Reimagine Business Models in Social Protection
Earlier this month SAP’s Digital Transformation Officer, Dr Chakib Bouhdary, published an excellent paper: “Reimagine Business Models – Navigating your company in today’s new reality” (https://dam.sap.com/mac/download/ad/yxAU8.htm). The paper’s premise is that digital transformation is the fourth industrial revolution impacting all industries, and that organisations need to adopt new business models and embrace disruptive technologies to weather the digital storm.
Dr Bouhdary identifies the six most impactful and proven business models of the digital economy, powered by digital technologies:
- Outcome based models
- Expansion into new industries and markets
- Digitization of products and services
- Competing as an ecosystem
- Shared economy
- Digital platform
Fantastic examples are provided for each model. But when you’re writing for 25 industries it’s difficult to cater for all, and unfortunately there were no public sector examples given beyond a small reference to Smart Cities. I would therefore like to offer a current and topical Social Protection example for each model, as a companion to Dr Bouhdary’s paper. My examples are sourced from around the world – from the United Kingdom to Australia, Africa to Asia, and America to the Middle East.
Outcome based models – these are models where the customer pays for business outcomes or impacts – a commercial example being usage-based insurance policies.
An easy one to start with! Outcome-based programs are nothing new in Social Protection, where the industry is already shifting from paying cash benefits to investing in social and economic outcomes. A contemporary example is Social Impact Bonds – public-private partnerships in which the government pays for social outcomes (e.g. reduce reoffending among short-sentence prisoners through an innovative rehabilitation programme). In a Social Impact Bond, investors fund a set of interventions and if the social outcome is delivered, the government repays the investors their initial investment plus a return. Digital technologies can be leveraged to raise awareness of unmet social needs, attract investors and establish partnerships. Social Finance (www.socialfinance.org.uk) is an example of an organisation working in this way to improve outcomes for individuals with complex needs in the UK.
Expansion into new industries and markets – this model is concerned with entering and disrupting adjacent markets – a commercial example being high-tech companies disrupting the music industry.
A more challenging one, since governments rarely seek to disrupt private sector industries. But Australia’s National Disability Insurance Scheme (www.ndis.gov.au) could be considered in this category. The NDIS is a new public insurance scheme, giving all Australians peace of mind that if their child or loved one is born with or acquires a permanent and significant disability, they will get the support they need. As an insurance scheme, the NDIS takes a lifetime approach, investing in people with disability early to improve their outcomes later in life. Digital technologies are being applied to connect scheme participants to disability service providers in a government e-marketplace. The scheme is being introduced progressively, and will ultimately support 460,000 Australians with disability by 2019.
Digitisation of products and services – this is about digitising the design, production, movement and maintenance of products – a commercial example being 3D printing.
Most Social Protection products are either payments or services, but the value chain is nevertheless being impacted by digital technologies. In Kenya for example, M-PESA (www.safaricom.co.ke/personal/m-pesa) sparked a mobile payments revolution, enabled by government regulatory frameworks and investment in digital infrastructure. Government safety net payments are now being delivered directly to e-wallets, reducing overhead costs and making it easier to exercise fiduciary oversight of the payment process. The Kenyan government continues to invest in Science, Technology and Innovation (STI) as a key enabler of its Kenya Vision 2030, which seeks to build “…a just and cohesive society enjoying equitable social development in a clean and secure environment”.
Competing as an ecosystem – this is a strategy of partnering with complementary industries to deliver better customer outcomes – a commercial example being high-tech and automotive companies developing self-driving cars.
Wraparound healthcare is a great example of Social Protection organisations partnering with Healthcare providers to deliver better citizen outcomes. There is no greater need for this than in Japan, where 25% of the population is over 65, and set to increase to 40% by 2060. Caring for the elderly has traditionally been a family responsibility, but this has become unsustainable, resulting in a phenomenon known as “social hospitalisation” where elderly people are admitted to hospital for long periods simply because they can’t be looked after anywhere else. In response, Japan’s Ministry of Health, Labour and Welfare has established a Long-term Care Insurance scheme (www.mhlw.go.jp/english/topics/elderly/care) to lift the burden of care from families, enable young people to re-enter the workforce and relieve pressure on the health system. The scheme is part insurance-based and part tax-funded, with people contributing from the age of 40 and entitled to social care support (e.g. home help with cooking and dressing) from the age of 65. Digital technologies are applied to collect premiums, conduct assessments of individual needs, develop service plans and collaborate across the ecosystem of Social Protection organisations and Healthcare providers.
Shared economy – this model leverages peer-to-peer networks for sharing of underutilized resources – a commercial example being Airbnb.
As a result of the subprime mortgage crisis in the US, there were 18.6 million homes left vacant – enough for every homeless person in the country to have six houses! Of course, addressing chronic homelessness is much more complex than simply putting people in houses, but digital technologies can still make an impact. Utah’s Affordable Housing Database (jobs.utah.gov/jsp/housing) is one such example, enabling people in the lowest 20% income bracket to search for suitable and affordable housing online. Listings indicate suitability for people transitioning from homelessness, youth and seniors, people with mental illness and other disabilities, people recently discharged from incarceration, etc. This database is just one tool within Utah’s Housing First programme, which the Department of Workforce Services last year reported has helped reduce chronic homelessness by 91% over 10 years.
Digital platform – this is the concept of bringing together communities of interest to create additional value – a commercial example being Facebook.
Another one where the public sector is leading the way! For example, this year the Human Resources Development Fund of Saudi Arabia (www.hrdf.org.sa) launched a range of online services to connect active jobseekers with businesses looking to fill open positions. This digital platform brings real-time labour market information to citizens, not only assisting them to find employment, but also empowering them with the information they need to target their skills development activities. Entrepreneurs can also apply for subsidies to kick-start their businesses and shift from being jobseekers to job providers. In this way, HRDF is fostering a community of employment service providers to boost employment and help create the jobs of tomorrow.
These are all great examples of how governments around the world are reimagining business models – shifting from providing services to enabling communities to help themselves.