BUSINESS DEVELOPMENT AND GROWTH
Setting up business development teams and efforts
Business development, fuels growth, whether in a startup or corporate setting. ‘Biz-Dev’ requires correct hiring, goal, and KPI setting, sufficient resource allocation, management involvement, and focused specialization to succeed.
A sales department is responsible for selling specific offerings to customers and marketing determines which specific customer segments to target with specific products and features. But when the opportunity isn’t clear but the potential is huge, that’s when business development steps in. Business development aims to identify and flush out new areas of business and this may/will entail new products, markets, partnerships and alliances, distribution channels, marketing tactics, etc., things that the organization has not experienced before.
Definitions
Business development is about growing the organization by giving structure to unstructured opportunities through identifying new partnerships and alliances, customers, and lines of revenue. A business development manager may attend meetings unsure of its outcome. The typical phases of a business development cycle with a new relationship or business account may include the following:
- Finding new strategic relationships
- Uncovering win-win opportunities
- Reaching and signing agreements
- Implementing terms
- Building and expanding on common interests
In short, ‘Biz-Dev’ is about identifying opportunities and building win-win business partnerships between organizations. Once the scope and terms of the partnerships and alliances are defined, business development projects will/may be handed off to operations, sales, or marketing, depending on how the organization is structured. Due to its strategic nature, the business development department is best positioned to sit between the market-facing departments of the organization — i.e. Sales and Marketing — and the strategy department.
The need for business development
Nearly all business functions except for business development are focused on driving current business operations by selling to known leads, marketing to known customers, optimizing products for current market fit, and abstractly strategizing plans for the future. On the other hand, business development provides feet on the ground and aims to flush out possibilities through partnerships. Business development looks for ways to broaden the options for the organization by identifying new opportunities across the value chain through developing and nurturing mutually beneficial partnerships and alliances.
The difference between sales and business development is that the scope of the salesperson’s role stays constant where the products and services he/she can offer and the compensation plan are fixed and predefined.
In the marketing department, we care about understanding the customers, communicating insights with the rest of the organization, and communicating offers and strategies with prospects. The end goal is to mass personalize communication efforts in a scalable and consistent manner. While in business development efforts the focus is on building partnerships and alliances and growing business capabilities and synergies.
The strategic planning department thinks about the future of the organization and develops financial plans for investments and entry into new markets and offerings. While the strategy department focuses on abstract aspects of strategic decision-making, business development deals with the implementation and the necessary ecosystem for business results and success. In other words, business development is the missing link between new opportunities and growing them as part of business as usual.
Launching a business development department
Timing
There is no right or wrong time to launch a biz-dev team, but it generally comes down to three factors:
- Strategic focus and priorities
- Level of business traction
- Resources
Generally, if you have the resources — you are making enough profits to invest into growth —, or are not growing fast enough or the market is non-competitive, or your focus is on a specific sector and/or vertical where you have sales operations already working, then you will not need a business development team. Otherwise, you do. For example in early-stage companies or recently launched startups, it’s best to maintain focus on a niche, have focus, and have founders do sales before investing in biz-dev. The business development team is usually built once the primary business is thriving, processes are established, and unstructured but attractive ideas around growth are starting to emerge.
Personality types to hire
Business development can be an unstructured work environment and it’s not for everyone. The best business development personnel tend to carry the following characteristics:
- They are highly curious, enjoy learning new things, and don’t mind asking questions to steer the ambiguity they are working with. In biz-dev, every new deal or partnership puts the team back at the bottom of the learning curve. Again, they need to feel comfortable with ambiguity.
- They are comfortable with researching and learning quickly in a fast-paced environment. Every new meeting has the team walking into a situation with plenty of unknowns, and therefore, a lot of homework is required such as an industry, attending conferences, and taking online classes.
- They have extroverted personalities who enjoy talking to people and exploring a variety of alternatives. As business developers are constantly scanning for new opportunities they will need to make new contacts and bring in new opportunities.
- They have a win-win mentality towards partnerships. This requires having a bias toward making the pie bigger rather than getting a bigger piece of it.
- They have strong quantitative and analytical skills. Business developers need to be quantitative-driven deal makers who spend a lot of time exploring deals and understanding their details before handing them over to sales, legal, or finance for finalization.
- They have high tendencies towards creating value. To do this, they require high emotional intelligence and caring for people, empathizing with their pains and needs, and finding workable solutions to solving them. Furthermore, they tend to explore their partners’ additional interests and pains as they expand on mutual relationships.
In short, good biz-dev hires have the following traits:
- Curiosity
- Extrovertedness
- High levels of empathy
- Opportunity seeking mindset
- Win-win mentality
- Analytical skills
- Research skills
Managing and organizing biz-dev teams and efforts
Setting goals
Business developers may find it a challenge to plan daily activities that lead to quarterly or annual results because the range of their activities may vary significantly over the period. Furthermore, the objectives are often long-term focused so prioritizing what to do next may not be obvious. It is best to start with the organization's vision, goals, and objectives and uncover the goals that need to be attained before diving into operations.
A good place for a business development professional is to ask seniors what the more promising opportunities might be.
Most often, senior management will have the necessary information to help business development plan or provide early insights about changing environmental needs. Business development leaders need to serve as the go-between who translates organizational direction to business momentum.
Furthermore, senior management needs to set expectations so the team knows how they’ll be evaluated and can provide timely updates and feedback, informing of emerging possibilities and expected progress. A good place to start is at a departmental meeting where everyone can get oriented around overall objectives before looking at their lists of activities.
KPIs — measuring performance
You should aim to recruit business development professionals who are ambitious with expectations for compensation, bonuses, and promotions. But to succeed in retaining these talents, you need to measure performance objectively, and the challenge is that it is hard to define short-term goals for metrics in business development because the value of business development is attained in the longer term.
The standard objective measurement accord is to measure inputs and outputs. For input metrics, the following two can be used:
- The number of companies contacted, or the number of meetings with clients. One goal is to gauge how much effort the team puts into the role and another is to start seeing patterns of partner/customer requests and asks.
- The number of opportunities identified and presented. The goal is to measure how successfully the individual/team can convert client contact to opportunities and assess segmented insights of the performance.
And for output metrics:
- The number of proposals presented
- The number of proposals approved
- The number of new lines of business
By setting and measuring milestones along a 1–2 year plan business development path, management can track the progress that will lead to long-term success. Moreover, the business development team needs to set expectations early on and readjust them based on new information that the team brings in (i.e. pivot goal settings) as this is the nature of business development efforts.
When it comes to recognition, it’s important to reward both inputs and outputs. This means you can acknowledge team members whose ideas are most frequently considered by the organization’s leadership whether or not the deals are successful which can encourage creativity, and also reward, promote, train, and/or rotate team members who generate the most business value, as this is the end goal.
Managing the partnership lifecycle
There are 5-steps to successfully managing and developing a business partnership:
- Sourcing new strategic business partnerships/relationships: can be led by seniors, networking efforts, or industry research
- Finding win-win opportunities: once interested and potential partners are identified, it’s time to explore opportunities that benefit the parties
- Signing agreements: you can start with an early document which can be called the letter of intent, that explains the goals of each side which will require legal input to incorporate terms and conditions. The written agreement/contract explicitly states the commitment of each side and aligns parties on mutual expectations
- Implementing the terms of the relationship: it is best to start in a small and controlled test environment. The challenge will be to motivate the parties to allocate operational resources and priority to the project, with the business development teams championing the partnership
- Determining the broader potential of such relationships: with the test project proving a success, the business development team needs to ask for additional resources to accelerate growth and fulfill the agreed roadmap with partners while identifying new opportunities for collaboration.
Specialization: the key to focus and optimized operations
As the business development team grows, they tend to specialize, and there are three advantages to specialization:
- Going deeper into areas of expertise in a particular part of the ecosystem
- Developing trust in relationships leads to revenue-generating opportunities and competitive advantages
- Finding out-of-the-box thinking models for business model innovation
There are a few ways team can think of specialization, including:
- Industry type (i.e. value chain)
- Technology
- Client size
- Geography
Internal stakeholder management
Business development efforts are explorative whereby the team aims to understand the external environment and look for new opportunities to prepare and harvest, and therefore, the majority of its time is spent outside the organization. But to succeed in biz-dev, you need to have strong relationships inside the organization, such as with the operations, legal, sales, and finance teams.
However, the risk with building strong relationships inside the organization is that the biz-dev team who needs to be outside the office building new partnerships will be dragged into meetings that keep them from doing that. Unless internal meetings are specifically about business development opportunities, the biz-dev team should limit its participation in meetings where decisions have already been made, unless it’s about a need for corporate strategy change.
Making business development relevant: bring in revenues
To make the business development team well-regarded, and get the desired resources it deserves, it needs to think like a CEO and the CEO wants the business to grow profitably. Based on this, the biz-dev team needs to demonstrate that it is contributing to this growth by building profitable opportunities now and in the future. To this end, it’s not enough to just hit KPIs including the number of deals being worked on or the number of contracts signed, the revenue generated by biz-dev’s ideas, will be key to gauging success.
Business development is key to the long-term success of an organization, therefore, business development professionals need to invest time every week in building their network, both in their industry and adjacent ones by joining associations, attending conferences, reaching out to friends and former colleagues, and reading one general business publications and industry-specific ones. Work with leadership to align with the company’s overarching goals for profitable growth.
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