Ivan Martinez of Goldman Sachs Touts a Strategic Plan in a Changing World

Join Richard Chambers for a new episode of his Agents of Change video series, featuring conversations with internal audit leaders from some of the world’s most prominent organizations about innovation in the profession.

In this episode, Richard sits down with Ivan Martinez, Managing Director and Head of Internal Audit Engineering, Analytics, and Strategy at Goldman Sachs, to discuss the indispensability of having a strategic plan to provide the structure to respond with agility to a changing world, including:

• Vision alone isn’t enough — setting goals and breaking them down into objectives with clear results and accountability is key.
• The lack of a strategic plan creates inefficiencies in how internal audit can cope and adapt to change. 
• How Goldman Sachs took a collaborative approach to developing their multi-year  internal audit strategic plan.

Watch the full conversation, and read the can’t-miss highlights below.

Moving Outside the Internal Audit Vertical to Be an Agent of Change

Richard Chambers: Internal audit Agents of Change have been described as those internal auditors who are catalysts for transformation that creates value within the organizations they serve. What’s your view on internal auditors as agents of change? And why is it more important now for internal auditors to take on roles like that than ever before?

Ivan Martinez: Auditors have a unique position within the organizations in terms of understanding the risks, controls, processes, and culture. That unique vision of how the landscape looks gives a lot of opportunities for them to crosspollinate experiences and skill sets. It is important that one always keeps a sense of things that require changes not only for the verticals that they cover, but across the organization — meaning part of the larger fabric of the companies they work for. 

For example, a great risk that I see agents of change take is they don’t stay in the same role for more than three to five years. Even within internal audit, they are perceived as the people that want to take on more, want to change things. With that comes a little bit of risk — but that risk, I think, pays off more rapidly than by staying within one vertical. They want to change their landscape while they’re helping to change the organization, and they kind of burn out if they stay in one place too long. 

Vision Isn’t Enough — Strategy Is Key to Achieving Objectives

Richard Chambers: Our research, Ivan, found that agents of change have a strategic mindset. It’s one of the four characteristics. Now, you’ve been an internal audit leader at virtually every level. How mature do you think the internal audit profession is when it comes to strategic thinking, strategic mindsets, and management?

Ivan Martinez: In my 20 years being an auditor playing multiple roles and engaging in different capacities, one thing that I feel is very mature is that at the very senior levels, you have the right people, broadly speaking, who have that strategic vision. 

I think when it comes to developing, articulating, and ideating the actual strategy and implementing the strategy on a multi-year basis — that’s where, I think, the lack of maturity today exists. One can have a great vision, but at the end of the day if you don’t set clear goals and then further break down those goals into multi-year objectives with clear results and accountability, it is very difficult to achieve it. 

What I observe is that there’s a bit of analysis paralysis in terms of thinking too much in terms of all the possibilities. I think keeping it simple, doing something well, proving the concept, and then scaling it up — I think this is what I see to be more effective. 

To Cope With Change, Internal Audit Needs a Strategic Plan

Richard Chambers: The new IIA Standard, Standard 9.2, requires CAEs to develop a strategic plan and that the internal audit function would be led in terms of that strategic plan going forward. I had someone recently who said to me, “with all the change going on, why would we want to develop a strategic plan?” We need to be agile enough to address the unpredictable changes that are coming. My answer to that is you need a strategic plan precisely because of all that change. What do you say to someone who says, “I don’t need a strategic plan. I can lead my internal audit function one year at a time”?

Ivan Martinez: I would agree with you — the lack of a strategic plan is inevitably going to create inefficiencies in how you actually cope and adapt to change. I think the first thing that I would say to a CAE that may have objections to implementing because it’s costly — I get it. It definitely takes investment. But having a day-to-day tactical or reactive approach to change is by far more costly than having a strategy that can actually cope with change and serve as a framework for how you actually adopt change. 

You brought up a very important point about agility. Agility can be applied tactically and strategically. You can be very good at tactically doing things, but that may not be the most efficient way of doing it. I think you are nimble once you have a strategy and you can actually have a framework that can repeat those processes. We’re going through that very situation right now. Coverage across a global bank like Goldman Sachs involves many lines of businesses, many control functions, and having one strategy that permeates across all of those areas is very difficult to do. So the way we start is simple — just do one at a time. Make sure that you have flexibility baked in. But at the end of the day, it is going to be more time-efficient and cost-effective. 

How Internal Audit Can “Skate Where the Puck is Going”

Richard Chambers: Great observation. I think it was the famous hockey player, Wayne Gretzky, who’s very famous quote is “I don’t skate to where the puck is. I skate to where the puck is going to be.” To me, that’s what strategic planning enables a Chief Audit Executive to do. If your function is going to be undertaking a major digital transformation or expanding into new markets in three or five years, having a strategic plan enables you as the audit leader to position internal audit to be able to assist, right? 

Ivan Martinez: Could not agree more, especially now with the disruption that’s being caused by AI in particular. We’ve seen it also to some extent with the use of applied data analytics and data science in the audit function. The effectiveness of applying these could only be successful if you have a strategy. What are you trying to measure? What are your objectives? What are the resources you are trying to obtain? How do you actually maintain the framework? I think having a governance structure at the highest level within the organization is an ingredient that’s necessary for really implementing successful strategies. 

I think being retrospective or having insights on the present can only get you so much. Knowing where are you heading and how you are anticipating those changes — that’s the cause of the function and the strategy going well. 

Taking a Collaborative Approach to Developing a Multi-Year Strategic Plan

Richard Chambers: It sounds like you are in the process of putting a strategic plan together for your own function. How collaborative is that process? 

Ivan Martinez: Our CAE was able to articulate a multi-year program involving all the loudest voices within the organization to make sure that the consensus was built around the approach — not even implementing the strategy, but that we have to have a multi-year strategy.

What that forced was a natural prioritization of where the right focus would be. Once you select your top 3 to 5 strategic goals, then you have a more manageable framework to build. It’s fundamental, in my opinion, to actually work with experts who have done this to help you along the way. I think the articulation is one part, but the second part is how do you automate and integrate the workflows that result from these new strategic goals within your day-to-day workings. You need to measure the success of your strategy and what you’re covering.