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Friday, September 15, 2017

What is Business Development?





Business development means different things to different people. That's why it is necessary to define the term. For some,  it simply means prospection, while for others, it means developing a new product or technology, while to others it is about investing or divesting corporate assets. All have their own right to claim that their activity is business development.


Definition
Business development is about bringing discontinuity into the normal operations of an organization. It is about bringing, doing or developing new things or procedures the organization didn't do or had before.


Levels of Business Development
So, business development has different levels. They are distinguished into product, commercial and corporate levels


Product level

At the product level business development means developing a new product or technology. Although this level of development can differ from firm to firm. The level of development can be divided into two categories: disruptive and incremental.
Incremental developments are those which increase the functionality of an existing platform or technology, while disruptive or discontinuous developments are completely new things developed from scratch.
E.g. of an incremental continuous development are extension to already existing products like a new odor for shampoo, a digital camera with 5MIO pixels for your mobile phone,
In both cases, the platform, shampoo, and mobile phone remain the same.
Discontinue developments are e.g. public key infrastructure (PKI). PKI is discontinued because it will change the way people do business and authenticate themselves in the future. The technology doesn't have a form yet, nor does it have mature value chains. PKI currently is still at the beginning of the TALC curve. It will take years before it will have a fixed recognizable form. Today PKI is mainly used in ID cards (e.g. Belgium, Malaysia), although its application is certainly not limited to it.


Commercial level

In its simplest form of business development, the commercial level means prospection pure et dûr. It means hunting new customers in new segments or markets by, mostly, cold contact. The work requires a highly driven psychologically strong individual capable of handling lots of turn downs. It's certainly not suited for the faint of heart.

The next level of commercial business development is channel or sales organization setup. The channel or sales organization can consist of partners, like agents, distributors, licensees, franchisees, ..., or your own national or international branches. The agent is a legal term used in Belgium law to denote somebody who is representing a principal in exchange for a commission on forwarded customers. In most cases, these agents are called resellers, value-added resellers, dealers, ... The latter being the functional position in your channel network.


And last we have commercial business development at the value chain levelIt is about developing the whole product offering. You'll find this type of business development in technology firms that have developed a platform that has to be integrated or combined with other technologies or platforms to form a whole product. A whole product is generally composed of multiple technologies in order to make it come alive. Those technologies are generally not developed by one firm but sourced from others to save time a.o.

Corporate level

When organizations have to decide whether to make or to buy certain organizational competencies we enter the realm of corporate business development. The focus is not on the product nor the commercial level but the business, financial and legal level.

This level of business development is about mergers & acquisitions (M&A), joint ventures (JV), direct equity investment (DEI) and strategic alliances. It deals with business portfolio analysis, corporate finance, contract law, fiscal law, social law, anti- trust law, change management, culture management, ect. Organizations can have multiple motives to buy organizational competencies. Examples are: time to market entry barriers, patent protection, legal constraints, business or proposal complementation, cash flow and profit diversification, ...
To conclude, from the above analysis it becomes very clear that business development it is a multi-dimension process. Each level has its own focus and requires different competencies, skills, and backgrounds.
George Gkekas | Brand & Exports Strategists

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