How EY Launched an Innovation Program

November 4, 2016

How do you jump-start an innovation program inside a global professional services firm?As part of our IL Live series of conference calls, we spoke recently with Jeff Saviano, the innovation leader within EY’s tax practice for the Americas, to answer that question.

EY traces its roots back to 1849, and operates in more than 150 countries. It had $30 billion in revenue in the most recent fiscal year, and employs 231,000 people. Saviano leads a team that discovers and brings to market new tax services and creates an innovation culture inside the firm’s tax practice.

One big challenge, according to Saviano: “Making sure that we’re not just asking people to spend time on nights and weekends to build something new, [and] move us in a new direction. If you’ve got a manager who is working 60 hours a week and doing great things for clients, it may be hard to expect that you’re going to get that manager to move mountains on nights and weekends.”

The Initiative

We started our tax innovation initiative after the passage of the Affordable Care Act — Obamacare. We looked at that, and what ultimately led to about 20,000 pages of regulations, and decided that there has to be something here to help our clients. So we formed a team to take a look at it, and we ended up building a business around it. I led a team for a year to build service offerings, and then ultimately bring those to market.

In those early days, I got an audience with this professor at Northwestern University, Mohan Sawhney, who’s written quite a bit about innovation. In that meeting…he was so emphatic in his advice to me about how the number one thing you can do is create a visible place for innovation — a place for people, in an organization like ours, to go with their good ideas. That’s what we did. The way we started was with an innovation council made up of a cross-section of people based on levels, and geography, and their experiences, and brought them together.

Communicating the Initiative

We communicated the heck out of this initiative, made it visible, and got lots of great input and interaction with the tax practice that way. But I realized that we needed some help. We met a partner over at Innosight, David Duncan, who has been with us at every step of the journey. We also used great technology from Imaginatik to launch challenges….around a specific question.

I remember asking one particular question around digital disruption and how our clients are impacted by digital changes and the tax implications from that. We put a challenge out and got a tremendous response and actually built some services based off of that.

DIY Innovation

We’re just in the process now of launching our own version of Adobe Kickbox, a program that encourages and helps individuals be more innovative. We got the idea through one of the InnoLead Field Studies. It was on one of those trips that we watched a presentation about Adobe Kickbox. It’s a really neat culture-driven experience and a great fit for a firm like ours to empower do-it-yourself innovation.

Photo by John Werner /

You don’t need to be part of a formal team, building formal services, but how do you build the innovation muscle of your people? For us it was really about giving people the time to do something.

In a client-serving organization like ours, where everybody is measured by the hours and minutes that we spend on our clients each day, how do you give people the time to work on things that are interesting to them, and watch [the] amazing things that can happen at the individual and small team level if you just give them a little bit of a framework?

Finding the Funding & Time

Look at any big organization. Everybody has got an R&D function and budget. We are no different that. There is a necessity to allocate some funding to new service and product generation.

For us, it’s been about making sure that we’re not just asking people to spend time on nights and weekends to build something new, [and] move us in a new direction. If you’ve got a manager who is working 60 hours a week and doing great things for clients, it may be hard to expect that you’re going to get that manager to move mountains on nights and weekends.

[You need to] take people off the line. Put them on [a project] and really measure them differently. Find unique ways to measure them in a short sprint, so you’re not screwing people’s careers up, taking somebody out of client service for years at a time, but actually, you’re working with them in order to move their careers forward over a short period of time.

You got to keep the lights on in the current year, but invest for the future, too. It’s not easy… If you look at what are the ingredients to build something, finding the talented people with the time to spend on it is such an important part of it.

Innovation Across EY

We have lots of innovation teams across the firm. My innovation focus is the tax practice. We have four service lines: tax and our core audit practice, advisory and management consulting, transactions, and M&A.

Each of those service lines has an innovation function. We have a global team as well that tends to focus on a few ideas that could really be impactful at the firm level. There are various ways that we integrate and work across those teams, but [we] also feel empowered to do things independently and really drive our own innovation.

There is a fair amount of autonomy within the leadership structure, within our overall practice. …For any big organization and the bureaucracies of any big institution, you’ll just have to find ways to move efficiently.

Getting Focused on Five Threats

About a year-and-a-half ago, we did quite a bit of research on disruption and what we think is impacting the tax services industry and impacting our clients, tax directors, CFOs, and finance functions. That effort has led to quite a bit of activity and new services generated from what we’re calling these five disruptive threats of tax and corporate tax departments.

I’ve been writing and speaking quite a bit about that over the past year. That shaped a lot of our innovation function because of where we think these disruptive threats are coming from.

The first [threat, as an example] is around machine learning and our artificial intelligence. Tax is all rules. It’s complicated, but it’s not that complicated when you look at the advancements of artificial intelligence tools like [IBM’s] Watson… We can see that day coming. Certain elements of it are already here.

Really smart people using artificial intelligence today are doing so around much more life-changing events like applications in medicine. We all read and see what’s happening with extending artificial intelligence to driverless cars. All those people, eventually, the really smart artificial intelligence people are going to turn to finance and tax because of the very quantitative and rules-generated activities that tax would promote. That will have a profound change on what we do. That’s one that we’re spending lots of time with and we’ve actually seen some start-ups that are starting to do some cool things in that space.

How the Workforce is Changing

Professional service firms [are] so dependent upon all the really smart people, the workers. …There are clear trends around millennials starting at professional firms today — they are much less likely to be looking for full-time employment options in one place throughout their careers.

We’re seeing lots of interest in contingent labor, and starting to see some professional service firms respond [by] opening themselves up to using contingent workers on client engagements. I think that will be a game-changer.

I did a talk at a law school about six months ago, and it was so interesting to talk to the students and hear from them how open they were to arrangements like that. They wanted to work for four or five multiple firms [and see lots of different] opportunities. They really weren’t as interested in that classic opportunity of going to work someplace as a full-time employee.

That’s the very essence of what will change and what will impact professional firms if I look out in the next three to five years or so.

Legal Compliance

We have significant restrictions on us, being a regulated entity. We have independence restrictions. As an auditor of financial statements for public companies, we have strict restrictions on us, in [terms of the] services that we can perform for those and other clients.

We’re also regulated by others as well. We have strict controls to make sure that the stuff that we’re building, new services, are all done…with the highest quality and that we don’t run afoul of any of those restrictions.

We don’t come close to the edges.

The Highnote Foundry

The Highnote Foundry was a venture capital firm in New York. We essentially took that VC firm and hired a big part of that team and lifted them out into our tax practice in order to build new businesses for us and really face these disruptive threats that I was talking about.

We took a step back and looked at who’s in the best position in the world to build businesses? We looked at academics. We looked at other corporate innovation teams. We looked at classic tax people like us.

After interviewing tons of people and ideas, we saw something unique about the venture capital community. We found this amazingly talented venture capital team with a passion for doing something unique in the tax world. It’s been five months, but we’re about to launch something in the next month or so. [They] will guide lots of our innovation efforts for years to come.

It’s given us a window into the startup world and that community. Just by issuing a press release that we’re in the business and we’re taking this venture capitalist approach, we’ve had lots of startups approach us. …It’s been helpful to get that level of attention and see that there are amazing teams outside of our firm doing really interesting things that we want to get closer to.

Measuring Success

Ultimately, we measure success by new projects and new ways that we can provide value to our clients. That’s really the biggest way that we measure it. That’s what gets us out of bed in the morning from an innovation perspective — linking client problems and client needs to new solutions and then being able to tell stories.

That’s an element of how we measure success — the stories that we can tell of how we can satisfy our clients with something new and how to fix a problem that they had with an innovative solution. We’ve got tools that we build and metrics around that.

We end up reporting these numbers out to a leadership team. Most often, it will be a group of the stakeholders that comprise various leaders within the firm. That’s gone particularly well.