Introduction

Business development means different things to different people. That's why it is appropiate to define the
term beforehand.
For some it simply means prospection, to others it can mean developing a new product or technology, while to
others it can mean investing or divesting corporate assets.
All have their own right to claim that their activity is business development, that's why it is necessary to
dissect the term.

Definition

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.

Levels of Business Development

So, business development has different levels. Those levels being product, commercial and corporate.
In the next sections these levels will be explained.

  • Product level
  • At the product level business development means developing a new product or technology.
    Although the level of development can differ from firm to firm.
    The level of development can be divided into two categories: disruptive and incremental.

    Incremental developments are developments which increases the functionality of an existing
    platform or technology, while disruptive or discontinuous developments are completely new
    things developed from scratch.

    E.g. of an incremental continuous development are extension to already existing products like
    a new odour for shampoo, a digital camera with 5MIO pixels for your mobile phone, ...
    In both cases the platform, shampoo and mobile phone remains the same.

    Discontinue developments are e.g. public key infrastructure (PKI). PKI is discontinue
    because it will change the way people do business and authenticate themselves in the
    future. The technology doesn't have a form yet, nor does it have mature value chains.
    PKI currently is still at the beginning of the TALC curve. It will take years before it
    will have a fixed recognizable form. Today PKI is mainly used in ID cards (e.g. Belgium,
    Malaysia), although its application is certainly not limited to it.

  • Commercial level
  • In its simpliest form business development at the commercial level means prospection pure et
    dûr. It means hunting new customers in new segments or markets by, mostly, cold contact.
    The work requires a highly driven psychologically strong individual capable of handling lots of
    turn downs. It's certainly not suited for the faint of heart.

    The next level of commercial business development is channel or sales organization setup.
    The channel or sales organization can consist of partners, like agents, distributors, licensees,
    franchisees, ..., or your own national or international branches.
    Agent is the legal term used in Belgium law to denote somebody who is respresenting a principal
    in exchange for a commission on forwarded customers.
    In most cases these agents are called resellers, value added resellers, dealers, ... The latter
    being the functional position in your channel network.

    And last we have commercial business development at the value chain level.
    At the value chain level business development is about developing the whole product offering.
    You'll find this type of business development in technology firms that have developed a platform
    that has to be integrated or combined with other technologies or platforms to form a whole product.

    A whole product is generally composed of multiple technologies in order to make it come alive. Those
    technologies are generally not developed by one firm but sourced from others to save time a.o.

  • Corporate level
  • When organizations have to decide whether to make or to buy certain organizational competencies
    we enter the realm of corporate business development. The focus is not at the product nor the
    commercial level but the business, financial and legal level.

    This level of business development is about mergers & acquisitions (M&A), joint ventures (JV), direct equity
    investment (DEI) and strategic alliances.
    It deals with business portfolio analysis, corporate finance, contract law, fiscal law, social law , anti-
    trust law, change management, culture management...

    Organizations can have multiple motives to buy organizational competencies. Examples are: time to market
    market entry barriers, patent protection, legal constraints, business or proposal complementation, cash
    flow and profit diversification, ...

  • Conclusion
  • From the descriptions above it becomes very obvious that there is not one single meaning of business
    development. Each level has its own focus and requires different competencies, skills and backgrounds.






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    March 19, 2007