The role and responsibility of business development
The first and most important element in managing business development is to define what the unit is to be responsible for and the role it should play within the organisation. Clarifying responsibilities and roles will help adjust and align expectations while making it possible to hold the unit accountable and measure its performance.
The responsibility of business development
In many companies, business development units are not held accountable for anything. Far too often, business development units operate according to a loosely defined list of ad hoc tasks such as trend spotting, competitor surveillance, market analyses and business case work, which other people in the organisation are accountable for delivering.
Through our research, we have found that business development typically fulfill either one or a combination of the areas of responsibility outlined in the figure on the right, depending on the strategic priorities of the company. Some business development functions are strongly biased towards identifying new business in new territories (quadrant 1) and have a high degree of orientation towards the market. The role they play is to pick up on new business ideas either in the market place or from within the organisation. They analyse these and incorporate them into the strategy management process.
Other business development functions are more biased towards working with evaluating investments or divestments to improve the overall portfolio of business activities (quadrant 2). Their work typically focuses on improving existing market positions and improving the company’s competitiveness and market share within already-defined businesses.
Another grouping of business development functions is predominantly biased towards improving existing business performance from within (quadrants 3 and 4). They are typically engaged with evaluating the potentials of new business models or analysing and delivering the needed process improvements and organisational changes to lift performance and margins in existing business activities.
For any company seeking to reap the full benefits of investing in business development, it is pivotal that the area of responsibility is clearly articulated and defined.
The role of business development
“Business developers must think, not act, like the CEO.” This short but precise statement was the key message from Niels B. Christiansen, CEO of Danfoss, at a lecture on business development management. The message is important. Not because it is stated by a highly successful former business development manager that has now turned CEO, but because it entails the essence of the role that business development should play in modern organisations.
A CEO acts on behalf of the organisation and is able to effectively define new strategic objectives, formulate supporting strategies, translate these into their operational consequences and oversee their execution.
A good business development unit does the exact same thing: applies analytical rigour, speed of mind and powerful execution and brings about the evidence and missing links that effectively bridge the gap between strategy and execution. Similarly, the business development unit acts as a catalyst for surfacing new strategic options for the company and presents these facts and opportunities with a short reporting route to top management.
As such, the business development unit will in effect act as an idea centre for new business initiatives that percolate up through the organisation. Just as the CEO often does but rarely has the time and resources to further investigate, qualify and respond to. The roles that business development units play in an organisation in relation to the tasks they carry out typically fall within one or more of the following types
- Role 1: The “strategist” – acting as the Office of Business Analysis
- Role 2: The “executor” – acting as the Office of Strategy Implementation
- Role 3: The “facilitator” – acting as the Office of Strategy Management Having depicted the possible areas of responsibility and roles within the organisation that a business development unit may play, an important recognition must be noted: business development means different things to different organisations. Below are just a few examples of the differences in today’s business development practices which underline the important point that business development is and should be designed to meet its purpose.
At FIH Erhvervsbank, the department labelled Strategic Business Development has been tasked with managing the transformation from a mono-line to a multi-service B2B bank, starting with strategy formulation, business model design and delivering defined strategic initiatives.
At Arla Foods, Business Development plays the role of in-house consultants participating alongside external consultants as analytical and facilitation resources defining and leading strategic transformation projects.
At Novo Nordisk, Strategic Business Development is concerned purely with M&A activities on the corporate level, whereas a separate entity called Business Development & Patents is engaged with in-licensing activities and small-scale biopharma acquisitions in the Novo Nordisk Biotech Fund.
At Danske Bank, Corporate Business Development – a grouping of more that 50 business developers – is predominantly engaged with concept definition and implementation as well as post-merger integration work and migration of IT platforms which tend to drive innovation in banking.
Finally, at DONG Energy, Business Development works in effect as the CEO’s chief of staff taking lead on all activities related to M&A, Corporate Finance and Strategy – their results are very visible in public: the making of DONG Energy.
Evidently, these examples show great diversity of the role that business development plays in different companies and the different kinds of roles that business development units can play.
Responsibilities and roles in a BDM context
As it is evident from the above, business development is not a static discipline – its role is shifting as strategic priorities shift from analysis to architects to execution and back to analysis again. And obviously, a more mature business will have other and more disperse business development needs than a start-up company. Just as the diversified conglomerate with multiple business lines will have other and more complex business development needs than the less complex, mono-line SME. But leaving aside the complexity and dynamics, we have built a model of four archetypical types of business development at work and linked these to the areas of responsibility typically fulfilled by business development.