1. Best Practices in
Business Development
prepared by
David Fatlowitz, MBA
dfatlz88@yahoo.com
April 2014

2. 2
Topics
• Today’s typical corporate structure
• Forecast vs stretch goal (gap analysis)
• 5 year forecast & plan for reaching goal
• Innovation plan for entering new markets
• Some worthwhile targets
• BDG concept
• Recommendations & best practices

3. 3
Preface
• Today’s globalized business environment moves with
ever increasing speed, and entails many new risks. To
succeed at growing into new markets requires strong
co-ordination, tireless communications and
exceptional risk management…
• The following slides integrate commentary from
numerous business executives and academic thought
leaders and represents a working guideline for best
practices in developing new business…

4. 4
Structure of Typical Sales Dept
(Company X)

5. 5
Structure of Typical Sales Dept
(Company X)
TYPICAL METHOD:
‘Military Style’ Top
Down Command &
Control structure
“By decree you will…”
RESULT: Little
cross co-ordination
with other depts,
focus mainly on
closing deals …
Add’l mngmt layers

6. 6
Today’s Typical Organizational Structure
(Company X)
Issues:
• conflicting priorities
• misaligned compensation
• poor communication by depts
Results:
• politics & turf wars
• decisions by power not facts
• dept interests not aligned with
company growth targets
PresidentPresident

7. 7
Today’s Typical Organizational Structure
(Company X)
Issues:
Organization lacks flexibility
& essential knowledge to
make good decisions at
critical times…
Results:
• low morale/high turnover
• poor customer satisfaction
• missed opportunities
PresidentPresident

8. 8
$239M
$223M
$208M
$195M
$182M
0
50
100
150
200
250
300
Yr1 Yr2 Yr 3 Yr4 Yr5
Rev-A Existing Accounts (7% Annual Growth)
Business Development Motivation
(Company X)
Opportunity Cost = $ 57M Gap
!
Stretch Goal = $280M
Based on current market opportunities alone
Company X falls short of their target…

9. 9
Growth expected only in top market, otherwise little revenue growth or
diversification expected over next 3 years …
Example: Projected 3 Year Sales Trend
Market Segments % Sales Current Year % of Next 3 Years
Market A 26% 37%
Market B 16% 14%
Market C 15% 14%
Market D 14% 14%
Market E 13% 7%
Market F 8% 5%
Market G 3% 4%
Market H 2% 3%
Market I 2% 2%
Market J 0% 0%
Market K 0% 0%
Totals 100% 100%
Business Development Motivation
(Company X)

10. 10
Core Business Issues & Scorecard
#1 – maintain cash flow to finance ongoing operations
Business Horizon: close sales within 1 year or less
Current Grade: ~ B
#2 – growth, diversification & flexibility
Business Horizon: close sales within 2-3 years
Current Grade: ~ C or D
Why?
Lack of co-ordination across departments limits information flow & adaptability
May have people with poor internal selling & communication skills trying to
execute business development process, etc.
Results: information & decision making “firewalls” are created within the
company limiting their ability to penetrate new markets…

11. 11
Some Growth Possibilities
• New market 1
• New market 2
• New market 3
• New market 4
• New market 5
medical
aerospace
semiconductor
electronics
automotive

12. 12
How to break into new markets
?

13. 13
How to break into new markets
Create a business development group…

14. 14
Business Development Group
A guiding mantra:
Key Lever: Virtual Teaming
“Everyone works in Business Development”
Focus: Opportunities with 2-3 year horizon

15. 15
Business Development Group
Definition:
• Purpose - to develop and align growth strategies
• Focus – turn long term horizon (2-3 years) into real sales
• Structure - composed of real & virtual HR assets
• Range - global network of subsidiaries, alliance partners, etc
• Goals - drive communication, knowledge & sales
• Benefits - to enhance value & profits and enter new markets
Structure:
• Director - Broad powers to set vision & goals for BDG
• Exec VP – executive decision making rights over Dept VP’s
• BDM’s – business development management responsibilities

16. 16
• Adds focus to activities:
- Separates short term cash flow creation (sales) from long term
strategic opportunity engagement (business devel)
- Clarify “beneficial” (profitable) opportunities
• Leverages cross functional teams:
- improves networking within & without the organization
- assists information flow up & down org hierarchy
Puts market opportunities in the hands of experienced decision
makers (BDM’s) which reduces overall risk
BDG – Features & Benefits
Net Result: better morale, improved decision making,
increased competitive advantage and higher profits…

17. 17
Creating Value in New Markets
combining resources and capabilities creates new
competencies and beneficial outcomes…
New
Competencies
Competitive
Advantage
Value Creation
Above Average
Returns
Valuable
Ex. save customers time to
market
Rare
Ex. Industry expertise
Costly to Imitate
Ex. Highest production
capacity
Non-Substitutable
Ex. Unique combination of
products & services
Takeaway:
Need to
spend
sufficient
time on this !
A clear plan
demonstrates
strong
commitment
to customers
in new
markets
not presently
served…

18. •Invest to grow market share
•Exploit economies of scale
•Cut costs and prices to drive volume
•Develop strong brands
•Control channels of distribution
Reference: London School of Business
High Margin & Profits
Start of Industry Shake Out
Some Basics of Good Strategy…
Take Away:
these are all important elements of strategy
but requires good co-ordination…
18

19. 19
To Develop a Winning Strategy
Apply Porter’s Five Force Analysis
(Example for POF use in fiber telcom market)
•Small number of suppliers
(POF, connecters, etc.)
•Low product differentiation
•Inevitable components
(LEDs, connecters, etc)
•Few competitors
•Low brand equity
•Low exit barrier
•Low product differentiation
•Small number of buyers now
•Low competition among buyers
•Low purchased item differentiation
•Low brand equity
•Low economies of scale
•Low capital requirement
•No patent
•Low product differentiation
(3 standard)
•Know-how
•Many substitutes available
(e.g. copper, coax, wireless, etc)
•However high switching costs
(POF is cheaper than others)
•POF has strong product differentiation:
- good for short distances
-light weight (good for aircraft use)
- high reliability/long service life
- high popularity/readily available
Supplier powerSupplier power
RivalryRivalry
Barriers to entryBarriers to entry Threat of substitutesThreat of substitutes
LOW
HIGH
LOW
LOW LOW
Buyer powerBuyer power
Ref: Prof. Michael Porter,
Harvard University

20. 1: ?
2: ?
3: ?
4: ?
5: ?
BDG
2
34
5
What are the five key elements for
successful organizational change ?
1
20

21. 21
1: STRATEGY
2: ORG STRUCTURE
3: INFO & DECISION MAKING (PROCESS)
4: REWARDS
5: PEOPLE
BDG
2
34
5
The five key elements for successful
organizational change…
1
Source: Dr. Don Hambrick, Professor of Organizational Change,
Penn State Smeal College of Business

22. 22
1: STRATEGY:
• pick strategically important markets
• set guiding principals* Example:
- product “quality” leader
- premium service capability
- premium pricing
• maintain high touch and communication
with customers
• penetrate new market segments using
market experts & integrated marketing
campaigns
• continue efforts to enhance brand
2: STRUCTURE:
• add BD Director & BD Project Managers
• SMTFI team members with defined roles:
- new opportunity analysis (ROI estimates)
- assign sales & marketing by projects
- develop mentorship program
• create & apply new metrics and scorecards3:
KEY INFO & DECISION MAKING PROCESS:
• leverage knowledge databases (formal & informal)
• planning and goal setting based on opportunity analysis (SWOT & ROI)
• frequent meetings (S-M-T-F-I)
• decision making: strategic-> centralized, tactical -> local
4: REWARDS:
• compensation: team based metrics /&/ milestone bonuses
• add’l project management opportunities
• incremental (tiered) development opportunities
•career advancement opportunities
• career fulfillment & morale boost
• other ?
5: PEOPLE:
• hire add’l S-M-T-F-I star players from industry
• leverage virtual teaming @ global level
• maintain individual accountability
• maintain family culture
• create career development paths (ex)
-Exec Sales & Marketing BDM project leads
-create dedicated IT solutions team focused on BD issues
-establish technology team for BDG projects
-hire entrepreneurial business financial experts
Some Key
Recommendations
BDG
1
2
34
5

23. New Organizational Structure with BDG
23
PresidentPresident
VP FinanceVP Finance
Finance DeptFinance Dept
VP ITVP IT
IT DeptIT Dept
VP MarketingVP Marketing
Marketing DeptMarketing Dept
VP SalesVP Sales
Sales Dept
(Acct Execs)
Sales Dept
(Acct Execs)
Regional
Sales Mngr
Regional
Sales Mngr
Regional
Sales Mngrs
Regional
Sales Mngrs
BDG
Director
BDG
Director
BDG
Exec VP
BDG
Exec VP
BDM’sBDM’s
VP TechnologyVP Technology
Technology
Dept
Technology
Dept
Entrepreneurial types
with good alliance
building and deal
making skills…
extensive market
knowledge & BD
experience
well connected at CXO
level with thought
leaders & major
industry players

24. BDG: Segmenting of Sales Activity
24
PresidentPresident
VP FinanceVP Finance
Finance DeptFinance Dept
VP ITVP IT
IT DeptIT Dept
VP MarketingVP Marketing
Marketing DeptMarketing Dept
VP SalesVP Sales
Sales Dept
(Acct Execs)
Sales Dept
(Acct Execs)
Regional
Sales Mngr
Regional
Sales Mngr
Regional
Sales Mngrs
Regional
Sales Mngrs
BDG
Director
BDG
Director
BDG
Exec VP
BDG
Exec VP
BDM’sBDM’s
VP TechnlogyVP Technlogy
Technology DeptTechnology Dept
BDG concentrates on
strategic “horizon”
opportunities that need
focus & nurturing…
Sales & Marketing
focus on “mature” &
tactical opportunities
ready to bear fruit
Key Message to employees: EVERYONE works in
business development, participation is thru BDG
projects…

25. 25
PM, RM, BDM Roles
• Product Manager (PM) Responsibilities:
– Manage technical & marketing information for all products
of responsibility (POR) within product line
– Set pricing guidelines on products
– Support key opportunities with all necessary technical and
product related needs, demo’s, troubleshooting,
– Provide guidance to engineering on new product needs
– Guide market research on target segments & applications
– Manage P&L for specific product lines

26. 26
PM, RM, BDM Roles
Products Sales
Marketing Finance
(PM)
POR
M1
M2
M3
M4
M5
R2
R1 R3
R4
R5
PM’s Goal: Sell POR into
as many regions &
markets as possible…

27. 27
PM, RM, BDM Roles
• Regional Manager (RM) Responsibilities:
– Manage sales activity within Region of Responsibility (ROR)
– Mentor ISE’s, SE’s and ESE’s on sales techniques
– Assign SE’s to new accounts
– Set strategy & assist negotiations on key accounts
– Co-ordinate customer service support
– Assist VP Sales in new policy rollouts
– Manage P&L for Specific Regions

28. 28
PM, RM, BDM Roles
Product Lines Sales
Marketing Finance
PL3
M1
M2
M3
M4
M5
ROR
PL5PL2
PL1 PL4
(RM)
RM’s Goal: Grow sales in
ROR by selling all
products into as many
markets as possible…

29. 29
PM, RM, BDM Roles
• Bus Dev Manager (BDM) Responsibilities:
– Identifies & communicates new opportunities within market
of responsibility (MOR) to top mngmt and other dept mngrs
– Analyze risk/reward for opportunities in his/her market
– Develop joint strategy with PMs & RMs
– Manage relationships with key opportunities
– Co-ordinate SMFIT activity related to market segment
– Manage P&L for specific markets

30. 30
Products Sales
Marketing Finance
PL3
MOR
PL5PL2
PL1 PL4
R2
R1 R3
R4
R5
(BDM)
PM, RM, BDM Roles
BDM’s Goal: Grow sales in
MOR by selling all products
into all regions…

31. 31
requires embracing teamwork, shared decision making
& overlapping responsibilities…
Products Sales
Marketing Finance
PM RM
BDM
Reaching the Pot of Gold…
Opportunity

32. 32
Business Development Group
New Market Projects (near term targets)
BDG
NM 1
NM 2
NM 3NM 4
NM 5

33. 33
Business Development Group
New Market Projects (near & long term targets)
BDG
NM 1
NM 2
NM 3
NM 4
NM 5NM 6
NM 7
NM 8
NM 9

34. 34
BDG Project Scoring…
• Purpose –set priorities for BDG activity & resources
• Methodology – establish numerical scoring system
based on key attributes:
- strategic value
- financial return (IRR, ROI, etc)
- technical requirements
- implementation feasibility (degree of difficulty)
- risk assessment

35. 35
$ 318M
$277M
$ 241M
$209M
$182M
0
50
100
150
200
250
300
350
Yr 1 Yr2 Yr3 Yr4 Yr5
Rev-A (7%) Rev-B (10%) Rev-C (15%)
Company X: BDG Benefit Example
(Projected Revenues)
~ On target
Rev A = Today’s
Customers Only
Rev B = Today +
Tomorrow’s
Pipeline
Rev C = Today +
Tomorrow + BDG
Stretch Goal = $280M

36. 36
STRATEGY: ?
STRUCTURE: ?
Collaborate & share
responsibilities among
subsidiaries on global
accounts & opportunities
INFO & DECISION MAKING PROCESSES: ?
REWARDS: ?
Outsourced Sales: revenue
recognition for subsidiaries that
initiate new business
PEOPLE: ?
BDG
Future: Global BDG
(networking with subsidiaries)

37. 37
Some Key Challenges
– defining benefits of adding BDG in terms of opportunity costs
vs present approach
– gaining top mngmt support (Board, CEO, VPs)
– defining 5 key elements: strategy, structure, rewards, etc
– leadership needs (identifying key characteristics)
– defining new roles for S-M-F-T-I personnel
– gaining adoption of BDG goals across all departments
– becoming a truly global company
(e.g. gaining subsidiary & alliance participation)

38. 38
BDG Implementation:
Best practices in
driving culture change…
To UN-FREEZE… To EXECUTE CHANGE… To RE-FREEZE…
1 - Communicate
need for change
Redefine top
metrics &
rewards to
establish
credibility
Monitor
acceptance
& make
adjustments
2 – Implement
change initiative
3 – Reinforce new
culture thru symbolic
actions
Source: Dr. Dennis Gioia, Professor of Leadership Excellence,
Penn State Smeal College of Business

39. 39
Company X with New Org Structure
BDG
Sales
Finance
MarketingIT
Technology
Bi-directional
information flow

40. 40
End