What is Business Development
"In a sense, business development is like the fusion of the suits and the ponytails … they draw on creativity to pursue opportunities no one else can see, yet they rely on their business skills to discover the best ideas that can be turned into viable businesses"
As with every new discipline in companies, business development needs time to mature – it needs to develop its own best practices and define the framework through which its mission and purpose can be executed successfully. Since the publishing of the first handbook, we have witnessed a rapid development in the area of business development and a sharper definition of the role of business development in many organisations.
"Since the formation of the publishing of the first handbook, we have witnessed a rapid development in the area of business development and a sharper definition of the role of business development in many organisations"
In this section, we will seek to re-define business development in a definition that encapsulates the striking similarities despite the multitude of operating practices in a way that will make it possible to drive business development towards continued success. We will do this by explaining
"What is new is that business development is being institutionalised as an organisational process, a new function and a new role in modern companies"
B. The common pitfalls of business development
C. The diversity of business development practices
D. The key success criteria for successful business development
A. The evolutionary pattern of business development
Business development is not a new thing. Every business develops on a continuous basis. What is new is that business development is being institutionalised as an organisational process, a new function and a new role in modern companies.
Through our work with business development in the past years, we have followed the evolution of business development. We have witnessed how the number of job ads for business developers has grown exponentially, and we have talked to headhunters that have filled hundreds of business development positions over the last couple of years.
This being said, the approach taken by many corporations investing in business development resources varies a lot. However, irrespectively of the approach taken, the evolution of business development units seems to follow a pattern of four distinct phases.
In most cases, the business development function emerges as a result of one or a few large-scale projects that do not have a natural affiliation with any other function within the company. Once the projects or initiatives hit implementation and need resources to oversee and co-ordinate their execution, many companies choose to invest in building in-house delivery capacity in the form of a business development unit.
In quite a short time, these high-calibre resources are requested to participate in different types of projects throughout the organisation with little or no bearing to the strategic agenda. The result is that the investment in business development becomes scattered around the organisation leaving both top management and the business developers confused and unfocused.
"Business development has proven to be a viable and value-adding investment, but the absence of a clear definition of its purpose, role and tasks is dominant and leaves the assessment and evaluation of business development efforts up to coincidence"
Consequently, it becomes necessary to define the raison d'être of the business development function more clearly, just as the need for formalised planning and systematisation increases.
The majority of business development functions today find themselves in exactly this position. Business development has proven to be a viable and value-adding investment, but the absence of a clear definition of its purpose, role and tasks is dominant and leaves the assessment and evaluation of business development efforts up to coincidence.
B. The pitfalls of business development
The easiest way to understand the common pitfalls of business development, often hindering a full exploitation of the unit's potential, is to think back to the 1980s when the HR paradigm was introduced. Back then, the HR function was recognised by everybody as the magic silver bullet that would enable organisations to make the most of their intellectual capital. However, it took almost 15 years before HR was denoted as a management discipline (HRM) and fully developed into an organisational discipline with its own organising logic, performance measures and defined work processes.
The same problem is facing business development in transitioning from its current state as a request-driven discipline with only very few well-defined processes and even fever performance measures. What often happens is that business development units initially thrive on the excitement and attention of being the newborn "rock stars" of the organisation; they have interesting projects, motivated employees, and they are high on the management day-to-day agenda. However, after a while the excitement wears out, the unit grows, and the number of projects becomes overwhelming reducing the quality and output of the business development unit.
Exactly at this point of maturity, the next phase of business development sets in, and failure to manage this transition decreases the chances of being successful.
The predominant pitfalls of business development are
o Uncertainty about the role, responsibility and mandate of the business development unit
o Unclear definition of the interaction with management and the line organisation
o Vagueness about how to measure the success of business development
o Limited understanding of the process and management of business development
Today, far too many business development units are merely an attempt to internalise permanent consulting competences into the organisation, and little attention is put into the internal structure of the unit. In such cases, the business development unit often ends up being just another parking lot for ad hoc tasks and problematic projects; or alternatively, the unit becomes yet another project office with little bearing on the strategic agenda.
"The business developer finds him- or herself in an exciting position close to the top management only to recognise that their newborn "rock star" existence lacks notes, instruments and a band to play with – and maybe even more importantly: an audience who likes the music and buys the album"
The result is that the business developer finds him- or herself in an exciting position close to the top management only to recognise that their newborn "rock star" existence lacks notes, instruments and a band to play with – and maybe even more importantly: an audience who likes the music and buys the album.
• Do not have monopoly on new business opportunities – but act as a catalyst for qualifying new opportunities
• Are not responsible for making the corporate strategy – but orchestrate the strategy process and enable it as a process, not a stand-alone event
• Are not just an office of the CEO – but facilitate informed strategic decisions through analytical rigour and speed of mind
• Are not an ad hoc problem solving centre – but co-ordinate and refine the corporate agenda and drive the implementation of key strategic initiatives
• Are not a project office – but lead or participate in projects of strategic importance to the enterprise
C. The diversity of current business development practices
During our research for the business development handbook edition 1.0, we established that business development means different things to different companies.
The practices that companies develop evolve as a result of the development of the business development unit, and it is thus difficult to find any patterns in the diversity of business development units. What we have found is that the practice of business development depends on
o The company's stage in the corporate life cycle (emerging, growing, maturing, declining)
o The clock speed of the industry (slow, fast)
o The ownership structure of the company (public, equity, private)
o The company size, structure and portfolio (small, large, simple, complex)
o The management risk profile and style (risk averse, risk taker, proactive, reactive)
We found no immediate relation between the type of company and its business development practice, but some patterns are recognisable within the current business development practices
.
We have identified the four current practices in business development present in different kinds of companies
Today, the majority of business development functions could be placed somewhere between "ad hoc" and "emerging"; the need for a structured approach to business development is recognised by the management, and a couple of projects have been completed successfully. The unit has been self-sustaining, one project has succeeded the other, and a few talented people have been hired to meet the requirements from management and the organisation to accelerate the speed of strategy implementation and new business exploration.
Whereas this loosely defined structure may work for a short period of time, it is hardly sustainable in the long run. As projects become more complex, the requirements from the organisation and the number of full-time equivalents involved in business development increases. Also, a well-defined organising logic is required along with the need for a defined work process and methodology – in other words, the need for management materialises.
D. Succeeding with business development
When looking for successful business development units, we have searched for prosperous units that are both reported successful by management and where the business developers themselves deliver clearly identifiable impact in their respective organisations. In the search for excellence, we have found one striking feature of the business development units that do well. They are both managed and integrated. They have successfully transitioned to the phase of maturity and avoided the pitfalls that arise in the initial phases of business development units. They have succeeded in designing their organising logic, their engagement approaches and the roles they play vis-à-vis both senior management and the line organisation to address the most pressing issues of the organisation.
"In the search for excellence, we have found one striking feature of the business development units that do well. They are both managed and integrated. They have successfully transitioned to the phase of maturity and avoided the pitfalls that arise in the initial phases of business development units"
Their corporate business development unit has been placed with direct report to the CEO and staffed with a variety of different competences – strategists, M&A experts, lawyers as well as experienced programme managers. All competences needed to successfully execute the strategy.
On the opposite side of the success equation we find the units that are less successful. Typically, they are organisations that have asked their business development units to explore new business opportunities and assist the organisation in building a highly efficient, cost-effective and flawless organisation but failed to provide the unit with an organisational context and overriding purpose through which the business development initiatives could be managed. Often what happens is that one or two bright guys or girls are hired with a background from finance or management consulting. They have responded to a job ad or a headhunter power speech promising them a job close to top management and a task of freedom to analyse, advice, instruct, engage and change. Reality, however, is that these units are not driven by a long-term strategic aspiration but merely by request only. The consequence is that business development becomes detached from both the annual and the strategic planning processes and becomes an ad hoc centre for problematic projects, often in close collaboration with external consultants.
Indeed, what distinguishes successful business development practices from those who do well is that
o They are anchored close to the strategic management of the company
o They are engaged with resolving strategic issues
o They are designed to purpose
o They work to bridge the gap between strategic intent and powerful execution
As such, successful business development plays an integrative role in modern organisations – bridging the gap between strategic intent and organisational execution. They orchestrate, co-ordinate and facilitate the strategy management process across the company and in effect form an "office of strategy management" that provides a clear link between top management and the rest of the organisation, making sure that the strategy is formulated, translated and executed.
For business development to fulfil its purpose of being the integrative link between strategy and execution, it needs to revolve around three axes, and it needs a clearly defined interplay with other support functions, top management and the line organisation. This is illustrated below.
As a corporate support function, business development is concerned with managing the development of the business from both an external and an internal perspective. This is reflected in the conception of business development units as "integrative links" between strategy and execution.
It is concerned with pinpointing important new business opportunities, enabling quick and fact-based decision making and finally making things happen. Every step is completed not as a singular event, but as a process that is concluded and followed up in collaboration with the top management and the line organisation.
As such, the most successful business development units solve three different tasks
o Investigate strategic options (external/internal)
– Evaluate strategic positions
– Identify new market segments
– Qualify new market entry
– Support M&A activities
o Execute strategic projects
– Lead or support business portfolio optimisation
– Lead or support process improvement programmes
– Lead or support organisational change processes
– Evaluate strategic investments
o Orchestrate strategy management
– Co-ordinate the strategic planning process
– Align performance measures with budgets
– Facilitate sharing of strategic learning
– Ensure ongoing follow-up and reporting
– Integrate strategic thinking into the annual planning cycle
Whereas the investigation of strategic options and the execution of strategic projects are recognisable activities for many business development units, the orchestration of strategy management is a new activity to most units. In some cases, the business development unit may be implicitly involved in this activity without the process being structured and managed.
In the cases where business development efforts are most efficient and generate the most evident results, they include a managed process where the unit orchestrates the strategy management process ensuring that the strategy is translated into actionable tasks aligned with other corporate functions such as HR, IT and Finance.
"In the cases where business development efforts are most efficient and generate the most evident results, they include a managed process where the unit orchestrates the strategy management process ensuring that the strategy is translated into actionable tasks aligned with other corporate functions such as HR, IT and Finance"
There is not a silver bullet solution to achieving this. As with every other new management discipline, business development needs time to mature professionally. Those who hire business developers (senior management) and those who perform business development (the business developers) have a joint responsibility in making sure that business development moves beyond the treadmill and becomes designed to purpose.
E. From business development to business development management (BDM)
As we have already declared, business development suffers from a range of childhood deceases, as did HR back in the mid-1980s in its attempt to move from a request-driven to a strategy-driven, managed and integrated organisational discipline. These childhood deceases transform into common pitfalls preventing business development to mature and have resulted in a great diversity in today's business development practices.
The units that are successful have managed to overcome the transition from being the newborn "rock stars" of the organisation into becoming managed and integrated. This transition also signifies a transition from being task-focused to being process-focused.
"Similarly, business development (BD) needs time to mature and become institutionalised as business development management (BDM)"
We can denote our definition of business development signifying this move from BD to BDM as
"A managed organisational process that ensures a systematic approach to strategy management and delivers lasting improvements in business performance by playing the role of being the integrative link between strategy and execution"
In order to live up to this definition of business development as an organisational process that bridges the gap between strategy and execution, a business development unit must
• Have a clearly defined role and mandate in the organisation
• Have a defined interplay with top management and line organisation
• Be focused on projects of strategic importance
• Be managed and process-driven
• Be integrated with the strategic planning process
Today, business developers struggle less with defining their work – they have plenty to do – but more with finding a way to ensure long-lasting and evident impact. Far too many business developers report that they are very busy, lack resources and lack perspective in what they do. These are all symptoms that point in the direction of poor or inadequate management of business development.
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