Business Development Is Too Critical to be Left to Corporate Politicians

Business development
Business development types are afraid to carry a quota

Business Development – Too Important To Be Left To Politicians

Business development is one of the most currently needed roles in tech B2B yet is often handicapped by having the least talented people inhabiting it.

Business development should be the place where B2B tech firms find highly leveraged relationships where other people’s sales forces discover the energy in one’s product. The end result should be a third-party sales force, with existing customer relationships, taking another’s product to their captive customer.

That is almost never what happens. Instead, the role is often inhabited by failed sales people or those fearing a real quota or other tangible accountability who have great hair, can talk endlessly about sports teams and have very high travel expenses.

Sales people constantly receive that dreaded email announcing a new “partnership” with some company where nothing much ever happens after the announcement. Business development types love to build “partnerships” with firms like Oracle, Salesforce, SAP and scores of equally mammoth companies where they already have tens of thousands (literally) such meaningless partnerships.

Sales people know that often the business development people are all about Bus Dev = No Rev. They are more about corporate politics, positioning, living a murky role somewhere between sales and marketing with little or no accountability.

It does not have to be this way.

Companies must give up on having the slick, great hair politician type delivering pablum press releases that amount to nothing.

Companies should realize the direct sales model is dying. In some sectors, it is legally dead. There will be growing reliance to cleverly build relationships with third parties who can sell one’s product via their own sales force to their existing customer base.

It is an axiom that products seeks channel and channel seeks product. Business development teams need to bring valuable product to their channels or to find leveraged channels to create less expensive, incremental revenue streams.

Business development must deliver a tangible, measurable and sustained revenue stream that has a cost of sales fundamentally different from that of the traditional sales force.

Measurement, via direct revenue targets is mandatory if a business development role is to work. The other measurement is margin. Delivering revenue where both the new channel and the existing sales rep are compensated creates a revenue event but at a margin loss.

Management needs to get a clue as to how many of the slimy current business dev types manipulate measurement. Often, direct sales reps are told to work with partners, whether they are involved in a deal or not.

A partner name is entered in the Salesforce or other transactional system. Then the bus dev types generate reports showing how their “partners” are either driving revenue or adding some level of value. Often, neither is the case.

People who live at the edge of revenue creation are very clever about making themselves look like they are delivering value when in fact, they are just spending money, getting in the way of the sales force and wasting the great opportunity there is in every selling environment to slowly transition from direct to indirect sales.

Smart firms are moving to business development as their top revenue generating endeavor. Such firms are bypassing hiring massively expensive sales forces who often prove useless for anything more complicated than a well-worn category entrant.

Business development at scale is not only about selling one’s product via a leveraged channel. It is about finding companies who need one’s product for both internal use and to give them a very differentiated offering in the market.

In a recent example for one of our portfolio firms, their BD team brought a product to a major, well known company, enabling them to deliver a service at the edge of the network.

This proved to be a revenue generating event that eliminated both the need for VC funding and hiring a direct sales force. This is what business development should be doing every day.

Unfortunately, current bus dev is more about finding a role for those who cannot sell anything but are adept at corporate politics, friends of the CEO and almost always have great hair and talk about baseball.

 

Article reprinted from Software Executive Magazine On Line Edition