GORE’S CALL TO ARMS

For those despairing over land expropriation, unemployment and corruption, the Discovery CEO’S speech last week was just the tonic

Every year when Discovery holds its leadership summit, the company’s CEO Adrian Gore opens the event. In most years, even amid the stellar cast (no doubt hired at vast expense), he is often the most impressive speaker on the day. Gore, 54, is as sharp and combative as ever — perhaps partly due to a punishing schedule, which begins with him getting up at 5am every day for a cycle or gym session, followed by answering all his e-mails by 8am. To blow off steam during the day, he runs up and down the stairs.

Again, it was Gore’s counterintuitive message at the Sandton Convention Centre last week on why, based on facts not sentiment, it would be foolish to believe the narrative that SA is sliding into infamy.

One of Gore’s central points was that in our private lives, we have something of an optimism bias in which we believe, often for no good reason, that our lives will improve. (Gore believes this too, even though he says that at his age his best days may be behind him.)

But when it comes to our country, we have an equally strong bias in the other direction — we believe our country is in terminal decline: “We see problems as insoluble anomalies, and our decline as inevitable.”

Gore flashed up a couple of slides which showed how these biases mean we misprice risk and opportunity. For example, we overestimate how volatile the economy really is, and how intractable our problems are (the financial crisis, state capture, land expropriation) and are quick to throw in the towel.

“In SA we are particularly gloomy, but we are incredibly inaccurate about our gloominess. We are confidently wrong, we are stubbornly stupid.”

Gore referred to a study, released last September by Ipsos Mori, of 26,489 people in 28 countries, which showed how people “frequently believe the world is in worse shape than it actually is”. When those respondents are sifted according to country, SA was among the least accurate when it came to estimating our progress in meeting “development goals”.

For example, 68% of South Africans believed global poverty had increased — the highest percentage in the world to hold this view — which, as it happens, is entirely wrong. And more than half also believed living conditions in SA are getting worse.

Yet in the same survey, 76% of South Africans believed that, personally, the living conditions for themselves and their family will either get better or stay the same. It’s an odd schism, since we’re all located within this world that is apparently falling apart.

This was Gore’s point — that our perceptions are entirely skewed by biases, and the best way to make decisions, including investment decisions, is not based on naive ignorance, but based on facts. “We are blind to progress — our progress is remarkable,” he said.

Gore reeled off some statistics of SA’S progress since 1994: the number of people who have formal housing has risen 130% since then, the murder rate per 100,000 citizens has fallen 50% and despite the rand’s fall, SA’S GDP, even in dollar terms, is two-anda-half times what it was in 1994.

He was enormously persuasive, as you’d expect. Even his critics — of whom he has plenty, especially doctors who feel his medical aid has become such a gorilla that it is unfairly intervening in the doctorpatient relationship — will concede he’s a mesmerising speaker. He’d clearly be a formidable politician. (It’s a well-established, if slightly facetious legend that on any day on which Discovery releases worse-than-expected results, the share price will dip at first, before rebounding sharply after Gore has wowed the analysts at that morning’s results presentation.)

But then perhaps it’s no huge surprise that Gore’s profound optimism bridges the personal and global divide. After all, the company that hosted Bill and Hillary Clinton, former Goldman Sachs economist Jim O’neill, President Cyril Ramaphosa, Caster Semenya, Stephen Koseff and Patrice Motsepe on its stage last week began as just an ambitious blueprint in the mind of a 28-year-old actuary at Liberty Life in 1992.

Three years later in 1995, thanks to a R10m loan from Firstrand’s founders, Gore’s new medical aid had 3,300 members. Today, Discovery covers 17.8-million lives mainly in SA, China and the UK, it is valued at R107bn on the JSE, and in the past year, it made pretax profit of R7.4bn.

These numbers alone are an elegant riposte to the notion that SA’S economy has been on the skids for years. Gore’s call for “a new story”, though not one based on “naive optimism”, was an equally elegant way to frame the leadership debate last week.

Perhaps it’s no huge surprise that Gore’s profound optimism bridges the personal and global divide