Business development entails tasks and processes to develop and implement growth opportunities within and between organizations. It is a subset of the fields of business, commerce and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships. Business development can be taken to mean any activity by either a small or large organisation, non-profit or for-profit enterprise which serves the purpose of ‘developing’ the business in some way. In addition, business development activities can be done internally or externally by a business development consultant.
In the limited scholarly work available on the subject, business development is conceptualized as or related to discrete projects, specific modes of growth, and organizational units, activities, and practices. Sorensen integrates these different perspectives with insights from chairmen and managing directors, senior business developers, and venture capitalists from successful high-tech firms worldwide, which is adopted in the Palgrave Encyclopedia of Strategic Management:
″Business development is defined as the tasks and processes concerning analytical preparation of potential growth opportunities, and the support and monitoring of the implementation of growth opportunities, but does not include decisions on strategy and implementation of growth opportunities.″
In practice, the term business development and its actor, the business developer, have evolved into many usages and applications. Today, the applications of business development and the business developer or marketer tasks across industries and countries, cover everything from IT-programmers, specialized engineers, advanced marketing or key account management activities, and sales and relations development for current and prospective customers. For this reason, it has been difficult to discern the unique features of the business development function and whether these activities are a source of profits.
Recent systematic research on the subject has outlined the contours of an emerging business development function with a unique role in the innovation management process. The business development function seems to be more matured in high-tech, and especially the pharma and biotech, industries.
The business developer is concerned with the analytical preparation of potential growth opportunities for the senior management or board of directors as well as the subsequent support and monitoring of its implementation. Both in the development phase and the implementation phase, the business developer collaborates and integrates the knowledge and feedback from the organization’s specialist functions, for example, research and development, production, marketing, and sales to assure that the organization is capable of implementing the growth opportunity successfully. The business developers' tools to address the business development tasks are the business model answering "how do we make money" and its analytical backup and roadmap for implementation, the business plan.
Business development professionals frequently have had earlier experience in sales, financial services, investment banking or management consulting, and delivery; although some find their route to this area by climbing the corporate ladder in functions such as operations management. Skill sets and experience for business-development specialists usually consist of a mixture of the following (depending on the business requirements):
- Mergers and acquisitions
- Strategic management
- Proposal management or capture management
The "pipeline" refers to flow of potential clients which a company has started developing. Business development staff assign to each potential client in the pipeline a percent chance of success, with projected sales-volumes attached. Planners can use the weighted average of all the potential clients in the pipeline to project staffing to manage the new activity when finalized. Enterprises usually support pipelines with some kind of customer relationship management tool or database, either web-based solution or an in-house system. Sometimes business development specialists manage and analyze the data to produce sales management information. Such management of information could include:
- reasons for wins/losses
- progress of opportunities in relation to the sales process
- top performing sales people/sales channels
- sales of services/products
For larger and well-established companies, especially in technology-related industries, the term "business development" often refers to setting up and managing strategic relationships and alliances with other, third-party companies. In these instances the companies may leverage each other's expertise, technologies or other intellectual property to expand their capacities for identifying, researching, analyzing and bringing to market new businesses and new products. Business development focuses on implementation of the strategic business plan through equity financing, acquisition/divestiture of technologies, products, and companies, plus the establishment of strategic partnerships where appropriate.
Business development is to be thought of as a marketing tactic. The objectives include branding, expansion in markets, new user acquisition, and awareness. However, the main function of business development is to utilize partners in selling to the right customers. Creating opportunities for value to be ongoing in the long-term is very important. To be successful in business development the partnership must be built on strong relationships.
Notes and references
Compare: Houterman, Joyce; Blok, Vincent; Omta, Onno (2014). "Venture capital financing of techno-entrepreneurial start-ups: drivers and barriers for investments in research-based spin-offs in the Dutch medical life sciences industry". In Therin, Francois. Handbook of Research on Techno-Entrepreneurship: How Technology and Entrepreneurship are Shaping the Development of Industries and Companies. Elgar reference collection (2 ed.). Edward Elgar Publishing. p. 169. ISBN 9781781951828. Retrieved 2015-07-23.
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- What, Exactly, Is Business Development?
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- The Palgrave Encyclopedia of Strategic Management (2014)
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