In just under five years, Bob Patton has grown Ernst & Young Advisory into a force to be reckoned with—turning the practice into a $2.4 Billion, 10,000-employee juggernaut. Here's how.
There are a few seminal moments in everyone's career and Bob Patton vividly remembers one of his: It was September 2008 at the height of the economic collapse when banks were failing and the stock market was plunging. Patton was about to go before Ernst & Young's board to request approval of a $500 million investment plan to grow the Advisory practice, which had recently been split out of Assurance.
"I remember telling my wife that I might be home early because it could be a really short meeting," Patton recalls. "That was a pivotal moment for me and the practice. One of Ernst & Young's core cultural tenets is the courage to lead, and I am so proud that our board stepped up and showed the courage to approve that plan. If they hadn't, everything would be different. I probably wouldn't be here talking to Consulting magazine right now."
Today, almost five years removed from that day what Patton, who is now Americas Vice Chair of Advisory Services for Ernst & Young, has been able to accomplish is nothing short of amazing. Since 2008, the Advisory practice has grown at more than 20 percent annually and will be at $2.4 billion at the end of this fiscal year, which runs through June 30.
"When I think back over the last five years, to me it's about thriving in turbulent times," Patton says. "That's what it's been about for our clients, and that's what it's been about for us. While everyone else, it seemed, was battening down the hatches, we were doubling down on consulting because we thought we could truly make a difference. We recognized that challenge is a catalyst for change and change is a catalyst for growth. I think that's exactly what we saw in 2008 and that's exactly how it played out."
Patton says he sees 20 percent annual growth continuing over the next several years. "We think 20 percent organic growth is about the right number over the next several years, and even that is probably running a little hot." At that rate, Advisory will double over the next four years to become a $5 billion business.
Megatrends
Patton says there are three megatrends that were, and will continue to be, major accelerants for clients and Ernst & Young. They are: the impact of the financial crisis, the rise of emerging markets and the digital revolution.
To address the impact of the financial crisis, Patton says the firm focused plenty of attention on financial services, the sector most impacted by the crisis. It rolled out a three-pronged strategy around saving banks, changing banks and growing banks with a strategic focus on answering the question: How does a financial institution make money in this new world? "Today, our financial services practice is the fastest growing segment of our business, it is the largest industry segment with 3,000 professionals, and it is the top practice in risk and regulatory reform in the world," he says. "And this economic uncertainly will continue to be a challenge over the next several years."
Meanwhile, Patton says the rise of the emerging markets is like nothing the world has ever seen. "It's absolutely incredible," he says, with "massive population shifts, massive demographic shifts, massive consumer spending shifts, massive capital shifts and massive talent shifts."
Patton points out that some 50 percent of GDP and 30 percent of consumer spending is now coming from emerging markets and with it comes plenty of opportunity.
"How do you streamline and optimize in developing countries? How do you address slow growth in developing companies? And how do you take advantage of the opportunity in the emerging markets?" he asks. "Clients are struggling with these issues."
Clients are also struggling with making sense of the digital revolution, he says. "There are 35 trillion gigabytes of digital information being created every year and clients are just inundated with all this information," Patton says. "How do you leverage digitization to create a better customer experience, how do you leverage it to connect better with your employees? How do you use it to make your operations more efficient? We have a deep heritage around performance analytics. We are really good at data mining and data profiling. And this is not a technology issue, this is a business issue."
Patton says the firm has recently won several advanced analytics engagements against major competition because of Ernst & Young's approach. "It really is about solving business problems and using analytics to connect with customers to make better decisions," he says.
Focused Strategy
It's that business perspective to solving client problems that has been a key differentiator for the firm, Patton says. Ernst & Young recently secured a multi-million-dollar engagement with a mega life sciences company competing against several major consultancies. The reason?
"The client said that we brought a business perspective and addressed it as a business problem, and we brought the best integrated team," he says. "We literally brought accounting skills, tax skills, risk skills and performance improvement skills. I hear this over and over again.
Clients say that Ernst & Young brings a laser focus on making it about business problems, it is a major differentiator for us."
And that's no coincidence. Patton says the firm's due diligence back in 2008 led to the development of what he calls "the EY wedge," a market position focused squarely on the business performance space, right in the middle of the strategy and systems integration space. He says Ernst & Young looked at the landscape of the consulting market and felt like customers had plenty of choice in corporate strategy but didn't think costumers had adequate choice in the business performance market.
"We felt like this was an underserved market and the ability to be the only global, scale player singularly focused on this business performance space was a huge advantage," Patton says. "It goes back to our vision to make a difference. We rolled this out in 2008 and one thing we learned is the power of purpose. We set out to make a difference by transforming industries, improving businesses and enhancing the lives of our clients."
And to solve today's messiest problems, Patton says a firm has to be global and "Ernst & Young is one of the most global enterprises on the planet," he says. "You've got to be innovative; you can't just bring bodies, you can't just bring methods. These are global transformations, these
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