This is a post I’ve been wanting to write for a long time but I haven’t had the time or the clarity to actually sit down and write it until now. Looking back at my (short) career in business, I realize that most of the jobs I’ve had have a relationship or business development component to them. Invariably, when I tell friends that I am a BD person I get two questions:
1. What do BD people actually do?
2. How do I know if my business needs a BD person?
What Do Business Development People Do, Anyway?
In polling folks I know in BD, most of the work we do falls into three categories:
Content Licensing – Content licensing is pretty straightforward. There are a lot of products in the market, vertical search engines or any other type of directory play for that matter, where licensing data or technology from someone else to power your product. Classic examples would be our very own Google Maps product — it makes use of lots of 3rd party data to make the product work. Think about something like a real estate vertical search engine or a jobs search engine — there’s tons of content out there that you can license to make a product in that space more successful. A good BD person can help you figure out how to license that content on terms that won’t break the bank and will give you the flexibility you need to build your business.
Distribution and Syndication – The flipside of content licensing is distribution. If you have a product that you think is great and want others to use it, getting distribution and syndication deals is a pretty important competency to have in your company. These deals are all about taking your technology and providing it to partners in a way that benefits you both. Looking for some web 2.0 examples? SimplyHired uses their job technology to power the job boards on LinkedIn. Jobster is powering the jobs service on Facebook. Google has very straightforward, self-service ways to syndicate our search and advertising technology to partners who want to use it. Anytime you see a “powered by” logo on a website, there’s usually a distribution deal behind it.
Relationship Management – So the first two things I mentioned above generate easily-observable outcomes — you either get the deal or you don’t. The “squishy” part of BD really comes into play when you start talking about relationship management. In my opinion, a big part of being in BD is not just closing the deals you can close today but also cultivating relationships and keeping communication open with partners with whom you’d like to work in the future. How does this work? Well, I haven’t found any way to short circuit this process. A lot of it just comes down to investing the time to get to know people with whom you think you’d like to work in the future. This requires two skills. First, you need to be able to identify the set of folks with whom you’re likely going to reach out to in the future. Second, you need to be able to figure out what you’d like to do with them even if you can’t do it today. The challenge with this part of a BD person’s job is that the outcomes are not terribly easy to observe. To the untrained eye, it can look like the BD person is “wasting time and money” by talking to partners with whom there is no immediate opportunity. Sometimes that’s what’s going on. If you have a good BD person, though, he or she ought to be balancing near-term opportunities with the longer lead time activities.
How Do You Know if You Need BD?
This is something I think about a lot. Whenever I’m looking at a product, internal or external, I usually think about the following two questions:
Is Your Product Ready to be Delivered to Partners? The first thing to think about is whether your product is really ready for partners. Is it sufficiently stable and developed to deploy it to a third party? Do you have any idea how you’ll support potential partners who are interested? Do you have even the foggiest notion of what the terms of service (SLA, pricing, etc) will be for potential partners? If the answers to these questions is “no” or “maybe” it’s a good sign that investing in BD might be premature. This doesn’t mean you shouldn’t talk to partners, but it does mean that you should have modest expectations as to what those efforts will yield.
Are You Already Getting Inbound Demand from Potential Partners? The other good indicator that your business is ready for BD is that you’re getting some inbound demand from potential partners. Folks are calling you because they want to talk to you about how they might be able to integrate or otherwise make use of your product on their own service. If you’re getting inbound calls and have an interest in partnering, you could probably use some help in BD.
Why do I bring up these two points? Well, I’ve talked to a lot of people who think that you can “BD” your way out of product problems. What does that mean? Well, the idea behind “BDing” your way out of a problem is using BD to achieve traction when organic growth isn’t getting the job done. In my opinion, it’s really hard to do this. If you have a product that’s growing and demonstrating traction on its own, you’ll have lots of interesting partnership opportunities. If you have an underperforming product, those BD deals and opportunities are harder to identify. There are a small number of product that rely explicitly on partnership for distribution, but most products have the capability to demonstrate some independent traction before looking at partnerships. Independent traction makes the prospects for partnering much easier to evaluate and understand.
Thoughts? Comments? Feel free to share them below.