Diversify wisely featuring Chuck Palmer and Ulrike (Rike) Harrison with Wipfli
Written by John P. Palen for Minnesota Business Magazine September 2013
Just one word can sum up how a friendly, small-town business can achieve global corporate success: "diversification." Taking feedback from clients is one way to diversify into new products or services. But growth also requires analytics, processes, outside counsel, and decision-making that must translate to daily work.
Sustaining a non-corporate, "Minnesota nice" culture becomes more difficult both internally and with client relationships through such growth. But one company has managed to both grow and keep its heart.
Wipfli has expanded by cultivating a diverse array of services. With 17 different business units in four locations in Minnesota, including a division for M&A and capital consulting and another for independent investment advisory services, Wipfli is not only one of the largest public accounting and consulting firms in Minnesota, but also in the United States.
Early on, Wipfli made diversification a long-term strategy. While other large companies prioritize analytics ahead of sustained client relationships, Wipfli took an inverse approach, using relationships as a bridge to develop new services and markets. "We want to be a business partner, not only their accountant," says Chuck Palmer, regional managing director in Minnesota. "Our clients provide us with constructive feedback that affirms they appreciate access to our diversity." Wipfli is constantly monitoring its clients' activities, challenges, and expectations.
Still, analytics and processes do follow once Wipfli recognizes a client need. The company reviews several aspects of diversification before pulling the trigger on a new service. For instance, if demand is high, it still needs to determine if the market is saturated with competition and whether potential clients will pay a rate that exceeds the cost of producing the new service. It also considers if it can grow the service by acquiring an existing provider or if it's more cost effective to develop it in-house.
Once Wipfli weighs the pros and cons of adding a particular service - and finds expansion desirable - it acknowledges the fact that diversification will always cost more and take longer than expected. In the end, diversification must contribute to the company’s progressive growth - so it has developed surveys, a client advisory board, and sophisticated analytics on win/loss, client use, and demand to determine a service's fit with the established service mix.
"To use client feedback properly, you have to be committed from the top," notes Ulrike (Rike) Harrison, chief growth officer. "We are very good at getting client feedback, but more importantly at using it to create positive change."
While diversifying allows a company to meet more needs, companies that try to be all things to everybody aren't really diversified. Wipfli has sustained its core accounting, tax, and consulting services as a strong foundation for more specialized consulting. "We have full-time dedicated resources for each of our business units as well as good partners outside of Wipfli to augment our expertise," Palmer explains. "Having a person or two who can sometimes perform a particular service won't result in long-term growth of that service."
It might follow that the more services a business can offer, the broader the spectrum of clients and the more success that results. But Wipfli has shown that successfully diversifying takes a full-fledged commitment of people, tools, and other resources, as well as close attention to quality and client expectations. As they augment services through operations in India, increased specialization, and adding partners such as Microsoft, sustaining that local, small-town feel is more challenging. But Wipfli is keeping an ear tuned to clients something that businesses of any size can't forget.
Tips for Diversification
- Determine the true need, the significance, and sustainability.
- Figure out if you can produce it profitably and sell it at a value-perceived price point.
- Will it enhance your brand and service or will it detract?
- See if there are opportunities to acquire it rather than create it in-house.
- Is the market ripe for an unmet need or is it moving toward saturation