Provoked by Seth Godin’s post on business development, I want to share my experience on this matter. All companies do “business development” from start ups to the SAPs and HPs of the world. Many of the deals are honest and have a real business reason, but many others are there to create a fake feeling of traction and news. Why is it happening and how can smart companies avoid it?
- The annual event pressure–you would not believe how many cooperation deals are signed so there is something to announce in the annual conference of customers/developers/partners. These deals are born to create PR and die the same way. The problem is that biz dev guys learn that it is OK to sign a deal that no one plans to execute, so the sense of accountability diminishes over time. Another secret: the press and analysts learned to ignore this type of deal as well…
- “We need to show results”- Biz dev people are always concerned about their future. It is a nice-to-have position and not a must for the company, so they have to produce results. Funny enough, on the other side there are people with the same motivation, so deals are easy.
- The wrong things are measured–ask most of the biz dev people you know and they will tell you that they submit or work on a plan that measures the signing of deals and not the outcomes. The reason is that it is easy to measure this way and you don’t have to wait 1-2 years for real measurement of success. Another popular excuse is that the outcomes are controlled by the business unit and not by biz dev. If you start measuring biz dev by this year’s signed deals (say 50% of the bonus) and revenue generated from last year deals, you will see much better deals getting signed.
- Having the partner’s interest in mind–this is the funniest fault of the system unique to large companies: you sign a big deal with a partner and you hire an account manager to manage it. Makes sense. This guy gets a desk at the partner campus and after a while becomes the ambassador of your company rather than your worker. Since the other side has an account manager as well, the two will spend endless amounts of time trying to carve out more deals to justify their existence and the cycle begins again…
How to avoid all of this? Here are some tips that helped me in the past:
- Embed biz dev in the right unit, where the wanted result is measured best: if you want to sign technology deals, have the biz dev guy report to the VP of product. If you want to increase sales, have him report to the VP of sales and if SMB is the focus, make him/her part of this unit. Don’t create a biz dev kingdom to serve everyone.
- Measure the results you want: signed deals mean nothing. It is like measuring salesmen by number of leads. Measure the end result instead.
- Don’t give in to PR deals: even the most hyped ones (say Salesforce and Google) die quickly.
- Hire the best: this is trivial, but here is one tip. Ask for references from the “customers” of biz dev like the sales head or the CEO of the partner companies and not from the head of business development in the company