Hi, this is Andy Bins from Change Logic, co-author of Corporate Explorer. And this is an opportunity for us to hear from one of the Corporate Explorers to Watch. This time it’s Federico Spagnoli from Prudential International insurance. An old firm, it’s founded in 1875, in New Jersey.
Federico is a long-term member of the company, an insurance industry veteran. And he’s developed this platform for total wellness that really takes the business into a new kind of relationship with its customers, helping to support them in their total wellness: physical wellness, financial wellness, and emotional wellness as well.
It’s a really fascinating story. I look forward to sharing it with you.
Hi, I’m here with Federico Spagnoli from Prudential Insurance and we’re going to be talking about Federico’s work in building this Vitality platform in Argentina and in South America overall.
But first of all, great to have you with us. Federico. Welcome to our series on Corporate Explorers to watch.
Andy, it’s a pleasure to be here and honored to be part of this series and looking forward to sharing our story about our partnership with Vitality, but also our wellness long-term vision and strategic direction.
AB: Yeah, that’s good because this whole thing about insurance companies and healthcare wellness, it’s a big theme. I know we’ve worked with a number of insurance firms. Many firms are looking around this issue. So I’m really looking forward to learning about how you’ve looked at that.
Before we get into the details, just tell us a little bit about how you came to do this work in insurance and what else you do in your life.
FS: Sure. Let me tell you a bit more about my background. I’m originally from Argentina. I’ve been in the insurance industry for almost 25 years now.
You know, the last seven years with Prudential. And prior to that I spent almost 13 years with American International Group, AIC. I serve in a number of roles and capacities and spend time in Asia, Europe, middle East, Africa, Latin America, you name it. Prior to that, I believe I’m one of the first generations starting my career insurance in a startup, because that was in the middle, late nineties.
So I’m revealing my age, but it was, at the time an insurance aggregator and our challenge was that internet penetration was less than 5% at the time. Right. So different type of challenges today, but obviously that experience influenced my way of thinking and approach to the business.
AB: So you started in insurance in a startup, then over 20 years with large insurance firms. Exactly. But somehow an explorer still when it comes to the way your career has gone.
FS: Yeah, you may say so. The reason why I was relocating from one country to the next one is because my background and expertise was more around building new opportunities and new business models, launching new products, new channels, or then around situations.
Yes. I consider myself now more like a corporate entrepreneur. More about building a staff than just managing large established portfolios.
AB: Yes. And it’s to Prudential’s credit that they get what your special skill is, they don’t sit you there saying, just operate this business, but rather help push some boundaries.
FS: Yeah, exactly.
AB: So, tell us a little bit about the genesis of total wellness, an offering of Prudential International and where it came from, where the insight was- a little bit of that.
FS: Actually it was, I think a very interesting story because when I joined Prudential back in 2016, it was the first time I was working for a pure, life insurer.
And I remember having a conversation with one of my best friends who is a physician, and he was wondering why insurers were not doing more to prevent or mitigate mortality risk. You know morbidity risk, right? So that kept me, thinking about this idea of being much more focused on prevention.
At the time I was doing a program at the University of Oxford Diploma, Strategy and Innovation, and we were discussing different frameworks and I remember, this idea of thinking about massive industries and how you start reading early signs of trends that may be talking about, an emerging industry.
To make the story short, I am working on a paper that basically talks about the AI industry. And AI is not artificial intelligence, it is the Aging Industry. And, and in that paper, in essence, I’m arguing about how a number of existing industries as we know them, are starting to merge.
FS: You know pushed by new technologies, emerging new data sources, etc., that are creating this concept of an industry that is focused on addressing the challenges of the aging population.
FS: And not necessarily following the traditional approach. So when the CEO at the time of Prudential International asked us to think about this as a special project, the future of the industry, we came up with this idea of wellness, in which Prudential could play a role as an incumbent of starting the orchestration of an ecosystem, a platform that could start incorporating solutions, bringing solutions to market that can mitigate and address some of these challenges that are affecting people at that age.
AB: So it’s a three way story. It’s kind of partly about this aging population and, you know we, we all face it. I feel it more and more, that reality. Then the clinical view of, well, why aren’t insurance companies stepping up around morbidity and wellness and then your own industry issue of how do you get engaged with people’s lives in a deeper way?
FS: Exactly. Yeah, exactly. Right now I’m seated here in Newark, in our headquarters, and the company was founded in this same location, 1875. Life expectancy at the time was 40 years old. Today, you know, if someone dies at 40, it’s a catastrophe. Right. So the question for us as an industry is how we can be much more relevant to our customers.
Yes. How we can develop a higher level of engagement and really help them to address the challenges that they’re facing today. So that was also, part of the discussion at the time when we thought about this idea.
AB: And I think that’s really important. One of the things that we often wrestle with is this view that doing the work of corporate explorers is all about an innovation. And, and you know, there’s a point of view that says, well you just do that outside of the firm or you leave it to startups. But actually the point is that, yes, you’re doing something new, but you’re doing something that is actually important to the existing firm. This is not an accidental, that looks interesting. This is like, actually we have to move as an industry.
FS: Yeah. Exactly. Right. As you know, for large incumbents, it’s challenging to innovate from within. Yeah. By that time, Charlie Lowery, our current group CEO, was the head of international. So, you know, we can give him part of the grade. Not all to him, but he was incentivizing us to really think about, outside the box and going 20 years ahead of our time. Now, part of the lessons learned in this process:
Operating and innovating within a large organization is not the same approach that you will follow if you are being backed by a VC and, and you are a standalone startup, right? So what I was trying to do at the time, I’m talking now 2018, 2019, when we started to execute the plan, was find the best of both worlds. What I mean by that is, as you know, in particular, public listed companies are measured by quarterly results.
FS: So we work with a framework in essence that we were trying to make sure that we were delivering results in the short term while we were delivering or investing for the future. In a period of five years. So I never, you know, left my head of a corporate officer and I was very much, we were very much aware of that we had to deliver results somehow in the short term that will give us credibility and trust within all our internal stakeholders to continue funding some of these investments and efforts in the long-term vision of the corporation.
AB: So you found some places where you could generate some revenue in the short term, even as you had a bigger vision?
FS: Yeah. So just to give an example, we always plan to, when we talk about wellness, in this case, it’s not just financial wellness, it’s not mental wellness or physical wellness. For us, what we were bringing to the table at the time that we thought was new was this holistic concept of wellness.
FS: And, basically if you think about, let’s assume someone loses his or her job and starts facing a situation of financial distress, that may lead to some mental distress as we all know, and depression, and another condition that may also affect their physical health. We were interested in that interconnectivity of these issues. We couldn’t find it in the market, or we thought it would take us time to develop a solution to integrate all these different verticals. And so how do you deliver results in the short term? That is when the partnership with Vitality came in handy. And at the time when I was doing this program in Oxford, I had a classmate who was working for Vitality, and that was the initial introduction and the rest is history. Today we have a partnership that expands all over Latin America. We had excellent results since we launched the program in 2020.
FS: We launched in March, 2020 to be precise. I don’t know if you recall what happened at that time. So, it was challenging, but for us was a relatively quick go-to-market strategy. We were able to show, you know, customer engagement, higher net promoter scores, which are leading to higher retention ratio, and showing higher propensity to buy more product from Prudential, etc..
And with that ammunition we were able to convince, key internal stakeholders to keep funding, to now develop our own brand, our platform. Still partnering with Vitality, who is, you know, a core partner in our ecosystem, but now being able to also develop our own IP, our own solutions, which is what we are now moving into the next phase.
AB: So you sort of used Vitality as a way of getting started in the market. Creating some traction. Building a case. And I’d say, if we do this ourselves and add more value around this, then we’ll get even more. And you would, but you’d started in a small way, relatively limited. You didn’t have to build much because Vitality had it there essentially.
FS: Exactly. And for vitality, obviously it was a win-win situation. They didn’t have any presence in Latin America. We’ve been sharing, you know, our learnings with them, they endorse our strategy on this vision about holistic wellness. They were initially primarily focused on physical wellness, so this is also complimentary to them. As I mentioned, they are still a key participant in our ecosystem, so they’re also benefiting from the expansion to this holistic wellness concept.
AB: Yeah. Good. And, so = when you made the case, when you first said, oh, I met this guy in Oxford and we could do this, who did you make it to? How did you get the whole thing started?
FS: By being in the same program we were talking, if you will, the same language when it came to the approach to the strategy and, the idea of ecosystems and forming ecosystems. And that person introduced me to the head of International. I was running Latin America for Prudential.
They were actually looking for a partner. So, the importance of being proactive, avoid making assumption that perhaps because Vitality already had a partnership with AIA or Generali, they will not talk to us. And that to me was a very revealing lesson because since then we win. Proactively approaching a number of new partners. And now our ecosystem is much more broader and much more robust.
AB: So you didn’t seek internal approval or business case. You simply took your position in the market and said, right, I’m going to develop some relationships.
FS: No, I, well, internally, we also, we have Prudential. So we had to do our homework and put together a business case and an internal approval process. Again, we try to be smart about it rather than over commit with huge, audacious goals. We said, let’s try to take this opportunity as a learning process.
So it’s not so much about the ROI. We were expecting obviously positive returns, but was really about starting this process. And by the time that we made a decision and we launched, we were the first company to launch this type of program in Latin America.
AB: Wow. That’s cool. Yes.
FS: And now you see a number of competitors trying to follow us, but we got that it was perceived at the time by the local ecosystem, if you will, in the region as Prudential being really innovative and proactive, opening the door for many other opportunities that now we are either monetizing or in the process of implementing.
AB: And, you said about that this is a learning process for Prudential, and that’s one of the things we find is really significant. I mean, the point that is often made to me is, our senior leaders won’t support this. They lack the patience, they don’t want to invest, and so on. And, it seems to me you’re offering two really important lessons in this: first, well, three maybe. Firstly, find a way to get started that is easy and fast. Secondly, generate some proof points. Thirdly, teach the senior leaders to think about this as a learning process. Is that fair?
FS: It’s completely fair. And the last point to me is the more relevant because the first time I did this speech was 2017. We’re in 2023, and there has been full continuity in the process without any material changes for me or within the team.
Actually, until last year, I was wearing multiple hats. I was head of Latin America, Brazil head of product for emerging markets, running this almost as a hobby. Now it’s my full-time job. So that shows the level of commitment, but I believe something that Prudential has as an advantage is that level of continuity in their thought process. And patience.
Actually, I think that is part of the success as a company, because, one of our most successful, schemes for Prudential International is this concept of the life planner. In particular, it has been quite successful in Japan, in Brazil, which originates almost more than 40% of our earnings today.
And that was another example of a long shot, you know, big bet, starting small in Japan. I was in the middle of this in the late 80’s, and today it represents 40% of the earnings of the entire group. So to me it’s part of how Prudential operates, it’s part of our culture.
And, when, as you probably heard, some people tend to generalize. You cannot innovate within large organizations. I think there are exceptions to that rule.
AB: Right, right, right. And indeed, Prudential International separate from, I mean it’s a little bit complicated. Prudential in the UK is one thing. Prudential in the US is one thing. And then Prudential International is this other entity within Prudential.
What I’ve learned from interacting with you and colleagues is the way that it started with somebody coming from Japan and saying, “Hey, I could take this business and build it in Japan,” which then became sort of an innovator within the Japanese market for life insurance. So you have this tremendous track record of waves of corporate explorers coming in and developing ideas.
So, what’s next, what, how is this going to unfold, Federico? How are you going to scale it? Because you’re moving from, as you said, it’s a part-time job to a full-time job. It’s now all about scaling, so it’s going to happen?
FS: We’re beginning that phase of scaling and accelerated growth and expansion, which I love. We have a target of more than 4 million dollars in revenues. Yes. Up to last year, we were considered more like a cost center, and now we are a full P&L. This is considered internally a proxy to a corporate venture. So it’s a separate legal entity. We have a different type of skill set within the talent pool in this particular company. Funny enough, probably 90% of the employees do not come from the insurance industry because, they are more quants or tech developers. So it’s a very unique scheme of skills and capabilities that we’re building.
And our priority for this year is to really expand within Latin America, and we’re doing that through a number of diverse channels.
I want to clarify that this is an open ecosystem, so it’s not limited to Prudential customers. Actually, we have a number of external customers that are not Prudential companies.
Like one of the largest health insurers in Argentina is buying our platform. And now the plan is to deploy all these programs across Latin America. And then we are starting to plant the seed to bring the technology to the US and export it to Europe, middle East, Africa, and Asia. So our aspiration and how we are designing the company and the capabilities is really to go global.
But we have a roadmap in terms of, you know, gradually how we would like to deploy the platform in multiple geographies.
AB: And just what will the pieces of that future business be? Do you think it will be this app that you have for the individual to manage their activities and wellness and so on. What else will be around?
FS: Yeah. First of all, we are developing and will announce soon our brand, because today we are operating under the Vitality brand. We’re going to have our own brand, our own IP, because so far we’ve been working with Vitality IP, and we are going to also own the assets that we are developing going forward so we can monetize into the future. Now, the core asset, the heart of this platform, which goes beyond an app, is an API integrator. Because one of the key challenges in the aging industry that is starting to mature is fragmentation.
There are a number of players thinking about wellness, but some of them define wellness related to physical wellness. Some others are talking more financial wellness. In our case, we decided let’s focus on integrating this variety of solutions that are out there that we believe are relevant to the customers in areas of mental health, financial, physical wellness and wellbeing. And then we’re targeting not only Prudential, but other insurers like the health insurer example that I mentioned from Argentina, but also targeting employers who would like to take care of their employees’ wellbeing and productivity and engagement. And we’re using, as I mentioned, a number of channels. So we are working with large insurance brokers who are focused on employee benefits. For example, we’re working with our own channels. We’re creating a standalone channel focusing, promoting the platform across different spectrums. But we’re also starting to integrate with other existing technology applications and platforms that are specialized, for example, in human resources.
We are looking for alternative channels, because our real aspiration is not to just talk about wellness, but really how we can democratize access of wellness across the board regardless of your socioeconomic or geographic background.
AB: So you sort of serve up to the consumer something that’s truly integrated in terms of how we learn about our wellness and think about wellness, not just physical, but financial and so on.
FS: Exactly. And again, our core asset is this layer that facilitates that integration of solutions. We facilitate the implementation of wellness solutions for a variety of target customers like insurers, health insurers, and large employers.
AB: Yeah. Wow. It’s a tremendous breadth of vision- really exciting Federico.
So, as we wrap up this, this opportunity to learn from you- what advice do you have for other corporate explorers out there in different companies and countries and industries around the world? What would you say are some of the highlights that you would have?
FS: Remember the, at least my key lessons learned, right? Start small. Show some initial results. And then this idea of thinking bigger and really start building on your long-term vision.
I heard the other day this, this principle of dreams, reality, and determination, like a formula of success. And I was saying, someone is talking about my personal experience in the last five years. Right? So again, I want to remove this idea that if you work for an incumbent, your ability to innovate is outside that organization. I believe if you find the right sponsors, you do your homework, you are persistent, I think there is a great opportunity to innovate. Innovate where you are.
AB: Brilliant. Dreams, reality, and determination.
FS: Yeah. Is it not a nice combination?
AB: That’s a fantastic combo. Excellent.
Well, thank you Federico. I’ve enjoyed enormously learning from you and best wishes for the growth of your business.
FS: Thank you, Andy. I really appreciate the opportunity and we definitely will keep you posted with our progress.
AB: I’d enjoy that.