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Lessons from a radical innovator

Nov 27 2015 07:30
Nicola Kleyn
Nicola Kleyn, dean at the Gordon Institute of Busi

Nicola Kleyn, dean at the Gordon Institute of Business Science shares her views on the Volkswagen scandal. (Picture supplied).

Business is often quiet when it comes to speaking out on social issues; maybe we forget that we operate within society and not around it?

This point was driven home for me recently when I accompanied the Gibs MBAs to India and, encouraged by the head of our India-Africa Business Network, Abdullah Verachia, we paid a visit to Narayana Health.

This low-cost healthcare chain was started by cardiac surgeon Dr Devi Prasad Shetty in 2000 and today boasts ?6 594 beds across 31 hospitals in 19 towns.

During a 2013 TEDxGateway discussion, Shetty explained his motivation: that Indians are genetically three times more vulnerable to heart attacks than the rest of the world’s population and they develop heart problems at an earlier age.

He said that of the 2m Indians who needed heart operations each year, some 1.9m could not afford the treatment.

This despite the fact that India’s government spends some 1.1% of GDP on healthcare, a figure which Shetty says is “slightly more than sub-Saharan African countries”.

Helping those who need it most

So, sick of “putting a price tag on human life”, he launched his own healthcare model.

He convinced the state government to launch a health insurance and they “convinced 1.7m farmers to contribute five rupees per month [about R1] and government agreed to become the reinsurer.

In 10 years, 60 000 farmers had heart operations, all because of the power of five rupees a month.”

In 2015 the World Health Organization awarded Narayana its Public Health Champion Award for innovation. The group has been recognised for operational excellence and customer service, for brand excellence and for corporate responsibility.

There are ample reasons why: Over and above the impressive 80-bed dedicated post-op paediatric cardiac ICU, which I saw first-hand in Bangalore, the group has moved into tele-medicine and also rolled out tele-radiation, which allows you to obtain a diagnosis from one of their India-based radiographers.

A speciality procedure like in-vitro fertilisation, which will cost you R250 000 in South Africa, carries a bill of R25 000 at Narayana.

The Narayana model involves 40% of patients paying the regular rate and 60% of patients paying less. Some pay nothing.

Lessons for SA business

This is the most unbelievable business model and it has profound lessons for companies in South Africa and across Africa.

Narayana is business thinking at its best. Yes, it is about frugal innovation but it is also about accessible leadership.

Although I wasn’t privileged to meet Shetty, some of the MBAs who visited the hospital previously had the opportunity to have an informal discussion with Shetty as he came out of surgery.

He was still wearing his scrubs but sat down and chatted with our MBAs, who came away with a sense of the spirit and commitment to adding value which resonates throughout this organisation.

We could be replicating this approach in South Africa; we certainly have the means.

André de Ruyter, CEO of Nampak, spoke at Gibs earlier this year and, in the course of his presentation, he made the point that there is fat in our value chains.

The difficult question business faces in South Africa, where there are so many historical imbalances to rectify, is whether they should cut out this fat only for the benefit of shareholders?

Or should they apportion an appropriate amount to inspire and, with any luck, change the world?

As a business school you can’t re-engineer all these value chains and make these changes, but you can celebrate milestones and hold up companies like Narayana as models from which to learn.

Certainly the biggest thing that struck me after my visit was the importance of questioning every aspect of the business value chain to deliver at low cost while retaining quality.

his takes radical innovation, but it’s also about harnessing the power of committed people with acumen.

While many of us in Africa sit on our hands, Shetty already has our continent in his sights.

He sees the potential here and is on record as saying that he hopes to roll out a larger hospital chain in Africa as well as in the Caribbean region, Latin America and Asia.

Maybe we don’t always see these opportunities because we cut ourselves off from recognising the considerable role business has to play in society.

A model like Shetty’s requires a deep and profound understanding of the environment in which business operates, it needs a sense of purpose which goes beyond pure shareholder returns and it involves radical innovation across the value chain. Plus it requires that we listen; the hardest job of all.

Prof. Nicola Kleyn is dean of the University of Pretoria’s Gordon Institute of Business Science (Gibs).

This article originally appeared in the 3 December 2015 edition of finweek. Buy and download the magazine here.

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