WHAT IS BUSINESS DEVELOPMENT?

This article is one of a three-part series. The content is found in Chapter 2 of the recently published Business Development Body of Knowledge (BD-BOK) available in digital Kindle edition and paperback on Amazon.

"Virtually every commercial transaction has within itself an element of trust."

- Kenneth Arrow, Nobel Prize in Economics

Business Development is Customer and Community advocacy that creates Corporate growth.?This definition spawned from the rapidly growing art, science, and ethics of the profession.

Business Development (BD) is a relatively new profession often confused with Marketing and Sales.?Marketing means "selling or purchasing in a market." The word, Marketing, originated in 1561, and the word Sales originated in 1840.?There are massive amounts of literature, research, and media about the sales and marketing professions.?

The first academic BD book, Business Development, A Market-Oriented Perspective, was published on 2 March 2012 by Dr. Hans Eibe S?rensen , a Doctoral Fellow at the Wharton School, University of Pennsylvania, and Associate Professor at the University of Southern Denmark. ?Sorensen stated the purpose of business development as "the analytical preparation of growth opportunities, and the support and monitoring of the implementation of growth opportunities."?

There are three ways to grow a business:

1.????Increase the number of new customers

2.????Increase the number of recurring customers

3.????Increase the revenue from existing customers

Community and Customers are necessary for a Corporation to grow.?The combination of these three entities forms the Business Development Ecosystem, shown in the figure below.

The Business Development Ecosystem forms a holy trinity. A trinity is defined as three closely related things.?The secular definition of holy means Equity.?Overlap of the Corporation, Community, and Customer represents their common equity, called the corporate Brand.

The Physics of Brand defines a Brand as "a container of trust where branding is the act of filling a brand with promises kept."?So, corporations are responsible for advocating for their Customer and Community stakeholders by delivering on promises.

Corporations are also responsible to their shareholders, who demand short-term gains and maximum profit.??Corporations may sacrifice their long-term promises in order to please their shareholders with short-term gains.?However, such shortsighted pursuits may ultimately decrease the corporation's overall value.

Existing customers drive 33% - 50% of corporate growth. ?So, sacrificing long-term promises reduces future revenue growth.?In addition, the Brand is an asset on the corporate balance sheet called Goodwill.?The greater the Goodwill, the higher the financial value of the corporation. Therefore, sacrificing long-term promises to customers reduces the entire value of the corporation.

The intangible nature of goodwill is often difficult to grasp or appreciate.???Goodwill is calculated when a corporation buys another corporation.?Accountants calculate Goodwill by subtracting the tangible assets of the acquired company from the cost of the acquisition.?

To maximize goodwill, the corporation's leaders must implement people and processes that continually build brand trust via customer and community advocacy.

An Edelman survey confirms the critical link between business growth and trust. The survey showed that customers are twice as likely to purchase from a brand they completely trust versus a brand they don't fully trust.?

The Neuroscience of Brand Trust

The customer’s trust is critical for business growth.?A corporation demonstrates trustworthiness by delivering a valuable item to its customer, as promised.?Truth is defined as the rational observation of fact or reality.?The customer's observation of truthful delivery of a valuable item is called Brand Activation.?

A 2014 study published in the Journal of Neuroscience discovered that the amygdala subconsciously determines trust.?It is found in the brain's limbic system that controls the "fight or flight" response and inspires people to act on their emotions.?Therefore, the limbic system not only controls a buyer's instinctive reaction to "friend or foe" (buy or not buy), but it also controls whether they love or hate your corporation.

In 2008, the University of Zurich implemented a Trust Game study. Participant oxytocin levels were monitored throughout the study. Oxytocin is a hormone created by the hypothalamus in response to feelings of affection.

The researchers discovered that participants produced oxytocin when they felt trusted. When participants were shown increased levels of trust, their brains produced even more oxytocin. Most significant was the finding that the rise in oxytocin levels resulted in participants' behavior being deemed more trustworthy.

The researchers concluded that people who feel trusted become more trustworthy due to increased oxytocin levels in their brains.?Increased oxytocin levels also trigger the creation of Serotonin that dampens the amygdala's "fight or flight" anxiety center of the brain. Therefore, increased trust yields increased feelings of comfort and affection.

Another study found that if people met certain conditions like delivering a project on time or keeping commitments, the brain's Ventral Tegmental Area (VTA) reward centers sent dopamine to the limbic system (the limbic system contains the amygdala).?Dopamine motivates or propels people toward a particular person or Purpose.

Brain activity varies depending on whether people trust conditionally or unconditionally. Unconditional trust stimulates the production of more dopamine.?Therefore, customer loyalty is directly linked to the delivery of products in pursuit of a shared purpose.

Simon Sinek 's 2010 Start With Why states that corporations without a strong WHY (purpose) must rely on rational brain manipulations, such as pricing and rewards, to keep their customers. Conversely, corporations with a strong purpose inspire customers to love their products faithfully.?An Accenture study found that 63% of consumers prefer a Purpose-led brand.?Also, Deloitte research discovered that high-purpose brands grow four times faster.

The Orbital Frontal Cortex (OFC) of the brain assigns a value based on goals and rewards. It dictates customer behavior between the customer's actual state and their desired state.?Therefore, aligning the corporate purpose and the customer's neurologically encoded "purpose" is both a biological and business imperative. ??

Research shows that corporations with a compelling purpose achieve exceptional growth.?A study published in the 2014 Firms of Endearment identified twenty-eight corporations based on the strength of, and demonstrated dedication to, a revenue-transcending purpose. During fifteen years, the average S&P 500 corporations returned 118% of the investment, and the Firms of Endearment returned 1,681%.

Experiments also found that Empathy was directly related to Oxcytocin levels and that changes in Oxytocin predicted feelings of empathy.?Oxytocin, combined with Serotonin and Dopamine, creates the Human Oxytocin-Mediated Empathy (HOME) feedback loop that compounds the feelings of empathy.?The HOME concept was first presented by Dr. Paul J. Zak in his 2012 book, The Moral Molecule: The Source of Love and Prosperity. ??

In summary, truth leads to increases of:

·??????Oxytocin that increases customer feelings of affection toward the corporation

·??????Oxytocin that increases empathy by understanding customer needs

·??????Dopamine that increases the drive toward a common purpose

Therefore, Purpose, Empathy, and Truth are scientifically proven to be the three fundamental ingredients of Trust.??

Value is defined as a customer's measure of how much Purpose, Empathy, and Truth they receive from a corporation.?Therefore, value is a customer's quantitative measure of brand trust.???

Continual cycles of valuable customer interactions result in the Brand Trust Flywheel shown below.

As the brand trust flywheel engages with additional customer interactions, it has compounding effects on the employees of the corporation and the community of influencers.?This compounding effect increases the value of the brand trust and results in corporate growth.

Brand Trust and Employees

Purpose, empathy, and truth are also the primary drivers of employee engagement. Dale Carnegie & Associates research conducted in 2018 and 2019 shows the top three factors associated with employee engagement are:

·??????Trust in leadership (grounded in TRUTH)

·??????Relationship with their manager (grounded in EMPATHY)

·??????Pride in their organization (grounded in PURPOSE of the organization)

Wikipedia defines an engaged employee, “as one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.”?Towers Watson also found that eight out of ten highly engaged employees trust their leaders.

Another survey notes that 90% of engaged employees trust their immediate superior, Gallup studied nearly 50,000 corporations and discovered that:

·??????Earnings-per-share 2.6 times higher than corporations with low employee engagement

·??????Corporations with engaged employees outperform the?competition by 147 percent

·??????Two times higher net income than corporations with poor engagement scores

·??????10% higher customer ratings

·??????20% higher sales

Employee engagement directly impacts a corporation's ability to advocate for its customers. In its 2016 Employment Engagement Benchmark Study, Temkin Group found that corporations excelling at employee engagement have "1.5 times as many engaged employees as do customer experience laggards."

Brand Trust and the Community

The Law of Diffusion of Innovation explains how new products spread. The law states that rapid growth occurs at the Tipping Point, with about twenty percent of the market.?The entire market is segmented into five different groups of customers shown below.

Innovators enthusiastically purchase new, unproven products. Early Adopters purchase proven products and influence the remainder of the market. The Early Majority typically follows the recommendations of the Early Adopters.?The Late Majority buys the product when it becomes a norm.?The Laggards resist product purchases until they must upgrade to a new product. ??

Early Adopters are the "social influencers" or "opinion leaders" capable of influencing the entire community. They are critical for achieving the Tipping Point (also called Critical Mass or Product Market Fit), enabling rapid growth. ?For example, the 2019 Edelman Trust Barometer showed that 63% of buyers trust influencers for product recommendations.?Conversely, the study found that advertisements influence only 26% of buyers.?

In the book, Crossing The Chasm, Early Adopters are critical for products to catapult sales into the early majority of buyers who do not buy unless someone else buys first.?According to Simon Sinek, Early Adopter advocacy drives trust in a corporation's purpose.?

Social influence is the most trusted driver of product adoption.?A 2019 Whalar and Neuro-Insight study found that buyer response to influencers was 277% more emotionally intense than TV ads and 87% more memorable. Unlike Facebook advertisements, buyer response to influencers was 64% more emotionally intense and 182% more memorable. Compared to YouTube ads, influencers are 28% more emotionally intense and 73% more memorable.?

Influencers also have a contagious effect on their networks.?A 2008?British Medical Journal study found that social networks have clusters of happy and unhappy people reaching three degrees of separation. The study found that a person's happiness is related to the happiness of their friends, their friends' friends, and their friends' friends' friends.

The study found that each additional happy friend increased happiness by about 9%. ?Happiness is not just a result of personal experience but also a result of friend networks. Therefore, emotions are a community phenomenon.

These findings are supported by a 尼尔森 survey showing that 83% of respondents completely or somewhat trusted word-of-mouth recommendations.?It also showed that "trust isn't confined only to those in our inner circle, as two-thirds (66%) say they trust consumer opinions posted online—the third-most-trusted form of advertising."?Since customer happiness is directly linked to trust, we may reasonably assume this finding also applies to a corporation's entire network of community influencers collaborating to promote products and services.

****** This concludes PART 1 of this three-part series *******

Click here to read PART 2 of this three-part series.

Follow the Global Business Development Association (GBDA) to learn more about Business Development.

#businessdevelopment #CGO #BDR #bizdev