Businesses today focus most of their efforts to the activity of business development. But, ironically, a large number of them cannot exactly tell what the business development really is. We see a lot of confusion about its true definition. Entrepreneurs, business development executives, CEOs, and other top management people perceive and define this activity according to the needs of their business and according to their own knowledge. You may find hundreds of differing perspectives to define business development and its areas. Search the web for its true meaning and origin, you will be not be able to find an agreed upon, standard, definition. This ambiguity is a big hurdle to manage and plan business development activities. You cannot effectively manage an unsure, ambiguous, or unknown phenomenon.
How Business Development is perceived presently?
There is a wide-spread confusion to define BD. Practically saying, most of the people consider business development as 'sales' or similar to sales. A common individual or a consumer treats a business development representative or executive as a salesperson. In fact, sales is a different thing. It is an after effect. It is a part of the marketing process and is one of the most desired outputs of the marketing efforts. Some businesses say business development is something between marketing and sales.
Let's take a tour of Google Search for an attempt to clear our concepts about business development.
1. According to Wikipedia:
"Business development comprises a number of tasks and processes generally aiming at developing and implementing growth opportunities between multiple 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."
2. "Business development is about bringing discontinuity into the normal operations of an organization. It's about bringing, doing or developing new things the organization didn't do before."
What? I am blank! Why shouldn't we go further to discover another detailed one? In this definition, business development is considered as the synonymous of enterprise development:
3. "The activity that increases, or is intended to increase, the profit, production, or service potential of an enterprise; investment of capital and time that causes, or is intended to cause, the growth and expansion of an enterprise; the process of moving a business towards the point where it can provide its services and products to the entire outside group that wants them; the promotional side of business networking; persuading, or intending to persuade, prospects that appear to have the potential become customers, clients, or buyers; the process of promotion to build and sustain working relationships that relate to the business purpose."
Getting blurred? The above one explains more than a lot, but don't you feel it is mixing multiple functions and duplicating some established ones? I mean it includes almost all the functions of a business enterprise to define business development.
"Business development is the creation of long-term value for an organization from customers, markets, and relationships."
Scott's view is very close to the definition by Wikipedia. Though, Scott beautifully explained every element of his definition in his article, but you can clearly sense that he does not define the real basic parameters of business development. The definition and its explanation also include things directly clashing with some established elements of marketing and sales.
What does Business Development mean, in reality?
To understand business development, it is necessary to analyze the term "Business Development". It consists of two words---Business and Development. Business, in a business enterprise context, refers to the commercial, professional, or industrial activities undertaken, involving exchange of values with another party (customers or stakeholders). The value may be anything having a worth to both the parties, e.g. money, market share, sales volume, image, need satisfaction, or any other thing (This definition is inferred from various definitions of "Business" in web search). Development means positive growth. So, business development is surely an activity causing a flourishing growth to the business and its value.
From this analyses and by studying the commonalities found in many of the definitions stated above, or elsewhere (You may also check Yahoo definitions), the following two major areas are more logical to be covered by business development:
1. To Identify growth opportunities/potentials to expand the business in multiple directions in a number of ways.
2. To boost the business worth/value to its stakeholders.
Why there is no standard definition for Business Development?
Personally, I get more confused when I see the lack of agreement to clearly identify business development . Have you seen or heard about a discipline or practice with so many definitions? There are two main reasons that cause a thing/matter/issue to be unclear and ambiguous:
1. It is not understood in its original form. For example, An engineer has a qualification and experience in electronics but you consider him/her to work on mechanical projects. This would be your fault not his/her. The term "Business Development" has been explained in the earlier section. Without knowing what this term calls for, people used to use it for multiple irrelevant activities, and define it as per their own use.
2. The thing/matter/issue in question doesn't have its unique identification. This happens when the subject thing has an unknown base, origin, or roots. For example, my personal identity is my parents. They are my base to introduce myself personally. When I get international, my identity-base is my country, and so on and so forth. I am nobody if I lose my basic identity. Same is the case with business development. Study all the definitions, you will have the impression as if BD is a separate and independent discipline. This wrong perception has made BD as one of the most controversial-to-define subject. In fact, the discipline or independent function of business development does not exist at all. It is a part and parcel of the marketing process--It is a part of marketing discipline. Bewildered?? But, I know and I am confident that business development is nothing independently. You cannot define a particular discipline in more than one way. The components of business development are already defined in marketing process, as a part of it. Ignorance to these two basic facts has caused all of the confusions about business development and prevented it to be defined in a standard way.
Business Development is actually a part of Marketing Process:
Every business knows, and must know, about the marketing process. Marketing process is a standard process, established on the bases of centuries-old practices and the most outstanding, hectic, and continuous research works.That's why when you refer to any authentic marketing book, you will find it almost same everywhere. For example, you may consult "Principles of Marketing" and "Marketing Management" written by Philip Kotler, known as "Father of the modern marketing".
The first step, market & environment analysis, includes the activities of marketing research (as well as marketing audit) to identify the opportunities, as it gives information about suitable market segments and the level and nature of demand, competition, and other external factors or forces. This analysis is the first and the major ingredient of business development--Identification of growth opportunities/potentials. But, as you can see, it's already the first step of marketing process. Thomas C. Kinnear and James R. Taylor have beautifully explained the marketing process in Chapter-1 of their book "Marketing Research-An Applied Approach", 5th Edition. They endorsed the kotler's and other marketing writers' defined marketing process.
The 2nd most important part of business development is "The enhancement of the business value to its stakeholders" This part is also related to the marketing process. The business value directly depends on the effectiveness of the marketing program and the prompt and effective response to the feedback from the market and other stakeholders.
How should Business Development be defined?
It is, now, established and understood that business development is nothing but a combination, or chunk, of some activities of the marketing process. It does not mean that we should deny the existence of or the need for business development. There are a number of marketing process activities managed separately as functions, due to the nature and volume of a particular business. For example, we know that most of the organizations have sales departments because of the the volume and complexity of the sales work, requiring focused attention. But it does not make sales as a different discipline than marketing. Sales, in fact, is a part of marketing process. Similarly, we find separate departments/sections for other marketing process elements like distribution, advertising, sales promotion etc. The marketing manager of an organization can handle the business development activities, as they fall in his/her jurisdiction, or a separate section or department can be established to manage these activities in a more focused way. All this depends on the size and nature of the business and its business development activities. But being a part of marketing process and, ultimately, of marketing program, it becomes the core responsibility of the marketing head to be in constant touch with BD to update him/herself to make relevant adjustments in the marketing program and to guide the business development team, where necessary.
Definition of Business Development:
Now comes the stage to exactly identify and define business development:
"Business Development is a function consisting of some of the activities of the marketing process to identify and explore growth potentials and market expansion opportunities for the organization and to maintain and enhance the business's value to its stakeholders like customers, market, suppliers, shareholders and investors, employees, and the public in general. The resources of the organization can be re-structured, re-defined, and/or re-allocated according to the extent and needs of business development objectives and activities."
In the entire discussion and in the final definition, we discovered the true meaning of business development and its missing or ignored base---its identity. We identified the core activities of business development. We have arrived on the conclusion that business development is a part of marketing process. It is hoped that this discussion would be helpful to remove or significantly reduce the uncertainty and ambiguity associated with business development. Clarity about the function is basic because businesses spend a lot of their time and resources on this activity, but they are not sure about the parameters, even the actual shape, of BD.
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