Five Reasons Why Business Development Is So Difficult To Get Right

Every conversation I have with a CEO of a middle-sized company eventually touches on the same conundrum … ‘How in the world does a company of our size get traction in new markets with new clients?’ This challenge seems to rank right up there with problems of arranging sufficient financial resources and getting top people to commit to a small but growing company.

This is often a challenge that did not limit growth in the early stages. During that early growth, the contacts and reputation of the founders and key executives drove the ‘top line’. Most often the client base came to resemble a silo in a corn field … one client dominating the business mix surrounded by other smaller clients that represent stunted attempts at broadening the base.

To be sure, this start up strategy is one of the preferred ways forward during the initial phase. In fact it is an early indicator if the management team has any business starting the business at all. If they don’t have ready clients for their product of service, they should get them before going forward.

But why, once the early growth phase is over, is it so difficult to get business development going? Why do the business development slots look so much like revolving doors? And, why is it that growing a company from nil to ten or fifteen million in annual revenues often does not seem to prepare management to take it to thirty or fifty million?

Here are some suggestions that might serve to channel discussions towards productive areas.

One: The senior management (particularly the CEO) is not really committed to making the journey. This is more common that you might think. Corporate growth requires significant self-reinvention among key members of the senior team. Often they are not prepared to give up control or manage a larger operation. Some prefer ‘writing code’ or whatever the company’s principal business happens to be. But whatever their ‘rationale’, they don’t want to or can’t become managers. In this case, expenditures on business development can just be a waste of resources. Better save the money and buy the new car.

Two: The structure pretty much guarantees failure. Business development is often an afterthought add-on to the evolved organizational structure. It seems to operate in a quasi-independent status with loose reporting arrangements to the CEO or COO. It is an appendage after the fact. Business development has to be integral to the company’s organizational structure and the CEO needs to be the senior business development member of the team. I once attended an all-hands retreat of a company where the COO gave the business development report. That spoke volumes on how the company saw the three business development employees standing in the wings. They were, of course, replaced by newer models by the next retreat and the revolving door was kept in good working order.

Three: Business development is seen as the province of middle-level people. Think of the message that such an approach gives potential new clients. “Talk to the ‘lessers’ and, if we deem you worthy, we will let you talk to the senior people.” New clients need/want to see the top person right off the get-go. It is the CEO that represents the Company’s commitment to client satisfaction, the ability of the company to commit as well as the ability of the client to find some person to rely on. Each time a decision-maker chooses to go with a new company they take a huge risk. If it goes wrong … how much faith do you think such a person would put in a middle level person with no real connection to the Company’s culture or senior management team?

Four: The wrong people for the job: A company often will bring in ‘business development’ types as a first attempt to attack the problem of widening the client base. These people are ‘specialists’ in chasing business … but frequently not specialists in the business of the company. Most often they are walled-off from the Company’s principal clients and are limited to higher risk longer cycle targets. What is most interesting about this approach is that it resource-starves functions that a company needs to provide in order to successfully grow its top line. Money is spent on business development types while the proposal development, capture team and red-teaming are radically under-resourced. In the end it is often the case of a middle level employee identifying a marginal piece of business that the company cannot properly pursue and capture.

Five: What is all this making us look like in the market place? The process is called branding … establishing the reputation of the company in the minds of actual and potential customers. It is by far the least understood and most dangerous threat to any company’s future. How is your company known … what is its reputation? How well do you understand why customers do business with you? Are you known as a group that knows how business is done? Or are you branded as a company that has ‘outsourced’ its future? These ‘costs’ are often overlooked as being less important than the business of the business. This mistake has probably killed more companies than any other. How you are known determines how seriously you are taken … and that largely determines what opportunities you will see and how successful you will become.

Business development is a tough nut to crack for any management team intent on growing a business out of the teens towards the ‘century’ mark. There are more dead bodies in that field than live travelers. Without careful planning and disciplined execution, the results are likely to be both disappointing and frustrating.