I often find that most people and companies (including startups) don’t understand the function of Business Development. It is often misinterpreted with Sales.
Looking back into some content I created in the past, I compiled it all in one single post and updated it. I hope this will help you understand Business Development, namely on how it differs from sales.
Even though this post has a broad application, Business Development is key for aspiring young new entrepreneurs. It is a need all startups have from day one. In fact several fail because they misunderstand business development and sales, thus building a solution that no-one really wants to buy (I will develop this further in other posts, subscribe to get free early access).
Purpose of Business Development
Even the purpose of doing Business Development is a topic of discussion among experts. I love the definition by Scott Pollack in his post What, Exactly, Is Business Development?. Scott found, what he calls, the Grand Unified Theory of business development. It goes as follows: Business development is the creation of long-term value for an organisation from customers, markets, and relationships. Finding Scott’s definition of Business Development was for me, as a Business Developer, a huge relief. Finally, something I could relate to!
Nevertheless, I am still not 100% satisfied. What about the role of technology and industry on Business Development. For example, when coaching or mentoring a company in developing a new offering, I focus on the problems of a target market and try to understand which solutions/features interest them. This is, more and more, enabled through technology. What about the now so trendy world of Growth Hacking? Can it not also be the role of a Business Developer (especially in SMEs where one must embrace several simultaneous roles)? I can’t help to feel that the quest for long-term value is, in itself, the definition of Business Development. My own description follows:
Business Development is the creation of long-term value.
I know that this definition is not explicit, and that’s fine. That’s why Business Development has been in vogue recently. Because it’s complex. It’s not a task that can be performed by a machine. It’s a strategic task and is all about understanding the context and the interactions between the different elements of value for an organisation. The somewhat contradicting definitions of Business Development stem from the several possible associations made with long-term value.
10 possible definitions of Long Term Value:
- SCAs (Sustainable Competitive Advantages);
Business Development, not Sales!
Business Development, unlike sales, is not about get-rich-quick schemes. It is extremely focused on the long-term strategic benefits that a business can create. Thus, definitions focusing only on income and revenue do not grasp the full spectrum of Business Development activities.
Companies nowadays, either multinationals or SMEs and startups, are equally, if not more, focused on sustainable business growth.
In the current economic scenario bringing together the business development and innovation bodies of knowledge can become a major influencing factor for strategic decisions of companies to achieve sustainable business growth.
Obviously cash still plays a major role. Mostly SMEs and Startups need cash in the short-term, or they simply close down – and that is a great challenge!
What is Business Development?
It is key to understand what exactly a Business Developer does. Here are some answers you can get if you ask around:
- BizDev is “Sales”
- BizDev is “Partnerships”
- BizDev is “Hustling”
If you accept my definition of the purpose of Business Development, you will agree that none of these is accurate.
I put it in the following way:
Business Development involves strategy, marketing and sales.
I have a very graphic memory. I try using simple images to define complex concepts. Here is the image that pops up in my mind when talking about Business Development. I call it the Sun Tzu’s Golden Triangle of BizDev (I just love this name).
The beauty of it, for me, is the fact that this image, as simple as it may seem, is a tool I use on a daily basis on consulting projects. It is a constant reminder of how my Business Development activities must be aligned and creating synergies with Sales, Marketing and Strategy.
Example: The first thing I think about when looking at the line connecting Marketing and Strategy is, obviously, Strategic Marketing. But it also makes me think of how to plan and execute the marketing activities in order to ensure a smooth connection between strategy and marketing. The same is valid the other way around. What kind of input can marketing activities have for overall strategy? A lot! Especially when trying to innovate.
Doing this exercise with an evolutionary mindset helps me tackle the full range of Business Development activities.
Make it Happen
Step 1 – Align Strategy and Business Development
Generally speaking, Business Development is a lot about identifying new business opportunities (what some call New Business Development) and caring for existing business. But what are the tactics available for a Business Developer?
“Tactics without strategy is the noise before defeat”
by Sun Tzu
Good Business Development starts with a strategy. This is closely related to how one measures success since it defines our goals and will, therefore, guide all processes. The strategy may, in some cases, lead to sales focused Business Development, nevertheless, the beauty of it all is the fact that a myriad of strategies are available out there.
TIP: What do you think is the best strategy if you are trying to become an entrepreneur? Focusing on selling your “dream product” or validating a product that is actually desired by a sizeable amount of people?
Step 2 – Mindset
Before getting operational, I always like to start with two underlying concepts:
- Innovation, Innovation, Innovation – it’s a must
Whatever the strategy is, innovation is key. Almost 90% of businesses believe that innovation is a priority for them to achieve sustainable business growth.
- Monitor, Evaluate & Iterate
Growth implies knowledge. Knowledge of your customers, partners, company, product, etc. Whatever you do, you must measure, analyse and adapt.
Step 3 – Scope of action
I provide a non-extensive list of areas of action that concern Business Developers on a daily basis. It obviously varies depending on several internal and external factors. The tactics used are highly dependant on the strategy. These may involve sales, marketing or even activities traditionally viewed as the responsibility of Business Development. These are the ones I see most commonly:
- Customer Focused
How to find new ones and/or extract more value from existing ones?
- Relationship Focused
How to maximise value through current partners and suppliers and/or new ones?
- Organisation Focused
How to promote organisational efficiency?
- Strategy Focused
Guarantee Business Development and Strategy are creating synergies and aligned
- Knowledge Focused
How to stay up to date on new developments in the industry?
As a business developer, you must think creatively about everything you know about the business. This may be identifying anything from new market segments and sales channels to new products.
Side comment – Metrics
As a business developer, I have initially struggled with the concept that no success (whatever that means in a particular period of time) may not be a consequence of lack of effort. In fact, my epiphany moment was understanding that success is guided by undertaking the right actions at the right time, thus the right effort. Identifying a lot of opportunities means nothing at all. The secret to success is being able to prioritize all the opportunities and pursue them accordingly: remember the importance of monitoring, evaluating and iterating.
I apply a feedback-driven methodology allied to actionable metrics. Obviously, metrics depend heavily on your business model and industry. Here’s a sneak peek into my framework of metric definition.
Even though all of these dimensions are relevant for whatever business and must, together, provide a clear, actionable, overview of business status quo, some might be less important for specific business models.
For example, Dropbox’s success is closely related to its referral program, thus monitoring and analysing referral metrics was a priority compared to others. The same would not necessarily apply for a marketplace service where, at first, the focus is on retention metrics (such as inventory growth).
Business Development is necessary nowadays for businesses to achieve sustainable business growth. It focuses on creating long-term value rather than quick cash solutions. Even though different from, it may include Sales, as well as Strategy and Marketing.
To be a Business Developer you must align the overall strategy with business development to explore synergies, embrace an innovative and iterative mindset and creatively think about everything you know (and don’t know) about the business. Also, monitoring and analysing are key drivers of growth.
What do you think? Is there anything I might have forgotten or other areas you would like to see discussed?