CDPQ to Leverage Technology?
announced a new integrated approach to technology:
Caisse de dépôt et placement du Québec (CDPQ) announced today a new structure to maximize its impact in technology. This integrated approach, under the leadership of Alexandre Synnett, who is appointed Executive Vice-President and Chief Technology Officer, aims to leverage technology for performance, both in investment and risk management activities and in transforming the organization.This is a very big shift in strategy at CDPQ and I congratulate Alexandre Synnett for being appointed Executive Vice-President and Chief Technology Officer.
“For many years now, CDPQ has made the integration of disruptive technology a strategic priority. With this new integrated approach, we will be even better positioned to seize investment opportunities and strengthen our business practices,” said Charles Emond, President and Chief Executive Officer of CDPQ. “Technology will play a central role in all our activities going forward. The current crisis, which is accelerating the adoption of new technological solutions in every industry, has strengthened our conviction.”Previously Executive Vice-President, Digital Technology and Operations, Alexandre Synnett notably led the acceleration of CDPQ’s digital shift. In his new role, he will pilot the new technology strategy that aims to create even more value for CDPQ and add investment and technology risk management activities to his responsibilities, in addition to the organization’s digital transformation.
Three pillars to unify CDPQ’s approach to technology
The new integrated approach is based on three pillars. The first one aims to anticipate and capitalize on investment opportunities created by disruptive technology and models. Led by Tom Birch, Global Managing Director, Venture Capital and Technology, this team will work on increasing investments in technology companies from around the world, at all stages of maturity and across all asset classes. The team will also continue to work closely with the group responsible of CDPQ’s investments in Québec.
The second pillar aims to protect invested capital by further integrating technology into risk management at CDPQ. In addition to allowing it to better assess the impact that technological innovations have on its portfolio companies, this aspect aims to enhance CDPQ’s market intelligence on the business models of the future.
The third pillar involves the digital strategy and will focus on CDPQ’s transformation so that it remains an agile and cutting-edge organization, including through augmented and artificial intelligence, the digital experience and the integration of different technological innovations into decision-making processes.
The creation of an integrated global research and data science group, under the leadership of Jim McMullan
In addition, the Global Research team, which is already a key partner to CDPQ’s investment teams for sectoral research, will add an additional dimension to its work by including, going forward, all analytical services and data sciences capacities, which were previously part of various teams across the organization. This new integrated group, led by Jim McMullan, Head of Global Investment Research, will create a multidisciplinary team that will provide a sought-after expertise to both internal teams and existing and potential CDPQ partners.
Charles Emond, President and Chief Executive Officer of CDPQ, is absolutely right: “Technology will play a central role in all our activities going forward. The current crisis, which is accelerating the adoption of new technological solutions in every industry, has strengthened our conviction.”
Any organization managing hundreds of billions across public and private markets which isn't leveraging technology to improve performance will be left behind.
CDPQ is actually following CPPIB which in late October 2018 appointed Kelly Shen as Senior Managing Director & Chief Technology and Data Officer (CTDO), a newly created role on the senior leadership team.
However, Ms. Shen's focus on technology and data infrastructure is more narrow:
“Together with her team, Kelly will further develop CPPIB’s Technology and Data strategy, which will help us advance operational efficiency by streamlining processes and automation. Achieving a data-driven edge is another priority to strengthen CPPIB’s international competitiveness,” said Mr. Machin. “Kelly’s impressive experience aligns with our strategic focus on hiring and developing people with technical knowledge, business acumen and creativity.”If I properly understand CDPQ's new integrated approach to technology, it will do this and a lot more to make sure they are able to seize investment opportunities and strengthen their business practices.
So, it's not just about "advancing operational efficiency" by streamlining processes and automation, it's much broader in scope as the three pillars aim to:
- Anticipate and capitalize on investment opportunities created by disruptive technology and models. Led by Tom Birch, Global Managing Director, Venture Capital and Technology, this team will work on increasing investments in technology companies from around the world, at all stages of maturity and across all asset classes. The team will also continue to work closely with the group responsible of CDPQ’s investments in Québec.
- Protect invested capital by further integrating technology into risk management at CDPQ. In addition to allowing it to better assess the impact that technological innovations have on its portfolio companies, this aspect aims to enhance CDPQ’s market intelligence on the business models of the future.
- Enhance the digital strategy and focus on CDPQ’s transformation so that it remains an agile and cutting-edge organization, including through augmented and artificial intelligence, the digital experience and the integration of different technological innovations into decision-making processes.
Now, in order to do this properly, CDPQ has to hire the best talent and I have already sent an email to Charles Emond, Alexandre Synnett and Jim McMullan recommending they hire two previous CDPQ employees to help them with this new initiative.
To be fair, I haven't asked these two former CDPQ employees if they'd be interested in returning back to the organization. Like me, they couldn't stand the politics there but I see the new leadership and think they would fit in perfectly and add significant value to this new initiative.
Let me be blunt: CDPQ needs to hire the best of the best to really get this initiative to the next level and this isn't the time for politics or pettiness, it's time to sit down and say: "Who are the best men and women we can hire to transform our technological capabilities throughout this organization, we are going to go after them hard, especially if they are in are own backyard."
Leveraging technology is meaningless unless you hire the best people to do so. In a post-COVID world, CDPQ, CPPIB, OTPP and other large Canadian pensions are competing among each other and premiere technology companies to attract the very best talent to work at their organization.
And the millennial techies aren't into office politics and titles, they're into quality of life and flexibility, so you not only need to hire top talent, you also need to hire amazing managers to motivate them and make sure they can keep them at your organization.
Anyway, that job now falls under Alexandre Synnett and I trust he will do an excellent job.
This is a huge transformational shift for CDPQ and it is one which will touch all aspects of the organization, so kudos to Charles Emond for getting this new initiative off the ground.
And while I don't know much about Tom Birch, he too has a big job and will be working with top venture capital and private equity funds focused on technology.
As far as Jim McMullan, this guy is very solid. Last year, he warned about the giant risk in private debt and I think it's still there and has gotten worse since the pandemic took hold.
Jim is the Head of Global Investment Research and he will now lead a new integrated group focusing on global research and data science. It will be a multidisciplinary team that will provide a sought-after expertise to both internal teams and existing and potential CDPQ partners.
I don't think you could have picked a better person to lead this team.
Lastly, CDPQ also announced today an investment in the form of a loan to LCI Education, a large network of higher education institutions in Quebec:
The network has some 20 campuses around the world, including LaSalle College in Montréal, one of the largest bilingual colleges in North America that is known for its fashion, arts and design programs.Keep an eye on Kim Thomassin, I believe she's being groomed to be the next President and CEO of CDPQ when the time is right.
The financing provided by CDPQ aims to support LCI Education in achieving three key objectives for its development: accelerating its online education initiatives, pursuing its international expansion and succeeding in its family business succession process.
With LaSalle College, LCI Education is a pioneer in online education in Québec, an area of expertise it has cultivated for more than 20 years. The loan granted by CDPQ will help LCI further expand its well established digital presence, as well as transform teaching and the student experience through new technology. Thanks to its accreditation by the Ministère de l’Éducation et de l’Enseignement supérieur (MEES), LCI will offer new methods of instruction, both on campus and remotely, starting this fall.
In the last few years, LCI has implemented a structure and operational framework to execute an ambitious growth plan through international acquisitions. The LCI Education network comprises 23 higher education institutions spread over five continents, with approximately 3,000 employees providing instruction each year to more than 17,000 students worldwide. This additional financing will enable LCI to pursue the expansion of its international network from its head office in Montréal and identify new potential acquisitions.
In addition, through this transaction, CDPQ aims to support LCI in its family succession process, which was successfully launched by the Marchand family, the company’s owner.
“We are extremely proud to be able to rely on a strategic partner such as CDPQ in pursuing our international growth. Our goal is to offer the best possible learning experience to our students by maintaining a diversified, people-focused and forward-looking team and by capitalizing on new technology,” said Claude Marchand, President and CEO of LCI Education.“LCI Education was a forerunner in its sector’s digital transformation, and we are delighted that this financing will enable the organization to refine its offering even further,” added Kim Thomassin, Executive Vice-President and Head of Investments in Québec and Stewardship Investing at CDPQ. “This transaction is also an opportunity to contribute to the international expansion of a leading Québec company going through a family succession process.”
Alright, let me stop there, for now Charles Emond is in charge and this new integrated approach to technology was long overdue and I truly hope it takes off and adds significant value over the long run. Just make sure you hire the very best talent, even if it means recruiting former employees.
Below, Ashu Avasthi, National Leader - Digital Transformation at Grant Thornton, discusses the competitive advantage of leveraging technology. He's focusing on small to medium-sized businesses, many of which CDPQ invests in.
And Glenn Hutchins, North Island Chairman and co-founder of Silver Lake Partners, one of the best private equity funds focused on technology, discusses what he sees next for the US economy.