As the world has become more complex, so has the role of chief operating officers. And with technology implementation being assigned as one of the many hats they must wear, digitalisation remains one of their biggest challenges.

“We've always been in a mode where there is change; we've always been, let's say, in transition mode,” said Genio van der Schaft, the Asia COO of Dutch pension fund APG Investments.

“If I look back 30 years ago, the world was a bit more simple. You had a front office, and you had a back office. Nowadays, the two of them are being dwarfed by a mid office, you know, whether it's regulation, whether it's compliance, risk management, all these kind of things,” he said during the ‘The agent of change’ panel at AsianInvestor’s COO Investment Week on Wednesday (April 14).

Genio van der Schaft

To simplify matters, he identified four key areas the company can be grouped into: investment operations, digitalisation, collaboration, and talent management.

“I would distinguish investment operation as the core - it always has been and always will be I think,” he said. “Nowadays, the buzzword is obviously digitalisation, [which includes] data warehousing, data management. I think that is the next step after investment operations.”

David Ng, chief operating officer at CSOP Asset Management, agreed that “digitalisation and digital transformation seems to be the buzzword nowadays, I think it must be near the top or at the top of every COO’s agenda”.

However, he pointed out that many organisations struggle with with the concept, and that senior management often gets the approach completely wrong.

“BCG research I read recently showed that at least 70% of the digital transformations done by organisations actually fail. I think that's a very stark statistic. And personally, myself, I've been through a lot of different conversations, transformation conversations, and most of them seem to start with the technology dimension… [But] I think that's the wrong starting point,” Ng said at the panel.

Companies focus too much on digital technologies but often fail to put enough focus on ensuring the right personnel are put in place to enable digital transformation, he said.

“[Technology] is a double-edged sword. You take a very bad process, and you kind of amplify what is bad about it using technology. I think that's the issue here,” he said. “Hire the right people for the right role. And then implement, improvise and repeat.”

Alice Tang

PEOPLE OVER PROGRAMS

At asset management firm Moelis Australia, COO Alice Tang echoed the same point and said she dedicates much of her time to people management.

“Having the right people is very important,” she said during the panel. “I probably spend about 25% of my time thinking about people, either recruiting, looking at incentives, looking at how the team resourcing work, and really finding talent that can grow with the firm.”

She added that having a forward-looking mentality when hiring makes a difference too. “What the firm looks like today could be quite different in two years’ time. So finding people who augment the current team skill base and expertise, and then also grow as the firm grows,” she said.

In the past three years, the asset management team has doubled in size and Moelis is looking to expand in Asia, she added.

APG’s van der Schaft understands all too well the need to adapt to change and growth. He recalled that in the past 85% of APG’s capital was invested within Holland, mainly in fixed income.

Since then however, the Dutch pension fund has expanded into Asia, having set up offices in China in 2019, expanding teams for real assets, and targeting infrastructure and natural resource assets in Southeast Asia.

“When I came onboard, we started internationalising, [and branching out in] equity portfolios, and then afterwards, obviously, alternative investments. The most important thing, time and time again, is to think about your operating model,” he said. “Sometimes we opted for at arm's length, sometimes we opted for in house, sometimes we started with index, to take on active management ourselves later on.”

“We’re pretty unique, as far as Dutch pension funds are concerned. We are the only Dutch pension fund having offices outside of our home market, and that's for a very specific reason,” he said. “If you really want to be part of the deal, if you really want to understand what's going on, you better be in the market, right?

“Recently, we opened to Beijing and Shanghai, because we think China is becoming more and more important, and also we don't think you can kind of invest in China without being there, or having the expertise. So those kinds of things have an impact on how we organise yourselves and your operating model,” he said.

AsianInvestor’s COO Investment Week is being held from April 13 to 15, 2021.