly optimistic view that we’ll muddle through this economic difficult time.
The first one is the concept of a world of We versus I. There was a fantastic article we may have to read by Rabbi Jonathan Sacks in the Guardian just a week or two ago. He makes the factual point that whenever societies are prosperous they become very self interested, people become focused on the I. When societies get into difficulty in the World War, the Great Depression, we become a collective, it’s about We. That’s a healthy thing when we think about We, in a very collective way. If you go through history, you’ll find that whenever there’s been great disruptions of negativity, World War 2 to the Great Depression, some amazing collective things have happened – the NHS in the UK was formed in 1948. The New Deal was formed by Roosevelt during the Great Depression of the 30s. It’s during these times we become a We, we become far less focused on self interest and that’s that’s a great opportunity for us. Rabbi Sacks talks about a number of levels and we talked about five levels of what he hopes remain post-Covid 19 world.
The first is kind of the way of global human solidarity. It’s a remarkable time. All of us around the world are experiencing the same things. I’ve been on calls in meetings today with people in China, with people in the US. We all discuss the same thing that the same fears, the same grief, the same concerns, we’re experiencing similar kinds of lockdown experiences. For the first time we have this kind of global solidarity around what we’re experiencing. It is tragic, but at the same time, we are in this thing together and you feel part of a profound collective. He also makes the point – I think beautifully about the we of humility – that no matter who you are, no matter what your resources or your technology you employ, where you live, this one little virus has cut us to our knees collectively. We’re on our knees in this thing together and then he talks about the collective We as a collective. We need to have hope and there’s something about a world of We that is of course much better than a world of I. In the South African context, we think about the New Deal and about things like the NHS. What are we doing this time? Leadership needs to think about poor people in a different way. We need to try and change structures in a way to change levels of inequality. Hopefully, if we can do something from what’s happened here that could be a good thing.
The second issue of plausibility rather than probability is South Africa itself. Our president has done remarkably well. I was chatting to the Dean of one of the public schools of health in the US. He was telling me that in their view our president and our government has been in the top 5 on how we dealt with Covid-19 to a large extent. If we get to the economic issue, a country could emerge. This is relatively competitive in a good space and an optimistic space. Chatting to a colleague in Germany, a fantastic business leader, he made the point to me that if you look at how Germany has dealt with Covid-19, very good healthcare system, death rates are low. They’ve done a good job. They may emerge in a very competitive space relative to other countries. I hope South Africa can do the same. I don’t need to make light of a tragic situation. If you manage esteem well, it could lift our optimism and we could come out of this hopefully in a strong place. In the realm of plausibility that is a future we should hope for.
The third point is that of an important plausible future of science and fact. The world has drifted away from experts. We have drifted away from science and fact, we’ve drifted towards just trading in fake news and everyone’s opinion counts. It is not greater to me than an illustration of this Dr. Fauci in the US – who is seen as kind of, how can I say in a humble sense of what works and what doesn’t work, what is science and what is fact. We’ve lost that. At a business dinner of some thousand or so business leaders in the country and there was a fantastic panel that asked the audience, it was quite remarkable, he said. ‘Tell me how many business people here are engineers and remarkably not one person put up their hand.’ Not one engineer, not one scientist in the room. Isn’t that remarkable? You can’t build an economy without engineers, you can’t build an economy without science, you can’t have modern economy. I’m a financial person, I’m not an engineer. I’ve been described as patronising. I’m making the point that science and fact, and experts is where we need to drift to as a world. And Covid-19 is making it clear that you can’t hide away from fact and talk in a large extent. I think the new heroes, the patriots are not soldiers and not money, it’s about maybe science and fact, which is a good thing.
And then the fourth plausible thing is that sensitivity of the climate I think would accelerate, there are many reasons for that but I think maybe anecdotally we have seen individually that the world can change. I guess you know about fears about Cape Town being flooded. You don’t really see it in your mind’s eye, but having lived through what we’re living through today, it’s clear that the world can change in front of us, the climate and those kinds of concerns, I think are good concerns. And they’ll be much more real.
The fifth point is a rush to an online world. That pace is going to accelerate regulations that stand in the way of online rule, they are going to be swept aside. Telemedicine and healthcare in the digital space is going to dramatically accelerate. Any of these petty issues will be swept aside. We’ve seen that now. If you followed some of the stuff we’ve done, we have this online doctor consulting service. It’s had a whole lot of issues of regulation over many years – that the doctor first sees the patient and you can’t allow this. Of course, there’s validity in that, that’s being set aside. It’s just too powerful a technology to be held back by regulation.
We’re moving into an online world with tele-medicine and it’s going to move very quickly – behaviours will change. I was telling this to one of the leaders, one of the large technology companies that are preparing for a new world. It’s not that technology wasn’t available for years in the US. It’s about behaviour change. The same is going to happen in education. The same is happening in dating. I think that socialising and dating is going to accelerate online. There’s a lot of statistics around that. Critically, the world of work will move online. I don’t share the view that every one will be at home – you still need to get out there, you have to hustle, you have to meet people. You can have BAU (business as usual) from home, but you do need to be out there somewhere. But, meetings will be much more local. I do think that using Zoom, and these kind of technologies will happen.
I think long distance travelling – I’ve spent my life on a plane and many of you have done the same – that’s still going to happen at a far lower rate. The climate effect and the effect of people understanding that you don’t need to do that to get your work done is going to change the world of work post-Covid-19. It is a fantastic shift dramatically online.
The final point I’d make is that the plausible issues that the tyranny of habit is going to disappear. This world of a 4-minute manager, sleeping 3hrs a night, be as effective as you can, I think we’re going through a profound time now in this lockdown – understanding that life has more authenticity than just chasing time – that connections you make, the time with family, the time at home, has value. It’s plausible that our value system changes somewhat.
I want to make the point to end that plausible versus probable is a personal thing. The futures, I’m outlining could happen on a societal level but to an extent these futures you would choose individually, this is attitudinal taking plausibility to realities of personal qualities from your own leadership and what you think is important in your context, in your business and your family.
In the case of Discovery, we share concern about the future, we’re conservative about our customers, about the affordability, but we are prepared for a Covid-19 world where we are more relevant and we will try to look clearly at opportunities. Health is going to be more important. Healthcare will be more important and health insurance will be more important in the post-Covid world. Concern about premature death will be more important. Wellness and immunity will become more important – we’re seeing an amazing shift during this Covid-19 period, it is the stuff that we’ve been trying to do, behaviour change to make people less diabetic – in the context of non-communicable diseases.
What we’re seeing now from the statistics is an infectious environment, where the same concerns happen. So all the behaviours if you’re trying to affect immunity, and immunity is going to be crucial going forward. This is a world about wellness and immunity. It’s all about healthy ageing and therefore retirement funding, and thinking about how you make decisions about your retirement are going to be in a context of healthy ageing with Covid-19 and the statistics coming out of that are going to be clear.
In terms of banking this is not commercial, one of our concerns when we got Discovery Bank was building an entirely mobile bank that is a sophisticated, clearing bank entirely in the face of the mobile wallet. For example, how we will deal with ATMs etc. I think the world will change, banking is going entirely online. We’re not going to go to branches at all. I don’t think people will want to carry cash. Cash is a dirty thing. You don’t know where it’s been in the post-Covid world. There are a number of trends that will happen in this environment that will be different.
We are focusing on trying to expand our role that doesn’t minimise our deep concern about how we get through this Covid-19 period. What I would say to you is that, with concern, caution, prudence and with some amount of grief we’ll muddle our way through and pop out the other side. I do think that the world will be better post Covid-19 hopefully, than it’s been pre Covid-19.
