Digitizing for the future

How does EQT approach digitalization?

Improving the digital maturity of the portfolio companies requires having the necessary competence at EQT and acknowledging that the private equity industry itself is also a target for digital transformation. In addition to launching EQT Ventures to invest in and support the development of tomorrow’s winners, EQT has hired some of the industry’s strongest profiles from top tech companies such as Google, Spotify and King.

EQT’s digital team has a dual role – supporting EQT’s existing portfolio companies and pollinating the ‘EQT mothership’ with digital skills and new, more efficient ways of working. After all, we can't tell the portfolio companies to digitize unless we are doing it too – or, in tech lingo, ‘eat your own dog food’.

How does EQT introduce digital change across its 70 portfolio companies?

The work EQT’s digital team does varies depending on the specific portfolio company. We don’t just focus on one area, instead we take a holistic view to adding both technology, as well as talent and skills, across an entire business. In any company, there are opportunities in virtually every function and domain. We aim to go for the big ones first.

What are the biggest challenges of introducing digital transformation at the portfolio company level?

We have tremendous respect for the EQT portfolio companies’ management teams and are not aiming to lecture them about their respective markets or disruption in their industries. Having said that, we can almost always identify gaps between the portfolio companies and best-in-class performance when it comes to, for example, utilization of installed technology, approaches to innovation, testing-and-learning, leveraging data assets, marketing, cross-functional collaboration and personal productivity.

We sometimes find ourselves 'selling the problem' – the individual portfolio company may not experience a problem simply because it may not be aware of the full value certain technology, digital ways of working and digital talent can deliver. It is therefore crucial for EQT to have CEO buy-in and commitment to lead the digital journey, with our digital team there to guide and support.

What is the cost of not addressing digital innovation?

Successful companies have always leveraged new technology and adapted to change. The difference in the digital transformation is not fundamentally different from any other shift, except that its rate of change is greater. In the long term any company who ignores fundamental shifts in markets and society will die. But in the the short term, ignorance means opportunities lost and a gradual erosion of competitive advantage.

Where has EQT seen digital transformation make the most impact at portfolio level?

We haven’t yet seen a portfolio company through a full cycle, but typically the first area where we see digitalization deliver significant value is in marketing. In too many companies, legacy marketing is considered a cost centre, something you have to have, but can't really measure. We simply don’t accept such lazy marketing. By leveraging digital, marketing can be treated as a measurable investment that is focused on value creation. EQT applies the same mathematical rigor to marketing as to acquisitions.