What is business development?
It’s a simple enough question. But it turns out one that’s quite difficult to answer: Some people might say that business development is just a fancy phrase for sales.
Others might say that business development is a function of marketing or business strategy.
The new kids on the block might even say that “biz dev” is just an old fashioned term for ‘growth hacking”, “scaling “, or “10x revenue”, “10x CX”, “10x lead gen”, etc.
Here you add the business activity that you want to make so much bigger and better with ease and speed!
Even the great Seth Godin weighed in with this provocative statement:
“Business development is a mysterious title for a little discussed function or department in most larger companies”
On a more uplifting note, he did also write that biz dev is:
“A great way for an entrepreneur or small business to have fun, create value and make money”
Seth Godin
And, of course, this is exactly what business development can do for any organisation..
So, it is not surprising that becoming a business developer is a major career goal for young people the world over.
Google the word “business development” and you’ll find literally thousands of jobs being advertised.
Head over to LinkedIn and the business development group has over 350,000 members. Intriguingly, the group calls itself the “missing link between sales and marketing”
So, we really had better answer that all-important question:
“What is business development?”
What business development is not
Before jumping into definitions of what business development is, it’s probably a good idea to clarify what it’s not.
Contrary to popular misconceptions:
- Business development is not sales
- Nor is it marketing
- Business development is not mergers and acquisitions
- It is also not continuous improvement, total quality management or Kaizen
To my knowledge, there are no business schools teaching business development as distinct from entrepreneurship,. There are also no academic or industry bodies awarding globally recognised degrees, diplomas, or accreditations in business development.
There are of course a huge number of businesspeople with job titles such as Business Developer, Business Development Manager, Business Development Director, or Vice President of Business Development.
Most such folk are actually salespeople. Their job is to sell the goods and services that the company already makes. This is of course an absolutely vital function for any organisation. But it is not business development.
Conversely, there are numerous people who are actually involved in business development regardless of what their business card actually states.
Their title might be Founder, Business Strategist, Product Manager, Strategic Account Manager, Business Consultant and so on.
Does that resonate with you?
If so, you’re in the same boat as me. You see, I’ve been in business development for nearly 35 years and have never had a job title that marked me out as such.
Nonetheless, in that time I’ve been involved in new business ventures worth millions of pounds.
Okay. So, if you accept that the business development is not sales then what exactly is it?
What business development is
The reason why business development sometimes gets confused with sales or marketing or other more closely defined business functions is because it does not have an internationally recognised and agreed definition.
This is partly because biz dev varies in its scope according to the size and type of company and of course its stage of development.
That said, those of us actually involved in business growth and value creation, whether at a large corporate or a small start-up, instinctively know what business development is.
Also, how it aligns with and sometimes overlaps with other business functions.
Here are the best definitions for what business development is:
“The activity of pursuing strategic opportunities for a particular business or organisation, for example by cultivating partnerships or other commercial relationships, or identifying new markets for its products or services”
Oxford English Dictionary
A bit bookish for you? How about this definition?
“Business development can be summarized as the ideas, initiatives and activities aimed towards making a business better. This includes increasing revenues, growth in terms of business expansion, increasing profitability by building strategic partnerships, and making strategic business decisions”
Investopedia
Still a bit long? Well, in that case, how about the grandly titled Grand Unifying Theory of Business Development? This definition states that:
“Business development is the creation of long-term value for an organization from customers, markets, and relationships”
Scott Pollack as published by Forbes
Business development is all about generating long-term growth
You’ll notice that what these definitions have in common is the concept of long-term, profitable, sustainable growth.
The ways of delivering this profitable growth are many and varied, which is why there are so many views on the form that business development can take in real-life business scenarios.
However, you will note that none of these business development definitions specifically mentions the word sales or marketing.
That’s not to say of course that the ability to market new propositions or sell additional types of products and services is not part of business development. It is of course, but it is not the primary driver.
What drives and differentiates business development is the search for entirely new ways of creating value.
These new opportunities largely come from outside of an organisation’s core business activities. Indeed, they often involve partnering with companies with entirely different but potentially complementary commercial offerings.
So, how do you define business development, simply, clearly and concisely?
Here’s my definition:
“Business development is the process of identifying and implementing value creation opportunities to generate long-term growth within and between business organisations”
Chris Dunn
Business development through partnerships and strategic alliances
The concept of driving long-term growth between business organisations is not simply about maximising value through more effective collaboration. After all, that’s the specific role of key account management.
Or pooling marketing resources through strategic alliances to reach wider audiences at a lower cost. This type of affiliate marketing or co-branding is the responsibility of the marketing department.
Or even jointly developing products and services with other companies. Joint ventures are generally driven by product management and R&D closely supported by the legal team.
It is the initiation and coordination of these activities in close collaboration with sales, marketing, and product development teams that create maximum long-term impact.
Therefore, what really makes business development so special is its licence to cut across the traditional functional boundaries within organisations – i.e. those notorious silos.
Also to work in those spaces inside the demarcation lines between organisations – i.e. industry sectors or verticals – to unlock growth opportunities in innovative and unexpected ways.
Achieving this often involves partnerships between companies that at first glance have no obvious synergies.
Examples of business development partnerships in action
Example one:
What does Uber have in common with Spotify?
On the face of it, very little. One offers taxi rides and the other music streaming services.
But dig a little deeper and the opportunity to partner and develop new business becomes apparent.
Both businesses owed their rise to international stardom to the ubiquity and indispensability of the Smartphone. Both disrupted long standing business models from the pre-digital age.
The two companies, therefore, had much in common. For example, they were both fast-growing companies enabled by digital platforms and targeting a young and mobile demographic.
Naturally, Spotify wanted to extend its services to the in-car market. Uber, on the other hand, wanted to personalise the experience of its taxi rides by allowing customers to listen to their own music.
And so, in 2014 the growing legions of Uber users were delighted to discover that they could link their Spotify account to their Uber account, use the app to hail a taxi ride, jump into their Uber vehicle, and have their Spotify music playing for them.
Example two:
Warning: This strategic alliance is less sexy!
It comes from my own career, but it is a great example of a value generating partnership that works well for both businesses as well as their joint customers.
What does a household appliance manufacturer have in common with an insurance company?
Again, on the face of it, very little.
But what if they worked together to sell extended warranties not at the point of appliance sale (as in the traditional retailer business model) but at the time of need (for example, when the consumer is experiencing product issues)?
That’s exactly what Indesit UK (now Whirlpool) UK did in partnership with Domestic & General.
Together the two organisations developed innovative new manufacturer branded repair protection plans and sold them through Indesit’s logistics and service teams.
As a result, both companies not only extended the reach of an improved range of products and services, they also increased the size of the total market without squeezing out the retailers with whom they were also partnered.
So, partnerships or strategic alliances, are often great ways of developing new business. However, they are not the only way of creating long-term value.
Other business development strategies
Leveraging relationships, particularly synergistic ones, such as in the two examples described above, can lead to sustained profitable business growth.
In effect, you harvest more revenue from common customers, often marketing to them at lower cost and keeping them brand loyal for longer.
But what happens when you can’t partner for growth?
This might be for any number of reasons.
For example, because your preferred partners are not interested in a strategic alliance.
Or perhaps, they don’t currently have the resources or bandwidth to invest sufficiently to bring a joint venture or co-branding project to life.
Business development through mergers and acquisitions
One answer to this conundrum is to buy growth.
This is of course one reason why business development sometimes gets confused with strategy in general, and mergers and acquisitions, in particular.
Undoubtedly, growth is a must for most – but not all – firms. Moreover, business developers power this growth. Therefore, it is natural that business development feeds into M&A strategy and vice versa.
But, which companies do you target for acquisition?
This used to be fairly straightforward.
Either, aggressively buy up your key competitors and increase your market share.
Or purchase suppliers to become vertically integrated and gain efficiency or security of supply.
Or buy your customers to guarantee your sell through and move up the value chain for higher profits and better consumer insight.
However, the majority of companies have already fully harvested this low hanging fruit
Therefore, these days, more often than not, biz dev teams are looking strategically for acquisition targets in adjacent markets or emerging technologies.
So, it’s is not uncommon to find business developers working with universities, early-stage start-ups, and even governments to incubate and accelerate developments which ultimately could lead their commercial businesses into entirely new areas.
Incubators and Accelerators
Large organisations themselves also run in-house incubator and accelerator projects. These are deliberately managed separately from the core business and given a free licence to experiment and prototype in a highly agile way just like the entrepreneurial start-ups whose environment they are attempting to replicate.
Even the big consultancy firms are nurturing separate or semi-separate entities. One such example being BCG’s Digital Ventures spin-off.
The objective here is to build the in-house expertise to help their clients drive the next wave of business growth using technology as a key enabler.
Mergers and acquisitions are obviously not a strategy that smaller organisations can easily pursue. Not unless, of course, you happen to be a founder looking for a buy-out as part of your exit strategy.
So, if you are a small organisation looking to grow big, or a start-up looking to scale fast before the cash runs out, which business development strategy could you deploy?
Business development through outside investment
For start-ups it is crucial to get outside experience and investment.
Developing a business takes time. However, when you are in start-up mode time is your enemy. Bootstrapping can only go on for so long before you burn through your cash.
Clearly, you need regular injections of external investment to continue to develop your business.
The process for securing that vital seed funding or venture capital financing is well documented.
Perhaps less well understood, is the role of the business angel.
Typically, angel investors are seasoned business experts who actively support budding entrepreneurs. They do this not just by investing their own money but more importantly, by investing their time and expertise.
By listening to the voice of experience as a start-up entrepreneur, you can avoid wasting time and money. You will also likely gain access to a large network of benefactors, co-collaborators, business partners, and potential future customers.
This business development tactic has the potential to propel a vulnerable start-up through increasingly lucrative investment rounds to the point that the business becomes one of the few not only to survive in the short-term but to thrive in the long run.
What we can learn about business development by watching Shark Tank or Dragon’s Den
Thanks to TV programs such as Shark Tank or its UK equivalent Dragon’s Den the need for injections of business acumen as well as hard cash has even gained popular recognition.
The 3-minute Dragon’s Den pitch is epic entertainment.
Whether the budding entrepreneurs walk away with the funding and business coaching they so desperately need largely depends on how well they articulate their vision to develop their fledgling businesses and whether they can convince the sharks/dragons that they have identified genuine new opportunities to deliver additional value.
To be successful they must highlight solutions to customer problems, wants or needs. In addition, they must identify untapped markets that their start-up company can go after.
Plus, of course, they have to prove that they are capable of building a sustainable long-term business with the support of the angel investor and the partnerships and relationships that he or she can provide.
What does a business developer actually do?
As with so much in business development, there is no single answer.
That’s because it very much depends on the size and state of maturity/development of your organisation.
Some companies are not large enough yet to have a dedicated biz dev team.
Sometimes even large companies may prefer to have specific business development activities carried out by functional specialists such as business analysts, product managers, or lawyers.
Others still, bring in business development consultants to sit alongside sales, marketing, and strategy teams on projects involving new and potentially risky areas of business.
Whatever your official job title you know that you are in a business development role when you are tasked with:
- identifying new markets
- assessing the potential for new products
- striking up new relationships with people outside of your direct industry
- investigating new ways of working such as affiliate marketing, licensing, or partnering with a view to achieving new growth or a new direction for your company.
What skills do you need to have or hone as a business developer?
You will find many well-meaning articles detailing all the skills and attributes that you need to possess in order to be successful in business development.
If you are a regular Jo(e) just starting out, you might find this off-putting.
Or, if you are a graduate from a top business school, tech guru or a youngster who had your first business at the age of 12 and are already on your way to your first million you might find this highly motivational.
The truth of the matter though is that business development managers are made not born. You do need some intrinsic attributes, but the hard skills can all be learned.
Take me for example:
I’m a modern languages graduate and I started out my career teaching. I switched to marketing, then to sales and on into international business.
I’ve worked in many different industries, both B2C and B2B. where I’ve been schooled in the real world of hard knocks, setbacks, and failures.
Through it all I’ve learned about the process of business development and along the way my teams have made millions for companies in the form of new, sustainable, and profitable revenue streams.
If I can succeed in business development. So, can you!
As a business developer you will need to be:
- Agile
- Flexible
- Creative
- Resilient
- Analytical
- Always learning
- Future orientated
- Open to new ideas
- Commercially astute
- Able to break down silos and work across different business functions
Business development is a long-term game
When deciding whether a career as a business developer is right for you, it’s important to keep in mind that business development is a long-term game. It’s also not for the faint-hearted.
For all the successful business development stories that you hear about, there are many more promising new ventures that fail – sometimes after substantial investments in time and money.
However, what makes business development so exciting is when it genuinely delivers something entirely new.
For example:
- A truly innovative product that revolutionises the way we live.
- Or, a partnership between two brands that delivers so much more than the sum of its parts.
- Or, a breakthrough for your company into a completely new market.
Summary
In writing this article I set out to answer the question “What is business development?”
The thoughts and opinions expressed here are born out of 35 years of practical experience.
If you are already involved in business development, you’ll certainly have your own take on what biz dev is and what it’s not. No doubt, it will be shaped by your own personal experience.
If you are new to business development or looking to break into this exciting business area, I hope that this article helps you to understand better not only the varied role of business development in companies of different sizes and maturity, but also provides you with a realistic view of the skills that you will need to be a successful business developer.
To recap:
Business development is not the same as sales, marketing, or business strategy. It does however overlap and align with these 3 important business functions. It aims primarily to drive long-term profitable growth through entirely new ways of working. In this way, it ignites innovation and creates lasting value.
If you are working in business development, you are by definition working on the future and are therefore part of the long-term success of your organisation.
Finally, if you need support with your business development from an external consultant, please don’t hesitate to Contact Chris Dunn Consulting
