WHAT IS BUSINESS DEVELOPMENT IN AN ORGANIZATION?
Business development comprises a number of tasks and processes generally aiming at developing and implementing growth opportunities between multiple organizations. It is a subset of the fields of business, commerce, and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships.
In the limited scholarly work available on the subject, business development is conceptualized as or related to discrete projects, specific modes of growth, and organizational units, activities, and practices. Sorensen integrates these different perspectives with insights from chairman and managing directors (CMDs), senior business developers and venture capitalists from successful high-tech firms from Europe, North America and India into one general construct. In this perspective, business development refers to:
“the tasks and processes concerning analytical preparation of potential growth opportunities, the support and monitoring of the implementation of growth opportunities, but does not include decisions on strategy and implementation of growth opportunities” (Sørensen, 2012, p. 26)
These tasks and processes are performed by “business developers.” Given the nature of business development activities, the business development function is typically organized as a staff function.
The term business development and its actor, the business developer, have evolved into many usages and applications. Today, the applications of business development and the business developer’s tasks across industries and countries, cover everything from IT-programmers, specialized engineers, advanced marketing or key account management activities, and sales and relations development for current and prospective customers. Business development had its origins in the Industrial Revolution. See more examples in the last sections of this
The business developer is concerned with the analytical preparation of potential growth opportunities for the senior management or board of directors as well as the subsequent support and monitoring of its implementation. Both in the development phase and the implementation phase, the business developer collaborates and integrates the knowledge and feedback from the organization’s specialist functions, for example, R&D, production, marketing, and sales to assure that the organization is capable of implementing the growth opportunity successfully.
The business developers’ tools to address the business development tasks are the business model answering “how do we make money” and its analytical backup and roadmap for implementation, the business plan.
Business development professionals frequently have had earlier experience in financial services, investment banking or management consulting; although many find their route to this area by climbing the corporate ladder in functions such as operations management or sales.
Skill sets and experience for business-development specialists usually consist of a mixture of the following (depending on the business requirements):
- Mergers and acquisitions
- Strategic management
- Proposal management or capture management
- Sales experience
The “pipeline” refers to the flow of potential clients which a company has started developing. Business-development staff assign to each potential client in the pipeline a percentage chance of success, with projected sales-volumes attached. Planners can use the weighted average of all the potential clients in the pipeline to project staffing to manage the new activity when finalized. Enterprises usually support pipelines with some kind of customer relationship management (CRM) tool or CRM-database, either web-based solution or an in-house system. Sometimes business development specialists manage and analyze the data to produce sales management information (MI).
Such MI could include:
- reasons for wins/losses
- the progress of opportunities in relation to the sales process
- top performing salespeople/sales channels
- sales of services/products
For larger and well-established companies, especially in technology-related industries, the term “business development” often refers to setting up and managing strategic relationships and alliances with other, third-party companies.
In these instances the companies may leverage each other’s expertise, technologies or other intellectual property to expand their capacities for identifying, researching, analyzing and bringing to market new businesses and new products, business-development focuses on implementation of the strategic business plan through equity financing, acquisition/divestiture of technologies, products, and companies, plus the establishment of strategic partnerships where appropriate.
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For further reading and insight on Business Development, go ahead and read the part 2 of this article. Visit www.dmckinseyandassociates.com.ng/blog