The best business development strategies generate long-term growth and create lasting value.
However, no truly successful business goes it alone.
Business development in the 21st Century demands that companies, irrespective of size or segment, look beyond the capabilities and resources of their own organisations to maximise their growth potential.
Partnering with other organisations expands knowledge and pools resources to increase scale, speed and market reach.
There are several ways of leveraging external support to power your growth.
Let’s take a look at 4 of the best business development strategies in action:
1. Business development through partnerships and strategic alliances
Partnerships and strategic alliances enable you to gain access to complementary skills and resources outside of your own organisation.
Successful alliances are based on strategic alignment, mutual interest and shared benefits.
They can drive fast and flexible business development in the following areas:
- Product development through co-funding innovation programs. This shortens time to market and extends design capability
- Value-added reselling and project management to bundle individual products and services from different organisations into more comprehensive solutions
- Shared distribution channels to reach a wider range of customers at a lower cost
Strategic alliances have proliferated over recent years.
Many eye-catching partnerships take the form of shared equity allainces or joint ventures.
However, most strategic alliances are in fact based on commercial agreements rather than equity partnerships.
Some even involve collaboration between organisations which at first glance appear to share no obvious synergies. Dig deeper and it becomes apparent how these alliances create competitive advantage. Or counter a competitive threat.
Examples of successful strategic alliances include:
Uber and Spotify
Spotify users get to steam their own music on Uber trips.
For Spotify, the business benefit is to encourage users to upgrade to premium accounts. For Uber, the partnership with Spotify provides a competitive advantage over other taxi apps. As a result, the number of rides booked through its drivers’ increases.
Nationwide and Assurant
Nationwide Flex Plus bank accounts include mobile phone insurance provided by US gadget insurance specialist Assurant.
For Nationwide, premium accounts allow it to charge a monthly fee and make a profit on bundled benefits. These typically include add-ons such as mobile phone protection, travel insurance and breakdown cover. For Assurant, it reaches consumers through its partner whom it might otherwise be unable to acquire directly.
SAP and Accenture
Accenture works as a consultant to businesses deploying SAP’s ERP software. It works with SAP and the client on the end-to-end development and delivery process.
For SAP, Accenture supports not only sales but also the successful configuration, customisation and integration of its software products. For Accenture, technology partnerships enable its consulting arm not only to advise on digital transformations but also to drive revenue through implementing IT infrastructure upgrades.
Technology giants such as Microsoft and IBM lead the way in partnership programs. They also have a track record of acquiring partners as they move into adjacent business areas.
2. Business development through mergers and acquisitions
Mergers and acquisitions may be driven by a need to cut costs, reduce industry capacity, create sufficient scale to compete or to enable a turnaround of a failing business.
More often than not though, M&A activity is powered by an opportunity to grow rapidly. According to McKinsey, there are a number of ways in which mergers and acquisitions succeed as business development strategies. These include:
- Increasing market access for the acquired company’s (or the buyer’s) products and services
- Obtaining skills or technologies faster or at lower cost than they could be built inhouse by the buyer
- Exploiting industry-specific scalability for the acquired company’s products through investments in productive capacity
- Acquiring innovative start-ups early. And then helping them develop their businesses rapidly to create a first-mover advantage
Examples of successful mergers and acquisitions include:
Vodafone taking over Mannesmann
Vodafone took over Mannesmann to enable it to become the world’s largest mobile phone operator. The merged telecoms business also became the fourth-largest company in the world in terms of market value.
Dell acquiring EMC Corporation
Dell, with its associates MSD Partners and Silver Lake, bought data storage giant EMC. This acquisiton transformed the struggling computer hardware company into an integrated technology business with cloud computing capability.
Disney buying 21st Century Fox
Walt Disney Co. acquired 21st Century Fox in the biggest buy out in the history of the entertainment industry. The rationale was to enable Disney to develop a stronger position in small-screen entertainment. Crucially, it allowed it to better compete with companies such as Amazon and Netflix and take advantage of the boom in video streaming services.
Acquiring another company is the ultimate business development strategy. However, this can be fraught with risk.
Protracted due diligence often leads to potential acquisitions being abandoned. Mergers can be subject to regulatory approval. Moreover, hostile take-overs are rarely conducive to the seamless integration of the acquired company.
Indeed, many analysts estimate that over 80% of mergers and acquisitions fail to deliver the promised payback.
As a result, organisations are increasingly looking for more agile ways of acquiring new skills and technologies to boost their prospects.
One business development strategy that has gained widespread adoption is partnering with universities and technology hubs as well as tapping into ecosystems
3. Business development through incubators and accelerators
Incubators funded by universities and public bodies nurture fledgeling start-ups. Increasingly, private companies are also looking to support early-stage businesses with potentially commercially viable innovations.
Accelerators propel the more promising of these start-ups through their next stage of development.
According to research sponsored by the UK Government nearly half of all funding for accelerators comes from companies looking to pick future winners.
They not only invest money in accelerators but also equally importantly, provide business coaching.
The objective is ultimately to acquire promising new talent and technology to spur the next wave of innovation and business development.
Some large organisations even choose to run in-house incubator and accelerator projects themselves.
These are deliberately managed separately from the core business. Operating with a free licence to experiment, these “businesses within a business” can prototype in a highly agile way just like the entrepreneurial start-ups whose environment they are attempting to replicate.
Other organisations have collaborative partnerships with leading universities. For example, they regularly participate in business programmes such as Cambridge Judge Business School’s Cambridge Venture Project.
4. Business development through external business development consultants
In today’s fast-moving business environment, it is wise to evaluate whether you have all the skills and knowledge inhouse for the next stage of your business development.
Bringing in business development consultants to support your organisation can provide big benefits.
One of these is speed.
Specialist consultants with agile methods can set-up proof of concept experiments. These POC’s allow you to quickly learn, through real-life testing, what works, what does not, and what it takes to get positive results.
These experiments can be run in short sprints lasting days or weeks, similar to the way lean start-ups use prototypes to better understand how to meet future customer needs.
Your consultant enables experimentation and creates urgency. Then your company’s own teams carry out testing in real-life scenarios.
In this way, concepts quickly move from theory to reality.
And of course, the experiments themselves produce real results (success or fail) that prove or disprove hypotheses.
The successful POC’s then move rapidly into the next stage of the business development process.
In summary: Partnerships are the key to successful business development strategies
In 2020 and into the future, you can’t go it alone. What’s more, you can no longer own and control all the assets that you need to deploy.
Successful business development therefore requires organisations to cooperate and collaborate with partners with complementary skills and additional resources.
To operate in a network of cross-industry players who work together to build ecosystems that deliver market innovations and customer solutions.
The 4 business development strategies outlined in this short article are examples of how future-orientated companies are forging new paths forward in an era of rapid change.
In summary, no organisation succeeds in isolation. Customers and consumers demand all-in solutions and seamless experiences. Products now often require additional services. Businesses need to deliver these services digitally as well as physically. Successful business development requires external support and partnerships.
If you need support with your business development from an external consultant, please don’t hesitate to Contact Chris Dunn Consulting