The advantage of attending large tech conferences with a mix of startups and big companies is that the views on business development vary by the experience of the BD team regardless whether the company is big or small. Quite a few enterprises are great at partnerships while many startups fail to successfully pivot from an established play to new ones. Some companies are outstanding at managing current business (sales and incremental product development) but have trouble implementing ideas for growth. Others are in a constant mode of ideation with shifting value propositions for both products and partnerships with inconsistent results.
I noticed some common threads among BD leaders who consider themselves successful by internal or customer standards vs those who do not. This is by no means a research based study, however this evolving shortlist I keep finding as a useful guide. Your insights are welcome.
THE 5 HARD THINGS TO GET RIGHT IN BUSINESS DEVELOPMENT
(1) BD’s primary purpose is to launch new business models
BD teams should only exist for one reason: to develop new business models. A new model is needed when any element of the existing model needs to change.This could be new types of customer behaviors, new influences, new emerging channels or new revenue models that the business cannot effectively address with current capabilities. (A good definition of the elements of a business model can be found in Alex Osterwalder’s Business Model Canvas).
There is a universal confusion about the right role of business development. In some companies they are channel sales teams with non-quota targets, in others they are extensions of marketing teams targeting a new kind of buying influence or behavior. Sometimes R&D teams working on product integration with partners. Unless the current business model does not address customer needs or the external teams are not our usual partners, such responsibilities can be handled by current sales and marketing functions. Introducing new products, pricing or product features to existing customers or current development partners does NOT require business development teams.
However, if new buying influences, channels, revenue models surface that the sales/marketing teams cannot successfully engage, then a new BD team must be launched. At the same time the existing sales/channel and marketing teams should continue maximizing engagement and results from current relationships.
(2) Decide what role partnerships play in your growth
It is surprising how many companies are unclear about what is shifting in their competitive environment that needs new types of partnerships. Given limited resources it is always a key decision. These could be technology partnerships (cloud platform, joint development, licensing etc), marketing partnerships (co-branding, co-marketing) or sales partnerships (channel). Some may assume the product features introduced by the competition is the threat and begin engaging with developers (B2D). At the same time it is possible that the fundamental shift had to do with business model change and the competitor focused its value proposition to CROs (sales chiefs) who your firm does not cover instead of the CIO who your sales and marketing resources are engaging. Whenever CROs have more decision power or influence than your CIO customer over your products your business will be at risk, unless you develop ALL elements of the new business model (a new value proposition, a new channel, new revenue models, new partners, etc).
It is important to estimate the upside and cost of each type of potential partnership and start with the one the business sees highest potential in or the greater risk. For example if all your business relies on your Microsoft platform partnership and your competitors move to cloud or other platforms, how much revenue is at risk? If you make the same change how much more market share can you capture? At what cost? The same is the question for new types of influencers, decision makers. Make your best guess and start piloting. Pursue building the new partnership type with the greatest potential in terms your business sees it, e.g. revenue, risk, cost. Then pivot if needed (point below).
(3) Know when to pilot, when to standardize and when to scale
Most strategic plans and business models will be wrong. Deal with it. Therefore we need to start piloting the partnership option with the highest potential in our current business terms. Measure leading indicators of success like number of partner meetings, MOUs, pilot engagements, proofs of concepts. This is our pilot stage. We need to see some consistent responses from our partners on the pitch, the value proposition, the product/solution and the willingness for them to have POC projects. Set a timeline for our pilot stage. If our metrics do not improve it is time to go back to the drawing board. We need consistent feedback from 8-10 different customers from different segments of our business before we can move on. But do not wait for 100 confirmations.
Once the partner feedback is consistent, we can move to a Standardization stage. This stage creates the actual business model that is repeatable and can be integrated into the core business. Decide what part of the offering, pitch and product can be standardized and what is not essential. Simplify and retest with the partners and customers. Run a period of tests with the standardized offering and measure the results. For example, standardize your first meeting deck, your pricing, your product APIs, etc.
If the new business model is stable, it can be handed over to the core business and let sales/marketing or R&D integrate it into their own offerings. The core business should be responsible for the Scale phase of any business model.
(4) Measure the right results and pivot often
Business development is NOT sales without quota. There need to be rigorous metrics in place to measure each of the above stages of business model development. There should be continuous improvement in whatever metrics we pick. If it is first meetings, there should be an uptrend. If it is POCs, signed partnership agreements, OEM agreements or API integrations, ditto. If the numbers do not improve then we need to pivot and find out what is happening. Which of our assumptions were wrong? Did something change in the market?
Adjust the game plan and try again. Experimentation and pivoting should have a time-box. If metrics do not improve with 2-3 pivots it may be time to move onto a different kind of partner, value proposition, pricing or product integration. It is key to remember that KPIs will move slower than in the fine-tuned core business. As a rule of thumb, if a core business makes course corrections every 2-3 quarters, business development should have a review cycle that matches that culture no matter how initial executive expectations were set. Prepare to be reviewed at the same cadence for success. Patience and what waiting period is normal for “things to succeed” seems ingrained in the culture. Be ready for it.
(5) Pick passionate teams with sales, product and networking skills
To pilot business models the BD team needs to have good balance of sales, product and networking skills. While a soft skill, networking is the most critical. The team will be working with new types of partners that our firm does not interact with or have a great track record with. Getting sustained access to them as we listen, hone our value proposition and work out our solution requires unique persistence and interpersonal skills. The same skill could be used internally as well. The BD team will need to network broad and deep in the company and its current partners and customers to garner the support for the ideas and suggested changes. The deep sales and product expertise can balance the enthusiasm with the realities of the existing of the core business and the knowledge of how things work and what can be successful.
Passion for the business model design should be a prerequisite. Pivoting a lot until the right model is found can be viewed as many small failures. And they are. It takes a certain team makeup to sustain enthusiasm in the early days to persist. Passion is also critical with partners and customers when we do not yet have all the answers, solutions or ideas. But have the commitment to bring it, no matter what.