Steve Shu on Management, Consulting, and Leadership

Business Development May Be On The Upswing Careerwise, But What Is Business Development?

Earlier this year I had heard from sources at various business schools that given the recession and slower consulting and investment banking hiring, a lot of MBA graduates were looking to careers in business development. This is a great development, but in my experience the term "business development" means quite different things to different people. Here's a paraphrasing of some of the types of statements I've heard in the workplace:

• "Business development is about new customer acquisition and sales."
• "Sales personnel are divided into existing accounts and hunters. Business development looks for breakthrough, strategic sales."
• "Business development handles strategic partnerships & deals."
• "Channel sales are the primary focus of the business development team."
• "The VP of Business Development works financing, acquisition, and strategy activities."
• "Business development establishes the cross-promotional marketing deals."
• "Business development focuses on strategic initiatives (whether partnership, financing, product) identified by the Board."
• "The business development team is facilitating design of a new product with XYZ company and our development team."
• "Business development sells product to the channel."
• "Oh. You handle a mixture of finance, marketing & sales, strategy functions. You're business development."
• "Business development folks are jacks of many different trades."
• "Business development is about getting larger partners to commercialize on brand extensions that you may not be able to handle on your own."
• "The sales team does that. You want to know what business development does? We need to talk about that in my office. Come on in, and please shut the door so we can have some privacy."

There is an element of truth in all of these statements. Business development can be all of these things. It really depends on company. In my mind, however, the role of business development is to find new strategic opportunities for the company and start the company on the path to execute (incubation). It is not uncommon for business developers to have a combination of strategy, marketing & sales, finance, legal, and operations background.

Based on my experience in business development, here's the flavors I've run into (roughly from more to less common):

• Partnership development
• Strategic market development and sales
• Strategic marketing
• Mergers, acquisitions, and financing
• New business line exploration
• Channel sales
• New product development

What are your experiences with business development professionals? To what extent is it a well-defined function within your business? What types of issues have you run into?

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Musings On Winning and Losing Moves Within Startup Situations Within Larger Companies

Though anecdotal, I've seen a slight rise in activity with companies looking to incubate new businesses or start-up climates within a larger company. These are challenging situations to get off the ground. Based on a mixture of consulting to a number companies in these situations and being involved with at least one of these situations as a manager within the company, here are some thoughts on winning and losing moves:

1. Structure: Having a start-up sponsor in name or position only (losing move) - Successful, external startups have managers that will fight to win, pave new ground, work out kinks, get the best resources, etc. If the sponsor is a senior executive that provides only oversight, does not push or provide guidance, and does not empower delegates, this could be a warning sign for an effort that will not bear fruit. If you have a start-up sponsor that provides political and boundary management only, then it might be a good idea (winning move) to get a powerful delegate that answers to the sponsor and can help to "fly cover" in the organization. Situations where cover may be needed include designing new marketing material, getting special access to the sales team, breaking new ground in the legal contracts area, and getting financial budgets approved outside of normal (overly conservative) control mechanisms.
2. Strategy & Goals: Failing to clearly articulate the ultimately goal and problem statement of the startup early on (losing move) - I guess an addendum to this might be making the strategy too complicated. For example, when faced with the startup options of creating new revenue, helping cross-sell other services within the larger company, reducing customer churn, or all of the above, I would tend to advise leaning away from trying to knock down too many of these at once. All options can be on the radar and should be part of early brainstorming & strategy sessions, but viewing the startup as a standalone business may be the best option of getting traction first.
3. Core Team Makeup: Failing to bring in new blood when new blood is needed (losing move) - At risk of disrespecting both large company employees and entrepreneur-types, these groups often don't understand one another. For example, entrepreneurs-types can lack respect for large company bureaucracy, but this is dangerous because buy-in and tapping into the resources (people, structure, assets) of a large company can be tremendous. On the other hand, large company employees can become accustomed to the culture, pace, and processes of existing businesses - these may be incompatible with aspects of a new venture. Bringing in new blood for a start-up within a larger company is often a winning move, and the resources need to be different & complementary.
4. Extended Team Resources and Horse Trading: Failing to capitalize on resources of the larger entity (losing move) - If entrepreneurial types are brought into the new business, there needs to be complementary intrapreneurs (winning move) that understand the structure of the large company and can help get things like data from business units within other areas of the company, identify potential A-team resources already within the company that can help (e.g., marketing, business development, project management, finance), or tap into key channels and partners external to the company (e.g., lighthouse accounts).

There are many more winning and losing moves to create startups within larger firms. What are your experiences? Where do you see pain points?

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Helpful Versus Hindering Lawyers - True Business Lawyers

Yesterday while getting some minutes on the elliptical machine, I was re-reading George Lois' advertising book, "What's The Big Idea". Two of the stories really cracked me up, and they led to write this perspective post on lawyers, more from a startup, venture, or new business initiative point of view.

The first story related to the incredible ad success surrounding Naugahyde (a synthetic, leather-like fabric or material), which had a fabricated, Nauga monster persona as part of the campaign. Click here for some pictures of the Nauga. George Lois, in true storytelling form, relates the whole positioning and art behind the Nauga solution. To make a long story short, he relates something to the effect that late in the game when the whole campaign is ready to roll, one of the lawyers raises a point to the effect of (off the top of my mind), "We're concerned that people may think the Nauga is a real animal ... as a consequence, people may be misled into thinking we are selling real leather."

To put things fairly, some forms of advertising (e.g., TV) must definitely be run by lawyer. But who in their sane mind would think that the Nauga was a real animal? Baffled, George relates conducting some primary interviews with regular people, and that the research turns up no one who is confused that the Nauga is a real animal. They think he is crazy for even surveying them. The Nauga goes through, and everyone is lucky that George was there.

The second story has a similar flow. It is related to the logo by Jiffy Lube (see here) and how at the last minute one of the lawyers raises the point that the logo might look like a phallic symbol (and be a showstopper). George disarmed with the laywer with a statement to the effect of, "I don’t know what your peepee is shaped like, but my peepee sure don’t look like that!”. The rest is history, and the logo went through.

I've worked with a number of lawyers, and I definitely prefer the types that help the business development, entrepreneur, & creator-types come up with solutions as opposed to finding every roadblock that will stop a deal. Just finding knowledgeable lawyers that can find holes and weaknesses isn't good enough. The great lawyers, in my mind, are pragmatic problem solvers and solution creators, in addition to being definitive experts in the law. The great ones can engage in a working dialogue and help to calibrate the business risk of pursuing different options.

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Consulting and Management Method: Finding And Relieving The Bottleneck

When thrust into a situation where either resources are constrained, there are competing management choices, and paths forward are unclear, I often find a consulting method of "finding and relieving the bottleneck" useful.

For example, suppose a startup is trying to figure out how to ramp up sales from its first (non-repeatable) deals. Or suppose a company cannot determine whether sales or operations processes are the primary lever for stabilizing revenues. Yet another case might be that there is an incubator unit within a larger company that is underperforming - how might you approach the problem of fixing the situation?

At its core, "finding and relieving the bottleneck" is an analytical method used in production and operations. There are a couple of predominant ways that I look at operations by default, the former being a more quantitative method involving system & process flows and things like Little's Law, and the latter (which I strongly recommend) method using visual inspection and interviews with client management. Here I'll address the latter.

So back to the case of ramping up sales for a startup, where its first deals are largely non-repeatable because they were unique and early in the learning curve. Suppose you have 1-hour with client management. How might you help to tease out how where to start looking for improvements?

In a nutshell, the bottleneck method approach might simply be organized around finding where one gets the biggest bang for the buck in terms of making a change. I might ask the client if they had another resource or an additional day in the workweek, which of the following would ultimately result in more sales:

• Refining Strategy - this might involve breaking the customer base into segments based on type and prospect awareness profile. Where's the lowest hanging fruit? What kind of marketing and sales material is each segment getting? If you had a choice to improve the marketing collateral or sales processes for the higher priority segment, which would you choose? Are there backlogs in the system (e.g., uncalled sales lead prospects), which would indicate bottlenecks? If you made the change, would it really address the end goal, e.g., getting more sales?
• Changing Management Approach - in many situations, entrepreneurs may make the first sales, but they often have problems transferring knowledge on how those sales are made. Alternatively, they may have problems letting go of other areas that could be delegated or outsourced (e.g., finance and accounting, inside sales, meeting scheduling, and/or field sales). Would it be helpful to have someone shadow key executives to distill the sales processes and real value propositions that various customers are buying? If we could clone key people to offload some of the burden, would there be enough prospects and deal flow to make things worthwhile?
• Adjusting Technology or Product - if the product were made less complex or if we simplified choices, would we get better yield and flow from the awareness to interest phase of the customer purchase process? Is there a way that we could get people to sample or experience the product before purchase to skip people past bottlenecks of overanalyzing things too much up-front?
• Obtaining Financing for Expansion- if you focus time on more sales versus financing for expansion (presuming company has sufficient sales), what would you do and why? What if choosing one path doomed the other? Would the chosen path still be worthwhile? What kind of results could we expect by financing a new online versus a physical market for services delivery?

Optimal diagnosis clearly involves a mixture of tools and approaches, but the bottleneck method is an important method to learn in consulting because it can be increasingly used in facilitative situations where a client has substantial implicit knowledge (and such knowledge must be better formulated explicitly and transferred for company operations to scale).

I've also used this method in management situations (as opposed to in consulting situations only). The method can be particularly good when troubleshooting a problem that cuts across functional areas.

What are your thoughts? Have you ever used this type of approach? If so, how effective was it for you?

Related Posts: A Perspective On Client Facilitation Skills and Crash Course Consulting Reading List

Update (9/19/09): Readers may also be interested in post by Seth Godin on the priority list.

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