Wednesday, June 17, 2009

Defining "Success" for BD professionals

Well, I am back from an extended vacation spent at the 38th annual Kerrville Folk Festival (, which is a special place and time to share music with old friends. I am well rested, albeit a bit sleep-deprived!

At first glance, it may seem trivial to spend time discussing how to define success for the Corporate and Business Development executive. But, over the years I have seen cases where results would have been very different had the goals & incentives been wrong.

As an example, when I engage with a potential partner for a client, one of the first things I determine is the organization and role of the people I am dealing with. Who does the partner BD person report to?; are they in sales? , or do they report to the CEO in a Corp and Business Development team?; are they part of the product team? We've all seen the BD title used in the sales organization, and it usually means something very specific relative to revenue - often with an OEM or reseller revenue goal, coupled with a Market Development function driving new business opportunities for sales. Some of my best friends are sales executives, but they will all acknowledge that their focus on revenue is paramount, and that strategic business development is different.

So, if I am discussing an alliance someone who has a revenue goal, and my expected outcome for the alliance doesn't involve direct revenue for the partner, there is going to be a mismatch at some stage, so it is better to find that out sooner rather than later, and finding another contact in the organization with a more strategic focus.

Why does this matter? Well, we all know that people tend to optimize their own incomes; that is why companies have variable incentive plans! So, working across from someone carrying a primary revenue goal will always drive the conversation to how much revenue I am going to provide for them, resulting in frustration and wasted time if I don't share that goal.

Here's a more interesting example. Many times, my clients seek alliances as defensive moves - either in an attempt to prevent a smaller direct competitor from gaining the upper hand, or in order to prevent the partner from entering your market in competition. In either case, while revenue may be important, the critical goal is to engage with the partner, even if it doesn't result in substantial revenue, or even result in an alliance. So, while the intended goal may be to form an alliance if possible, "distracting" the partner for a period of time is just as effective, so signing a contract and generating revenue are both secondary. If the person assigned to handle this transaction is measured and paid primarily on revenue, it is easy to see how they could fail to achieve the strategic goal.

But, defining measurable goals for BD is important for both the company and the individual. Direct or indirect alliance revenue is obviously important to the business, and is always a component of that goal set. BD professionals who are tasked with forming and managing Strategic Alliances should be goaled and measured on quantitative strategic outcomes aligned with business objectives, such as:
  • Forming a specific number of alliances in a specific period of time, possibly with a list of targets or classes of prospects;
  • Managing a review process with the executive team to define the target list of partners over time - at least quarterly - so that the goals remain fresh, reflect market dynamics, and changes in company strategy;
  • Generating marketing success - measuring Press Releases, positive analyst coverage, lead generation resulting from activities with partners;
  • Engaging with a specific target partner to limit or prevent competitive threats, and of course
  • Generating direct or indirect revenue from partners. Indirect revenue is that generated by the business as a result of influence by the partner. Direct revenue is that generated through and by the partner.

I welcome hearing examples from readers of situations where goal-setting was used effectively, or resulted in disasters - nothing is better as a learning tool than seeing the results of such a mistake.

Next week, I will spend some time discussing the Alliance Spectrum: different types of alliances and how each adds value to the business. Suggestions for future topics are always welcome!

Until then ... thanks for listening!