Not enough companies engage in genuine business development activities. So it’s no surprise that I’m often asked the question “what is business development?” It’s one of those things that most people have never had any involvement with and really have no idea what it is. The question mostly comes up at social events or when I meet with new employees from other departments. I’ve had to explain it 3 times this week.
It doesn’t help that a lot of companies like to use the terms business development and sales synonymously. So I always start with “business development is not sales.”
The next thing I do is point people to a great resource by Seth Godin on Understanding Business Development. Then I engage the person in a discussion about how this specifically relates to our business. By the time we’re done, most people get it.
Seth’s post provides an overview of what constitutes business development, how business development can positively impact a business, what a good business development deal looks like, and what makes a good business development person. Some highlights include:
…Good business development allows businesses to profit by doing something that is tangential to their core mission. Sometimes the profit is so good, it becomes part of their core mission, other times it supports the brand and sometimes it just makes money…
- Starbucks licenses their name to a maker of ice cream and generates millions in royalties…
- Best Buy offers extended warranties on appliances you buy. They don’t provide the warranty, of course, a business development person did a deal with an insurance/service company to do it and they share the profit.
- The Princeton Review built a huge test prep business, but only by licensing their brand to a series of books which did the lion’s share of their marketing for them.
…[Often smaller companies] are so focused on their core business that it never occurs to them to consider partnerships… Harley Davidson probably makes more money on business development than they make on motorcycles.
The thing that makes business development fascinating is that the best deals have never been done before. There’s no template, no cookie cutter grind it out approach to making it work. This is why most organizations are so astonishingly bad at it…
If you’ve ever pitched a product or service to a business, you know how soul-deadening it can be. The buyer works hard to make it clear that she’s doing you a favor, and you need every dog and every pony available at all times (and you better be the cheapest). But business development doesn’t have this dichotomy. Both sides are buying, both sides are selling…
Business development people are exploring the unknown. That means that there’s more than cash on the table, there’s bravery and initiative and excitement. The best business development people I’ve ever worked with are able to capture the energy in the room and amplify it…
The thing that I always add to Seth’s comments about what makes a good business development person is the necessity to have a vision of what can be and the ability to sell that vision both internally to senior management and externally to potential partners. This isn’t easy to do and few do it well.
Bottom Line: More businesses should embrace business development. It can create significant value in ways previously unimagined. It takes someone with vision, the ability to sell that vision, and the leadership and persistence to execute that vision in order to realize these gains.
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