Recently, I coached three participants of the New Business Development program at the Rotterdam School of Management. These participants worked respectively for an architecture, a law, and an IT firm. Three totally different professional service providers, yet their new business development challenges were remarkably similar.
The business development function
They all work for firms that are among the top in their respective fields. Not the leading firms in size, but certainly well known and respected.
They participated in this New Business Development course, because their business development function had only recently been formalized. Their task is to help increase revenue, take workload of their professional staff, foster current clients, and build new customer relationships.
What more, they were tasked with changing the current paradigm of new business development – one of unnecessary expenses and missed opportunities – and turn it into a winning strategy.
At the moment, business development is considered a cost center, because these hours cannot be booked on client projects.
Thus, business developers are under a lot of pressure to show their worth. Their time is under scrutiny, while they struggle to get people from the business to help them with their business development tasks. The latter is somewhat odd, as after all, these business developers are there to assist the professionals of the firm to be more effective in their sales efforts.
What few seem to realize, is that the business development function can assist and facilitate, but they cannot do the work for them. With one business developer who has to assist all professionals in the firm, and the breadth and depth of knowledge these firms represent, it is impossible for this person to be in charge and execute all the development efforts.
The new business development projects undertaken in the past, did not end well. Not because they were bad projects, but just because everyone was waiting for others to act. As a result, especially the more risky new business development endeavors, often got delayed and were less successful. If they ever produced any results at all.
What I learned from these experiences, is that you need to invest in new business development. Either do it well, that is, commit sufficient funds, time, and resources. Or don’t do it. Never try to cut corners, as than it just becomes an expensive exercise that will waste the organization a lot of money with nothing to show for in return.
Without a clearly defined development process to bring ideas to practice, the projects that these firms had undertaken did not deliver. They became either long arduous and expensive projects, with outcomes that were outdated by the time the firm finally got around implementing the new solution. Alternatively, these projects were abandoned after spending significant sums of money. In either case, the outcomes never created the return on investment the organization envisioned.
Wasting money on unnecessary costs is one thing, but missing opportunities is far worse. That means that the firm is missing out, while leaving room for the competition to take over.
Why act now?
If the past performance was this bad, why did these participants take on these new roles and sign up for the Rotterdam School of Management New Business Development course?
I asked, why their firms decided to take action. One of the participants described it as the frog in the boiling pot problem. You know that the temperature is slowly rising, but when is it time to jump?
For another, their main competitor went broke. Then, their management realized it was time to act now. Change was needed, which required more structure around their business development efforts. Waiting was no longer an option.
Indeed, the longer you wait to act, the less resources are available – as the firm has become less profitable -, the larger the gap you have to bridge (as your clients have become more discontent), and the fewer loyal clients you can reach out to, to partner with you in new service development projects. In sum, the sooner you act the better. Yet recognizing the urgency of a slow moving in threat is a challenge.
No longer business as usual
In the past, professional service organizations rarely if ever went broke. Nowadays, the competitive pressure has increased due to a variety of reasons.
The strategic focus of these firms was on the high end of the market. That is were the interesting and lucrative projects are. Yet, with all professional service firms going after this slice of the pie, this usually uncontested market has become tremendously competitive.
Meantime, the low-end services – those that are relatively uninteresting and unattractive, yet provide the bread and butter in terms of revenue – are under pressure too. Not by their usual competitors though, but by new entrants, such as startups and technology companies. Whether it is low-code software, legal-tech startups, or firms from developing countries, competitors pop-up out of the blue. Competitors that offer to deliver these low-end services at much lower costs.
So, these business developers certainly have a challenge at hand in trying to figure out, how their firms can remain cutting edge and profitable. How to deliver high-end and low-end services in the most effective and efficient manner?
By developing new service offerings that enable the firm to efficiently and effectively service the low end of the market, these firms can simultaneously open the door for the more lucrative high-end work.
In addition, freeing up their experts from the uninteresting, yet time currently time consuming low-end work, gives these professionals more time to spend on these high-end solutions.
This however only pays off, when also the business model changes. In a pay-by-the-hour model, delivering services more efficiently does not make sense. Yet, in a results-based payment model, effectiveness and efficiency are paramount.
Professional service firms are so used to be in a providers driven economy, that they still think in terms of what they can and want to offer. Not in terms of what their clients want or need. Now that there their clients are in the driving seat, they have to turn their thinking around. Instead of the classic technology push – what can we do -, to the market pull – what is it that our clients want us to do-. That is a shift in thinking that does not come easy.
As a result, we spent a significant amount of time defining the problem from the perspective of their clients.
Eager to learn, these participants quickly learned and understood what needed to be done.
How to make sure you hit a home-run?
Conversations with clients about their problems and challenges, make that a new service idea is build for them. It also facilitates the discussions around approval of the project. No longer are these decisions based on hunches and opinions, but on facts and data about the actual needs and discontents of current clients.
Such initial exploratory conversations can be great breeding grounds for future collaborative partnerships with their clients.
Thus, to make sure you are hitting a home run as a business developer, you will have to start with what your clients want.
Once that is clear, then you can build the roadmap to get there.
Today are the final presentations of the New Business Development Program. I am looking forward to follow my new business developers beyond this program, and hear where their projects got them and their organizations!
How about your organization? Do your new business development result in new service offerings that pay-off?