What is business development?
Business development is the creation of long-term value for an organization from customers, markets, and relationships.
First, what do I mean by “long-term value?” In its simplest form, “value” is cash, money, the lifeblood of any business (but it can also be access, prestige, or anything else a company seeks in order to grow). And there are plenty of ways to make a quick buck for you or your company. But business development is not about get-rich-quick schemes and I-win-you-lose tactics that create value that’s gone tomorrow as easily as it came today. It’s about creating opportunities for that value to persist over the long-term, to keep the floodgates open so that value can flow indefinitely. Thinking about business development as a means to creating long-term value is the only true way to succeed in consistently growing an organization.
The “customers” portion of the definition may be slightly more obvious – customers pay the bills. They are the people who pay you for your products and services, and without them you won’t have any business to develop. But not everyone is a natural customer for your business. Maybe your product doesn’t have the features I’m looking for. Maybe your product is perfect, but I don’t even know your company sells it. Or maybe you’re not reaching me because you’re not knocking on my door.
That’s because customers “live” in specific markets. One way to understand markets is by geography - if I only focus on selling in the U.S. but you reside in London, then you are currently unavailable to me as a customer as I do not currently reach the European market. But customers also "live" in markets that are defined by their demographics, lifestyles, and buying mindset. Identifying opportunities to reach new customers by entering into new markets is one important gateway to unlocking long-term value.
Take for example the Pet Owners market. The customers who live there, of course, are people who own cats, dogs, fish, etc. Petco is a company that clearly sells to customers who live in the Pet Owners market. I, on the other hand, do not have a pet. I don’t live in the Pet Owner market. So what if Petco wanted to sell something to me? Then they’d need to find a way to enter into a market where I do live. For example, I have red-hair and pale skin and as such, I am prone to spontaneously combusting when exposed to the sun. Therefore, one market that I "live" in is the Sunscreen Buyers market. If Petco wanted to sell something to me, perhaps they can find a way to enter into that market by offering sunscreen, hats, or sun-reflecting aluminum foil suits. Now, determining whether that’s a good idea or not for Petco to do so is a job for the business development team – and another story for another blog post.
And then there were “relationships.” Just as the planets and stars rely on gravity to keep them in orbit, any successful business development effort relies on an underlying foundation of strong relationships. Building, managing, and leveraging relationships that are based on trust, respect, and a mutual appreciation of each other's value is fundamental to enabling the flow of value for the long-term. Relationships with partners, customers, employees, the press, etc. are all critical to the success of any business development effort and as such they demand a bold-faced spot in any comprehensive definition of the term.
So, is business development actually sales? Is it partnerships? Is it all about hustling? Well, frankly, yes. It’s all of the above and as we’ll see in future posts, it’s much more. It’s a complicated and fascinating discipline that deserves a clear understanding, so that we can marvel at the beauty of a well-done deal as much as the stars.
Read on Forbes, on Wikipedia and on investopedia
Comments from Eduway: I think business development is different for existing businesses and for newbies. The existing businesses may want to expand, to grow, or focus more on quality rather than scale. The newbies want to exist and grow. The process of business development is distinct obviously.