Business Development 101: Part Two: ….know everyone else!

A couple of months ago I penned a short ‘part-one piece’ looking at what differentiates BD from sales and marketing, as well as arguing the criticality of knowing what you are good at and relentlessly signalling that message. A few folk (and especially within the military service-leaver community, to whom BD roles may not be a natural destination) found the piece useful so I thought I would finally get around to the second bit which will look at how you can go on to understand the environment any commercial enterprise operates within.?

An aside, but the military-leaver point I find interesting: the military turns us into effective communicators from an early stage and much of what I discuss in this piece has parallels with the combat estimate process (so actually this ‘business stuff’ isn’t as alien as it may at first seem).? But this line of thought is probably a post topic for another time!

So back to the point of this post. If, like me, you are a fan of the show Dragon’s Den you will be familiar with the intelligent inventor who rocks up with a very clever gadget.? He or she then proceeds to quickly get taken apart by the panel because a. that clever gadget actually already exists b. its clever but two years on no sales indicates no market interest c. external factors mean the clever gadget will shortly be rendered redundant.? This results in sad faces all around and, too often, an indignant but resolute entrepreneur who, wedded to their creation, misses the point and still vows to go on.?

But it doesn’t have to be this way…

The common trend here is that nothing exists in isolation and having that killer product isn’t enough on its own. Other ingredients such as sheer timing, fickle governmental policy, competitor intentions and macroeconomic factors can all rapidly take the wind out of something which looks great in theory. It always come back to right product, right place, right time alongside a compelling narrative that clearly tells the customer what they are buying and why.

Market analysis can get very complex very quickly.? On the one hand you have qualitative assessments of general market conditions, on the other you have quantitative attempts at calculating market share and anticipated growth set against a business plan.? In the interests of a digestible (ie short-ish!) think-piece I will keep things high level and so suggest a few tools by which this stuff can be assessed.? These tools aren’t exhaustive and the context will always determine which will be of most relevance in a given scenario. The key takeaway though is that such processes are key ‘homework’ that must be undertaken and at a very early stage if success is going to be much more than a coin-toss.

The Operating Environment – A Qualitative Look

There are a number of tools that can give a sense of the external environment.? A nice entry point I like is a PESTLE analysis. This will allow you to understand the political, economic, social, technological, legal and environmental factors affecting your business and/or product. It’s high level so won’t necessarily get to the ‘devil in the detail’, but as a starting point for understanding how you might fit into the broader commercial landscape it’s a very valuable step. It will also allow our clever inventor to get a general sense as to whether or not the new gadget might land well in the market-place.

This information can then be combined with something called a Five Forces analysis.? Designed to allow you to gauge how competitive a given market is, this will tell our inventor how the power dynamic works in the market concerned as well as how hard it is for substitute products or services to steal their momentum or if the market sees constant entry and exit of new entrants. The tool will indicate if your chosen market is static in nature (high barriers to entry, entrenched competitors) or dynamic (constant churn with market share changing constantly). Coming back to the question of power dynamics, it will also warn you if your market is skewed towards power residing in one corner of the five forces construct.? For example, if substitutes are readily available and account for significant market share, then understanding why customers might choose your option over others becomes even more fundamental.

Assessing Relative Market Position -? A Quantitative Look

Whether BD is an art of a science is probably the subject of another post, but at some stage judgements will need to be made.? I deliberately use the word judgement here rather than ‘guess’ because those judgements will need to be made upon as much information as can be found via the methods above and other sources and assessments. The existence of the internet makes this job easier (as a child of the 80s I am of that last generation to not grow up concerned about knowing the wifi password) and much can be discerned from freely available sector analysis etc, but it remains the case that some calls will need to be made.

One of those calls relates to assessing who your customers (and/or competitors) are in detail.? A great tool for this is something called market segmentation.? I am a great fan of this because it allows the complex to be simplified.? By choosing two metrics and plotting them graphically you can start to see patterns in customer types. Companies like Coca-cola have turned this into an art form.? The process will allow you to quickly determine who your target customer segments are.? Once you know that, you can then get into issues like which are the best marketing channels to reach those people and what kinds of narratives they prefer in so doing.? It will also offer perspectives as to whether you need to major in cost, quality or a myriad of other factors depending on their demographics and socio-economic status.? Again, military contemporaries will recognise parallels with targeting processes here.? Once segments are fleshed out, further analysis can then be taken into their wants, needs and desires, but I won’t get into how that is done in this piece.

So I covered a lot of ground here, but I think understanding customers, competitors and broader market dynamics are absolutely key to business success. Such analysis should be swept up into a business plan but is often skirted over in the rush to ‘get something out of the door’.? That is a mistake because if you understand your offer (see my part one) and also understand your operating environment and target audience you have a powerful basis on which to take an enterprise forward.

And that could well be the difference between a happy or sad Dragon’s Den contestant.

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