I’ve worked in a few companies that had a role called “Business Development”. I have to say, this is probably one of the most poorly defined and managed roles I’ve seen in any of these companies. Usually “Business Development” means “Strategic Alliances”. Now what does that mean?
From what I’ve seen, Strategic Alliances involves trying to cozy up to one or more large technology vendors, such as IBM or HP or Sun or Dell or some equally significantly larger company to develop a relationship with them that will turn into a huge channel for the smaller vendor at minimum, or in some cases, impress them enough that they’ll buy you outright at some point.
Now let’s understand something. In the abstract, this is not a bad thing, and it has been known to work for some companies. But in practice, what usually happens is that the BizDev team cozies up to the target large vendor, creates a lot of “buzz” about the potential of the relationship, IF ONLY, we partake in certain activities with the vendor. These activities, unfortunately, typically involve heavy lifting by Product Management and Engineering for product integrations or ports or feature enhancements and the like. There are of course marketing and sales activities as well that are involved, but the bulk of the effort falls on the product teams.
So, here’s the problem I have with this. When we talk “strategic” alliances, keep in mind, these alliances are usually only strategic to the smaller party. The large partner is probably in similar “strategic” talks with you and all of your competitors as well, playing each off one another.
I once worked for a company that wanted to cozy up to IBM. IBM was willing to help us port our product, which ran on Unix and Windows, to the mainframe (OS/390). We had no such plans on our roadmap and we couldn’t identify more than 1 or 2 (out of over 2000) customers who would purchase a mainframe version of our product. But, cozying up to IBM was “strategic” for the company. Even Sr. Management had bought into this. So, we started the port. I won’t go into all the details of the problems we had (we had very few mainframe savvy staff to begin with), but after about 2 years, and a switch from a native mainframe port (which worked but was very slow and needed a LOT of tuning), to a Linux on Mainframe port, IBM did an about face and bought our biggest competitor for a 10 figure sum. So much for the “strategic alliance”. I’ve seen this type of thing happen at other companies as well.
No disrespect intended, but BizDev people are really just sales people with a very small prospect base, and usually high quota numbers. They are chasing “the big deals”. There are few constraints put on them, because the relationships are “strategic”, and so this pattern of cozying up to large vendors, bending over backwards to impress them, only to usually have the rug pulled out later happens again and again.
Yes, there are risks in business that must be taken, but when the pattern these large companies take, particularly with smaller vendors, is patently clear, why do companies fall prey to this over and over again? Is it simply a case of “lotto-fever”, or are there many more hits than misses that occur across a wide swath of companies? I’d love to hear your comments on this.
Saeed