What is BD? Sales ? Strategy ? Marketing ? The Wikipedia definition is: Business development comprises a number of tasks and processes generally aiming at developing and implementing growth opportunities within an organization.
To understand in practical terms the meaning of BD and the activities developed by BD professionals I believe that the best way is to listen from the guys that are implementing BD in the field.
This post from Holger Luedorf, (BD at Foursquare) describes 15 basic rules that he follows at FS: 1) Create clear BD targets related to core company goals (e.g. grow the user base, expand internationally, outsource a critical technology etc.) or more explorative (e.g. M&A), 2) Structure your approach, this includes market sizing, market and competitive analysis, and a clear timeline. Identify partners and how to reach them (e.g. give intros hoping to receive intros), 3) Solve problems, help partners reach their goals, 4) Be prepared, research the companies you want to partner with, this means scanning a lot of industry press and frequently meeting with peers to share information, 5) Understand the partner organization, who are the decision-makers, which teams or managers are heavily weighing in, who is responsible for the long-term execution of the partnership, 6) Build a hierarchy of touch points, in certain scenarios bottoms-up approaches might work better in other cases it might be better to pitch top-down knowing that an executive is passionate about certain topics and will strongly influence the decision making process of her organization, 7) Always be responsive, 8) Don’t rush, don’t annoy, pitch, have a solid follow-up providing additional data points but then let it sit for a period of time, before sending a reminder, 9) Can’t close? Regroup, analyze, and adapt if possible, 10) Own your partners, not just deals, when BD is a separate function from Partner Management, it is easy to play good cop, bad cop, 11) Don’t over-commit, internally or externally, 12) Build strong relationships with key partners over time, 13) Be present as a company, 14) Relay partner feedback back into your own organization (e.g.: partner meetings generate a lot of information like product critique, observation of what the competition is doing) 15) Make sure you have solid legal support. Digging in the comments there is also intersting information. Following some notes: a) Hiring BD professional: I am always looking for:
1) Personality (obviously you need someone personable, trustworthy, and who fits with the rest of the team)
, 2) Hustler mentality, you want someone pro-active who can think on the spot and is creative in her approach,
3) Reputation & network (someone that already has a good reputation & network, whether it be from college or previous jobs)
, 4) Quantitative skills (number skills will come in handy when researching, negotiating, and forecasting), b) Startup KPI: Transparent, weekly reporting e.g.: – New Meetings: 2
- New Term Sheets: 1
- Signed Deals: 0, c) Segmenting BD. The Foursquare BD team has split up its team in these groups: 1) Mobile distribution (OEMs, carriers, platform app stores)
, 2) Media deals (publishers, sports & entertainment companies),
3) International (doing early-stage BD deals abroad, similar to what we did early on at Foursquare)
, 4) Strategic/Monetization (e.g. Amex)
, 5) Platform (the Foursquare platform is becoming increasingly important for 3rd party service and there is high demand for our venue & Explore API).
Another great post regarding BD is: Who You Gonna Call? Navigating the Existential Crisis, from John O’Farrell. The post describes the story of a crisis at Loudcloud/Opsware, and the important role of the BD guys orchestrating and executing the deal that saved the company. The author explains that strategic business development is not sales, is an investment in systematically mapping and networking your ecosystem to drive transformational opportunities. BD is focused on a very few high-impact events a year rather than a large volume of quarterly transactions, so it should have separate goals and incentives from those of sales. Strategic BD should be low headcount and high impact, led by a senior professional operating at a peer level to Sales, Engineering and other company functions.
A part II of this post reinforce this perspective, showing how BD is important to: 1) leverage key company assets (e.g.: management team, engineering, marketing, sales, legal and finance functions) driving the process while the rest of the company continue focusing on daily operations, and 2) gaining massive industry insights during the process of evaluating future acquisitions.
How you manage BD in your organization? Which BD frameworks are you using?