Business Development, Pre-sales, Sales and the ‘Arrow-head’

HAVING BEEN TRAINED FOR CULTIVATING ‘GROWTH’ AND evaluated for a few appraisal cycles by now for tasks that were marked under a title called ‘Business Development’ (or something that either sounds or seems similar), the debate on the subject by a certain groups of ‘experienced’ personnel almost immediately drew my attention.

And it becomes interesting when, with all due respect, the so-called experts, having built their careers in the relevant fields, seemed rather confused between the functioning and mandate of ‘Business Development’ and ‘Sales’ functions. Before taking a dig on that, respectfully, here is my version of the ‘classical’ definition (or differentiation) of the two:

“Business Development is a bunch of activities of today, based on your strategic vision of your product/service framework, that the Sales people would be selling tomorrow.”

Well, this definition might neither be universal nor be entirely technically accurate. However, it does give a certain level of clarity (when some of the rather experienced folks are contributing to the confusion). To me, these two functions are neither the ‘same’ nor ‘interchangeable’, but are distinct. And by the virtue of that clarity one can perhaps define both the functions more accurately and also appreciate their imperatives.

So, what we are saying here is – today’s Business Development initiatives could (should) potentially translate into sales targets of tomorrow – in other words: Sales follows Business Development. And thus, what we call pre-sales will have to fit between the two where it would have a sort of a ‘vetting’ role for the tasks trickling down from BD for the Sales to be made. It perhaps is a different matter that all of these three functions may not exist independently for a given organization, but could be merged among each others (pre-sales may be merged with BD, or BD may be made to co-exists in the same basket as of Sales. And that perhaps is the very reason where the confusion about the distinction is arising from).

[Above: The ‘Arrow-head’ components: a) the Sales function as the cutting-edge, b) the Business Development (BD) function, the main-body, that gives the aerodynamic shape and (thus) ‘direction’ to the arrow, and c) the Pre-sales function that embeds the Arrow-head to the stem (delivery streams).]

My personal exposure to these “cutting-edge” functions has been in terms of IT systems services, products, and delivery (where I have had the opportunity to performed all the roles except for direct-sales). In terms of the required skill-sets and experience for each of these functions: a BD professional might have to have a more strategic (and, if I may add, visionary) inclination on top of pure selling skills. A pre-sales professional, at the same time, may have to have a more Risk-oriented outlook (the correct Risk-appetite measure, as well as Risk-averse functioning) and the mandate to have Risk-mitigation embedded within the Sale that is going to be made. This is also the position where the ‘Analysis‘ bit could play its role. And connect the “arrow-head” to the structural strength of the stem (delivery streams) which provides for the momentum for the ‘travel’ (i.e. growth).

Further, this also helps give the logical alignment of each of these functions vis-a-vis the leadership roles in a typical organization. The BD function should ideally be with the top executive leadership (CEO/COO); the Sales function should report into BD; and the pre-sales should be closely knit with delivery/operations and having a dotted-line reporting to the executive leadership.

Go here for the interesting ‘confusion’ that I referred to at the beginning (you may would want to skip the vanity of the thread at the start and move over to the answers).

 

The Gillette ‘trap’

[A little background: It had been a few months that I was searching for twin-blade cartridges for the Gillette SensorExcel safety razor that I prefer. I had almost given up on it by now, and was looking towards this seemingly inevitable upgrade to Mach3 or something when I suddenly hit a jackpot – I found a supermarket selling the make and model that I was looking for. I could finally purchase a year worth of supply.

In other words, another year that I would effectively dodge Gillette Mach3 upgrade ‘threat’.]

The history goes that some hundred years ago, Mr. King Gillette was a wealthy but frustrated failure of an innovator at 40. He had written a book called “The Human Drift“, which argued that all industry should be taken over by a single corporation owned by the public, and that millions of Americans should live in a giant city called Metropolis powered by the Niagara Falls.

His boss at the bottle cap company, meanwhile, had just one piece of advice: Invent something people use and throw away.

One day while shaving with a rather blunt straight razor, the idea struck to him that perhaps this reusable razor could be replaced by a ‘consumable’ razor having the blade made of thin metal strips. Somewhere around 1870, Kampfe Brothers had developed a forged razor of a similar kind, which Mr. Gillette gladly improvised upon, registered the patent for the new design in his name, and the world got it’s first safety razor with name ‘Gillette’.

This same successful Business model was the weakness of the Gillette product in the initial years…

The really unique and path-breaking piece about this safety razor was not the product itself so much so was the marketing model it assumed, and which I called – the Gillette ‘trap’. Known as “Freebie Marketing“, the business model was to give away free safety razors and make profit by selling corresponding blades for them afterwards. In the initial days, however, this marketing model was the product’s weakness for the industrial facilities were not advanced enough to manufacture cheap blades with thin metal strips as mass-production. Mr. Gillette had to struggle almost for a couple of decades more to turn his model truly profitable. That past, the inventor is reaping benefits since than, and the company was valued at nearly USD 60bn in 2005 when P&G acquired it to create world’s largest personal care and household products company.

The year of 2005 is important for this post also because, after acquiring my new supply of cartridges, I thought of using the one cartridge first that I had been saving for a rainy day for quite some time now. The manufacturing date on this old one is May 2005. But interestingly the retail price is exactly the same as the one I bought today in 2008.

This really got me thinking as to how a product could sustain its retail price for almost three years while inflation is nearly 7% yoy, and the input costs for the cartridges, mainly steel, have jumped (e.g. price-rise in automotive sector). Even a 1-2% difference in prising would have killed the motive of this post, but here we are, with three probabilities:

• Gillette products were over-priced in 2005, and hence no price-revision took place in last three years. OR
• Gillette is under price-pressure today, and so is unable to hike prices (and thus making less profit). OR
• There is a twist in the tail for the “Freebie marketing” model now that there is a new owner P&G is running the show (Also, as critiques say, innovation has already taken a hit at Gillette under P&G – could they simply stop adding more blades to the cartridge and try something really innovative?)

If you come up with a better possibility, do let me know! 🙂 I would gladly appreciate it if it helps me dodging the threat for upgrade to Mach3 yet again…

 

The Future of Business – $0.00 enterprises

A really interesting article by the Editor in Chief at Wired magazine, Chris Anderson titled “Free! Why $0.00 Is the Future of Business” was the subject of much debate recently.

Accordingly to Chris, the economy of the brave new world is mainly driven by “scarcity” and “wastage” (as against to the old world concept of demand vs. supply). Out side of online business it may take a rather detailed and elaborate study to apply this new economy driver phenomenon to the world at large, such as manufacturing or airline industry.

Chris talks about six business models with examples that are used in the web2.0 economy, and goes on the indicate that all of them revolves around the concept of “Free!”.

At the same time, he argues that less successful (or failed) ventures have not appreciated the psychological bearer called “penny gap” which separates the cheap from the free.

Talking about “Freeconomics”, he says that what makes ‘free’ economically possible is known as externalities, a concept that holds that money is not the only scarcity in the world. Chief among the others are your time and respect, two factors that we’ve always known about but have only recently been able to measure properly. The “attention economy” and “reputation economy” are too fuzzy to merit an academic department, but there’s something real at the heart of both.

Some other interesting ‘observations’ include:

• Forty years ago, the principal nutritional problem in America was hunger; now it’s obesity, for which we have the Green Revolution to thank.
• Going from tens of dollars in the 1960s the cost of a transistor is approximately 0.000001 cent today for each of the transistors in Intel’s latest quad-core. This meant that we should start to “waste” transistors.
• If the unitary cost of technology is halving every 18 months, when does it come close enough to zero to say that you’ve arrived and can safely round down to nothing? The answer: almost always sooner than you think.
• In the Greek philosopher Zeno’s dichotomy paradox, you run toward a wall. As you run, you halve the distance to the wall, then halve it again, and so on. But if you continue to subdivide space forever, how can you ever actually reach the wall?
• Not too cheap to meter, as Atomic Energy Commission chief Lewis Strauss said in a different context, but too cheap to matter.

It would be interesting to look forward to his forthcoming book – “Free!”.

Here is the link to the whole article.