THE VISIBLE HAND
Discovery’s new bank: Gore’s plan all along, you can bet
First he split from the FNB mothership, and now he’s competing head-on ... and it sure isn’t just opportunism
A long time ago when I had just been appointed the editor of the Financial Mail, I decided to go and see some real businessmen about the magazine to try and get a sense of where the publication was hitting the mark and where it was not. One of my victims was Discovery’s CEO Adrian Gore, who very graciously gave me all kinds of advice.
His perspective was so instructive about not only the Financial Mail but also his own business. It’s almost impossible not to be astounded by Gore’s achievement as a businessman; he is the very model of a modern entrepreneur and has been lauded everywhere, as we all know. But how this all happened is much less well known.
Anyway, the first thing he asked was whether I had a clear vision of what I wanted to achieve. That seemed obvious enough to me at the time: I wanted a better publication. So I said “yes”, slightly dubiously because I suddenly became aware of the haziness and generality of my aims. And then he asked “have you written it down”. Well, that kinda stumped me, because of course, I hadn’t.
In retrospect, I can see he was inviting me to be specific. In entrepreneurial circles, this is often called “focus”, but ironically the notion of being focused is itself rather hazy. But writing down your aims makes them not only memorable but sets a standard that you can actually measure. You can refer back and check that you are doing what you intended to do.
Well, sort of. As it happens, I did go back and write down my aims. On rereading them now, they seem rather self-embellishing. In the event, it really illustrated the difference between a desire and a plan, and perhaps that was the point. The FM at the time was barely breaking even, but in a few years – more through the intervention of management than anything I did – we got it back into the black through what might be called “aggressive cost management”. Trust me, that was not in my original conception of how things were going to play out. Turns out “plans” are a movable feast.
It’s obvious there is a kind of contradictory tension within a business, a kind of yin and yang or heart and head. One part is meticulous planning, the other is untrammelled dreaming. One without the other is pretty useless. Gore knew that I was enthralled by the promise of a great title like the Financial Mail, but he wondered, correctly as it happened, whether the head was operating.
That dualism is one of the things that makes Discovery so interesting – being planned at the same time as being opportunistic.
This past week has been a slightly understated red-letter day for Discovery, which announced last week that it had struck a deal with FNB to buy the bank’s share in its credit card operation and Discovery's nascent bank for R1.8bn.
The significance of the deal is that it cuts the umbilical cord between FNB and its protégé Discovery. Ever since Discovery announced it would be taking on a banking licence, the split was perhaps inevitable. But this is it: now they are officially competitors.
This is a big gamble for Discovery. FNB is three times the size of Discovery, and has an established clientele and a great operating history as a bank, and so on. I’m willing to bet a huge number of FNB clients are also Discovery members. As a bank, Discovery will be competing not only with the mothership but with Investec and others, who are all great operators.
Yet, Discovery has its own arrows in its quiver, too – notably, the Vitality Health rewards system which has become such a staple of city life in SA, and is making real headway now in all kinds of places around the world.
Reading Discovery’s results last week, I couldn’t help wondering if Gore at some stage wrote this down? Was this really the plan all along?
Frankly, I wouldn’t be surprised.