I have a confession: I hate the term “business development.”
Despite having spent most of my career “doing business development”, I must admit that I’ve always secretly harbored an uneasy relationship with the label of “business development” as a job title.
I mean, isn’t anyone who works for a business thereby charged with developing it?
According to my own Grand Unified Theory of business development, the goal of this ambiguously-named function is to create long-term value for an organization from customers, markets, and relationships. And yet, if you ask a Biz Dev person at a startup to describe their day-to-day role you’re likely to hear a vastly different description than someone doing business development at a more mature company. And the differences are likely to be just as vast between a startup at the seed stage and one after their Series B.
Why is that? The answer: The role of business development changes as a company grows because what is valuable in the long-term changes as the company grows.
Here’s how the role of business development evolves as a company evolves, from an early stage startup to a mature Big Company.
Business Development At A Startup
Early stage startups (pre-seed, seed, Series A)
At the youngest of startups, the greatest opportunity to create long-term value is by finding customers to validate product-market fit. There won’t be a business in a few years if an early-startup cannot find traction within a few months, so value that is “long-term” to early-stage companies may actually be realizable in a relatively short-term period. Getting customers, users, or early adopters on board to validate the need for a product helps confirm (or dispel) whether the business has a solid base on which to build a future. Accordingly, the role of business development in a very early stage startup is often focused at the intersection of sales and product development.
Early-stage business development is often so integral to a company’s foundation that it primarily the responsibility of a sales-focused co-founder or CEO. At the same time, a company whose founding team is more heavily weighted with subject matter experts instead of business experience (for example, an all-engineer team or a company founded by industry domain experts) may prioritize an early hire of an experienced “business guy” to play the BD role while allowing the founders to exert their experience where it is best applied.
“Business development” in an early-stage company is focused on establishing a firm footing that will allow a product to become a company. By helping to fund the continued existence of the business, business development at early-stage startups is fundamentally about creating long-term value to the organization.
Growth stage startups (Series B or later)
Once a startup has traction, the universe of realizable growth opportunities begins to expand.
Business development roles now focus on evaluating the best paths to pursuing growth by relying on a backbone of existing products and customers. A company with runway, funded either by investors or revenue, can explore a variety of options in the pursuit of long-term value. As new growth opportunities become apparent – for example, ideas for developing new products, pursuing customers in new markets, investing in marketing or distribution efforts to attract customers – a growth stage startup must still carefully manage its limited resources and will still be forced to prioritize the most valuable uses of its people’s time.
Having achieved product-market fit, a growth-stage startup’s customers, products, or reputation, become an asset that may be leverageable for partnerships. Partnerships become an attractive option to pursue distribution, product enhancements, or brand equity. The ability to sell other companies on the idea of partnership and “do deals” that drive scale becomes a go-to arrow in a growth-stage business developer’s quiver.
Repeating the cycle of identifying, assessing, and pursuing strategic growth opportunities has the potential to create a snowball effect that leads the company down a course towards self-sufficiency, and ultimately an exit via IPO or acquisition.
Large organizations survive by milking cash cows but create long-term value for shareholders by pursuing new avenues of growth. Even for a mature Big Company, growth opportunities abound: from extending a brand with a new product, to engaging with new and old customers in new ways, to innovating around entirely new lines of business.
At a Big Company, the day-to-day tasks required of a business developer can vastly differ from team-to-team within any given organization. Specifically, I believe there are 3 ways that business development manifests itself within a large organization: Intrapreneurial BD teams, Agent BD teams, and De Facto BD teams.
Intrapreneurial BD Teams
Some Big Company business development teams act as vanguards in unexplored territories, evaluating how an idea can hatch into a new line of business. These teams lead the charge in vetting “whitespace” opportunities, often ideas that caught the attention of senior executives as a prospective growth area in which to invest (case in point: every company that sprouted a “Big Data” division over the past few years). To a large extent, this approach resembles a hybrid of those found at earlier-stage companies: being the intrapreneurial “business guy” that’s focused on iterating on an idea until it finds a willing audience of customers (or doesn’t, and gets mothballed).
These teams may operate independently from the rest of the organization, but just as often an Intrapreneurial BD team can operate from within an existing business unit. When they have responsibility for a budget, these teams may act on their own to explore and execute on ideas that result in new products, partnerships, or other initiatives that tie back into a larger goal of the organization (such as a mandate to “Drive customer acquisition of Millennials” or “Grow our market share in Asia”).
Once an idea is brought to market, an individual in an Intrapreneurial business development role may transition into an operating role within the new business, or they may move onto a new project and continue the cycle.
Agent BD Teams
Another form of Big Company business development team is one that lacks the funding to incubate ideas on their own, and instead serves as an internal scout for opportunities that may benefit other teams within the organization. Frequently, these business development teams will operate as agents of a division of the organization. For example, a business development team for a company’s Small Business Products division may evaluate opportunities for new products or partnerships that help the marketers, product developers, or other colleagues of the division scale their efforts.
Agent business development teams may spend their days stepping through Excel models to analytically assess the value of an opportunity and decide on whether to “Build, Buy, or Partner.” While the execution of a “build” or “buy” path may be handed off to counterparts on another team, such as Product Development, Marketing, Corporate Development, or Procurement the pursuit of a partnership often remains in the hands of the agent BD team. These teams can manage the sourcing, due diligence, and negotiation of a contract that brings a partnership to life that will ultimately wind up in the hands of colleagues.
De Facto BD Teams
And further still, many people “doing business development” within Big Companies don’t actually have the words “Business Development” written anywhere on their business card. They are Social Media Marketing Managers, or Directors of Customer Service, or Senior Architects — the operators who drive the day-to-day functions of a business and therefore evaluate the many paths that they may take to do their jobs better. Sometimes those paths lead to marketing partnerships, or new product development, or a recommendation to acquire a company. Recognizing a growth opportunity in front of them, a De Facto BD team (which is a quote-unquote “BD” team at all) may spring into action to perform the very functions that we may traditionally associate as the exclusive domain of a dedicated BD team. De Facto BD teams prove that creating long-term value is not the exclusive domain of any one job title.
A commonality across each of these three archetypal Big Company BD roles is the need to sell internally. Having evaluated the myriad paths to creating long-term value, a Big Company business development team can become as much focused on selling an idea up the chain within their own company as it is focused on closing deals externally. The fight for budget, resources, and executive approval all dictate which growth opportunities will be green-lit and which will be passed over.
The Common Link
While a day in the life of a business developer may seem to change dramatically as a company evolves over time, there will always be one common link. No matter how you slice it, at companies of all sizes the role of “Business Development” will always be focused on seizing growth opportunities and creating value that persists for the long-term.