Tuesday, September 22, 2009

Business Development

There is always a set of people in B-Schools who want to get into "Business Development". Seth Godin, in his usual style has written a blog on this which is reproduced here:


Business Development is a mysterious title for a little discussed function or department in most larger companies. It's also a great way for an entrepreneur or small business to have fun, create value and make money.

Good business development allows businesses to profit by doing something that is tangential to their core mission. Sometimes the profit is so good, it becomes part of their core mission, other times it supports the brand and sometimes it just makes money. And often it's a little guy who can be flexible enough to make things happen.


  • Starbucks licenses their name to a maker of ice cream and generates millions in royalties.
  • A rack jobber like Handleman does a deal with a mass marketer like K Mart. K Mart gives them room in the store to sell records and gets a cut, Handleman does all the work.
  • AOL buys AIM instant messaging software and integrates it into their service.
  • Years ago, I licensed the rights to Isaac Asimov's Robot novels from a business development person at his publisher and turned the books into a VCR murder mystery game which I licensed to a business development person at Kodak, a company that was experimenting with becoming a publisher. (Isaac made more from this project than he did from many of his books).
  • Best Buy offers extended warranties on appliances you buy. They don't provide the warranty, of course, a business development person did a deal with an insurance/service company to do it and they share the profit.
  • The Princeton Review built a huge test prep business, but only by licensing their brand to a series of books which did the lion's share of their marketing for them.

You don't see business development from the outside, particularly all the potential deals that fail along the way. Many companies, though, spend millions of dollars a year looking for deals and then discovering that they pay off many times over. Others, particularly smaller competitors, are so focused on their core business that it never occurs to them to consider partnerships, licensing, publishing, acquisition and other arrangements that might change everything. Harley Davidson probably makes more money on business development than they make on motorcycles.

The thing that makes business development fascinating is that the best deals have never been done before. There's no template, no cookie cutter grind it out approach to making it work. This is why most organizations are so astonishingly bad at it. They don't have the confidence to make decisions or believe they have the ability to make mistakes.

Think about the Apple Nike partnership on making a device that integrates your iPod with your sneakers. This took years and cost millions of dollars to develop. Most companies would just flee, giving up long before a deal was done and a product was shipped.

Here are some tactical tips on how to do business development better:

  1. Process first, ideas second. If you're going to be bringing new partners and new ideas into your organization, you need a process to do it. Professionals don't, "know it when I see it." Instead, professionals think about the abilities of their company and strategies necessary to bring ideas in, refine them and launch them. Great business development people don't waste time in endless meetings with random vendors or hassle about tiny details up front. Instead, they have an agenda and a project manager's understanding of what it means to get things done. They don't keep the process a secret, either. They share it with anyone who wants to know. Someone needs to say, "here's how we do things around here," and then they have to tell the truth.
  2. Who decides? Because every great business development project is different, it's incredibly easy to get stuck on who can say yes (of course, everyone can say no). Professional business development people intentionally limit the number of people who are allowed to weigh in and are clear to themselves and their potential partners about exactly who can (and must) give the go ahead. Don't bother starting a business development deal unless you know in advance who must say yes.
  3. Courtship, negotiation and marriage. Every deal has three parts, and keeping them straight is essential. During the courtship phase, you win when you are respectful, diligent, enthusiastic, engaging, outgoing, and relentless in your search to make a connection. Do your homework, research people's backgrounds, learn about their kids, visit them--don't make them visit you. Look people in the eye, ask hard but engaging questions, you know the drill. Basically, treat people as you'd like to be treated, because the people you most want to work with have a choice, and they may just not pick you. Hint: if you skip the courtship part, the other two stages probably won't come up.
  4. Buyer and seller. If you've ever pitched a product or service to a business, you know how soul-deadening it can be. The buyer works hard to make it clear that she's doing you a favor, and you need every dog and every pony available at all times (and you better be the cheapest). But business development doesn't have this dichotomy. Both sides are buying, both sides are selling, right? So talented business development people never act like jaded buyers, arms folded, demanding this and that. Instead, from the start, they seek out partners.
  5. Enthusiasm is underrated. Business development people are exploring the unknown. That means that there's more than cash on the table, there's bravery and initiative and excitement. The best business development people I've ever worked with are able to capture the energy in the room and amplify it. They'll build on the ideas being presented, not make them smaller.
  6. Close the open door. I regularly hear from readers who are frustrated because a big company wasn't willing to hear a great idea they mailed in. Here's the thing: there isn't a shortage of ideas. There's a shortage of execution. That means that successful business development teams look for proven partners and organizations with momentum. A key part of that is the decision to say no early and quickly and respectfully to people who don't meet that threshold.
  7. Call the lawyers later. A business development deal that never happens is one that's sure to cause no problems. While the legal clarity you need is important, there's plenty of data that shows that ten page NDA agreements and onerous contracts early in the process don't protect you, they merely waste your time and energy.
  8. Cast a wider net. The Allen and Co. annual gathering is a dumb place to choose a merger partner. Limiting the number of potential partners to people you've met at a trade show is also silly. Business development (when it works) creates huge value for both sides, so better to be proactive in searching out and soliciting the organizations that can make a difference. Here's a simple way to widen your net: start a blog and go to conferences to speak. Describe your successful business development projects to date and let the world know you're looking for more of them. How many amazing partnerships could the Apple store launch? How many great books could Starbucks highlight? Not only don't they do this, they hide. Don't hide.
  9. Talk to the receptionist. This is huge, and so important. When a great partner shows up at your doorstep, do you know? Here's a test: call your organization (pretending to be from some respected organization), describe a business development opportunity and ask who can help. If you're not immediately transferred to your office, you've failed, right? Make it easy for the right people to know that you're the right guy.
  10. Hire better. How do you decide who to put in this job? I'd argue that glibness and charisma aren't as important as strategic thinking, project management and humility.
  11. Structure deals with the expectation of success. The only real reason to do business development deals is because when they work they're so powerful. Andrew Tobias put his name on a piece of software that ended up earning him millions of dollars. It's easy to get hung up on all the bad things that could happen, but keep your focus on how the world looks when you get it right.
  12. End well. Most of the time, even good business development deals fall down before the end of the negotiation process. If a deal doesn't come together, say so. Acknowledge what went wrong, thank the other party and end well. If it does come together, track the integration and stay involved enough to learn from what works and what doesn't. I'm still waiting to hear from people who said they'd get back to me "tomorrow" fifteen years ago, but I'm losing hope... Ending well not only teaches you how to do better next time, but it keeps doors open for when you need to come back to someone who you should have done a deal with in the first place.

Wednesday, August 19, 2009

Exciting Innovation - Sixth Sense

So if you get a kick out of tech innovations, watch this video.

I bet in 10 years, this will be common across the globe. A new era in user experience!

Wednesday, August 12, 2009

Bloglines ... .. .

Am moving away from Bloglines after 5-6 years. I am not too sure how long they will survive and for some of us it appears as if people have already left forgetting to turn the servers off and at some point, when all payment reminders are sent and not responded, the ISPs might just decide to pull the plug.

Just worrying if such a state occurs to Facebook or LinkedIn!

Sunday, August 9, 2009

Global Corruption Map

A global corruption map by Forbes. Maps countries against Corruption Perception Index.

Bandwidth Sync Correlation & Media

(reproduced from Seth Godin's blog, including the text)

So, what can you learn here?

  1. There's a huge correlation between how much interaction there is and how powerful a medium is (at least among successful media). Telephones changed the world because the interaction is so real. As you get more interactive, though, you exchange less dense media. You can't have a real time conversation online that carries the digital impact of a movie or some other high bandwidth entertainment.
  2. The bottom left corner is the scrap heap. It's hard to place a commercial value on this part of the grid and there's not a lot of commercially interesting work being done here. People just aren't interested in low bandwidth, non-interactive media. Graffiti, for example, rarely draws a paying crowd.
  3. The top right of the corner is where huge value and difficult sales lie. Not everyone can pay for the scarce resources needed to deliver an in-person seminar or one on one coaching, but those that need and can afford it, love it.

If you had seen this chart three years ago, you obviously would have invented Twitter. Now that you see it today, what will you create?

(Thanks: Seth Godin).

Wednesday, May 13, 2009


Ah. The World does move fast. Less than 10 years of blogging making a first appearance, it is already becoming a big bore to blog or read them. It is the world of twitter. Make it short, make it precise..

As I continue to blog, I am also going to twitter more and am eagerly awaiting the day when tweetdeck or other plugins let me post in one shot to twitter, facebook and blogspot!..

Friday, April 24, 2009

Misgovernance at World Bank

We all know how a pathetic institution World Bank is. While it claims to reduce poverty in the World, it has done little to reduce poverty of the beggars in front of its main posh offices at Washington, DC. This institution is a embodiment of incompetence, mis-governance, corruption, advancement of selfish & personal motives in the shroud of poverty reduction and what not?..

Harvard Business School has come out with its research on Mis-Governance at the World Bank. The draft of the paper can be found here and an interview with the authors here. While it is a very interesting paper, I also hope & believe that this is just the icing on the cake and one of the first to appear..

It is time that the World stops and rethinks & redefines the purpose, mission and operating procedure of this mammoth irrelevant institution. The least that we can do is to cut down the $1.5B in Op-Ex!!