Digital Transformation and Innovation at EY with Andy Baldwin, Global Managing Partner

How can digital transformation at professional services firms be supported by a culture of experimentation and innovation? This was the question under discussion at Alternative Event’s 8th Tech Leaders Hangout. For panellist Andy Baldwin, EY Global Managing Partner – Client Service, embedding an ‘innovation culture’ across numerous global offices came with its own set of challenges.

The first phase, which Andy called ‘Innovation: Version 1’ was a period of intense energy devoted to innovation, involving many different activities – including the creation of a Global Innovation Leader. Most importantly, innovation was positioned to link to pretty much everything – tech, data, ecosystems. “And when a new Global Chairman and CEO was appointed recently, innovation, transformation, and tech were at the heart of the new strategy. Innovation was also connected to business outcomes; whether that be transformation of our service delivery model or new growth,” he said.

‘Innovation: Version 1’ also saw EY give a lot of thought to building the right infrastructure to support innovation from the bottom up. “So that you can surface the best ideas and bring them through the organisation,” said Andy. The challenge was striking a balance between top-down innovation efforts while also harnessing bottom up. The answer lay in ‘Innovation Concierges’. “Forty percent of innovative ideas can be solved by an existing asset. We put infrastructure around an asset register and used software to capture every innovation idea that came up. Now we can track the top innovation projects,” he said.

And innovation had to be formalised in budgets, rather than being something that happened at the side of people’s desks. “We ringfenced investment and provided multi-year innovation investments. We took a percentage of the existing budget, as well as creating new budgets. We rolled out a consistent benefits tracking model of how we can look at the benefit of innovation – whether revenue growth or productivity,” said Andy

Of course, there are barriers. Such as the impact of EY’s private equity approach to investment, where you get investment once you hit a milestone – upping the risk of cancelled projects. Then there is the question of how to scale and industrialise. “We have lots of ideas, but they never get beyond a few offices or a country. As a partnership, we also wrestle with what is in the interest of the global organisation and what is in the interest of the individual member firm,” he said.

Another barrier to innovation is that professional services’ obsession with personal revenue drives the wrong behaviour, according to Andy. He advocated scrapping utilisation as a metric: “Move away from hours, time, and rate. Look for the value outcome.” He saw a huge pivot happening around how the industry creates value. “Instead of an expert charging their time, the value will be made by the individual, data, and technology,” he said. And the knotty problem of how exactly to get this value for the tech and the data piece is the biggest thing he is wrestling with at the moment.

Andy Baldwin

As EY Global Managing Partner — Client Service, Andy leads the execution of their global strategy. He has overall responsibility for EY's three geographic areas and four service lines so that the 200,000 client servers can provide exceptional service wherever clients do business.