Business Organisation
The second element of managing business development successfully relates to the organising logic through which business development is delivered.
During the course of our work, we have experienced many different kinds of organising logics for business development functions. We have seen
o Diversified conglomerates with both corporate and divisional business development functions as well as large- scale in-house project and programme offices
o Large global corporations with only one business developer acting as the analytical mind of the CEO and organised as a board secretariat
o Medium-sized Scandinavian companies with large teams of business developers with a skill base ranging from business management, corporate finance to legal profiles
o Small start-ups with 4-5 assigned senior industry specialists or subject matter experts organised with direct report to the top management.
1. Organising business developers
Organising a business development unit requires attention to many factors. Not only the hierarchical position in the organisation must be considered when figuring out how to organise or reorganise a business development unit. We have found that the following organising levers are necessary to attend to
o The modus operandi of the unit: a fixed vs. a mobile unit that moves around and changes in form from project to project
o The relation to the organisation: a centralised vs. a decentralised unit that is aligned with a division or SBU
o The interplay with the rest of the organisation: a stand-alone vs. integrated unit that collaborates closely with the rest of the organisation
o The role in the strategy management process: a direct involvement in the strategy management process vs. an indirect participation.
The following examples illustrate how these levers are used in practice to organise for business development.
Examples from current organising practices
Company A – a supplier of aircraft spare parts
Previously, business development resources were anchored locally market by market and driven by a strong desire to ensure organic sales growth market by market. But it was later recognised that business development would deliver more value if organised to work across business units and engage in the strategic planning process. Today, it is a 20-20-60 work load split. 20% of the time spent on managing the annual strategic planning process, 20% of the time spent evaluating investments and acquisition targets and 60% of the time spent executing projects.
Company B – a pharmaceutical company
Top management recognised that future growth was highly dependent on the ability to in-license, acquire or obtain preferential rights to new biopharmaceutical innovations due to patents becoming obsolete and R&D pipeline drying out. A business development unit of 55 FTEs was defined with the purpose of analysing and integrating new biopharmaceutical products, and a corporate business development unit managing the M&A activities in the core business was also defined.
After two years of operation, top management recognised a clear disconnect between the corporate strategy process, the in-licensing activities being pursued and the execution of defined strategic initiatives in the core business. They decided to re-organise business development and make clearer distinctions between Strategic Business Development (SBD), Licensing & Patents (L&P) and Strategy Implementation & Execution (SIE).
Today, an effective organising logic has been defined, assigning distinct roles and responsibilities linked to the corporate strategy. In effect, three different organisational units drive business development activities – SBD is responsible for corporate level strategy design and orchestration; L&P is responsible for pursuing defined licensing and acquisition activities, and SIE is responsible for acting as a focal point for executing strategic projects in close co-operation with corporate IT, HR and other support functions.
Company C – a multi-line financial institution
Having pursued a range of domestic and foreign acquisitions, top management recognised that the bank needed to roll out a consistent IT platform and retail concept across its many branches.
The issue was defined as the number one strategic priority for the next five years in order to successfully integrate the acquisitions and realise the economies of scale and scope defined in the acquisition business cases. To accelerate the corporate-wide integration process and define the strategic baseline for future customer service and selling, a multi-skilled team of in-house consultants was organised into a corporate business development unit with direct report to top management.
The new corporate business development unit's purpose was to co-ordinate the making of the strategy that would enable the bank to realise its full potential by effectively migrating both existing and new brands to a "one system, one concept" model and provide the necessary implementation power and expertise to make this happen.
2. Organising logics in a BDM-context
Studying the different cases closely has led us to conclude that there are certain logics for organising business development that determine the nature of business development practices today. These are depicted in the figure below.
The following characteristics are typical for the four types of organising logics
o In the corporate support function model, we typically see a need for a broad representation of competences – from M&A capabilities to business consulting skills and legal expertise. We often find that these types of business development units are comprised by teams of 2-10 "in-house consultants" with a license to operate on both the corporate (strategic) and the organisational (execution) level acting as both specialists and generalists
o In the division support function model (SBU support model), we find small units of 1-3 people acting in effect as subject or industry matter experts. Their prime responsibility is to fuel the SBU strategy agenda and assist the organisation in executing strategic initiatives and analysing new business opportunities. The dominant skill set required is a combination of industry insight and strong business acumen
o In the permanent project organisation model ,we witness the organic mode of operation for managing business development. In this organising model, a team of dedicated project resources is charged with assisting the organisation in delivering defined organisational change programmes. The business development unit operates as a virtual unit with the potential to act as both a generalist and a specialist on various tasks. We label it the permanent project organisation because of its adaptive (as in projects) and permanent (as in structure) nature
o Finally, in the outsourced business development model, we find a mode of operation that does not necessarily favour a strong link between strategy and execution, but a model that is highly favourable to large organisations lacking the necessary power to execute. In this model, business development is synonymous with execution. Teams of capable project resources are organised into distinctly defined teams delivering e.g. IT implementation, process improvements and the like
In either way of organising, business development is representative for a conscious choice of best modus operandi, given the strategic agenda and organisational context. Through our experience, we have seen how one type of organisation works in one company but is less successful in another.
These four logics are all prevalent among business development practices today. However, what we have experienced as the most efficient one in ensuring that business development is "managed and integrative" is the logic of the corporate support function, allowing business development to act as the connecting link between top management and the line organisation. Similarly, business development can become the centre of gravity for capturing and qualifying new ideas for the organisation.
"In either way of organising, business development is representative for a conscious choice of best modus operandi, given the strategic agenda and organisational context"
The corporate support function explicitly emphasises the close relation to top management while allowing for the mobility needed to move across the organisation. It is implied in the logic that the business development unit may have closer relation to some units than others – and that these relations may change over time.
3. Guidelines for organising a business development unit
An important conclusion about the organising logic of business development activities is that there is no "one size, fits all" solution to organising business development. Instead, business development activities should be organised to best serve a specific purpose defined by the strategic priorities of the company. Due to the specific needs of a managed and integrated business development unit, the following precautions must be considered when organising for business development.
1. Place the unit close to the management of the company or the SBU
‒ act as a focal point for bridging the gap between strategy and execution
2. Charge the unit with the necessary resources and capabilities
‒ act as a catalyst, a facilitator and a driver for change
3. Allow the unit to transform over time
‒ respond effectively to the strategic agenda
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