Who Owns Revenue Responsibility? On Thinking Like a Partner, Part 1

Several years ago some friends formed a firm and asked for advice on generating business. “Should we hire a full-time business developer?” one asked. “No,” I answered. “We’re all busy with our clients. It’s hard to make time for anything else. In that case, doesn’t it make sense to hire a dedicated business developer?” he responded. “No,” I said.

We talked about other things for a while, like the urgency to generate revenue. As I was about to leave, one friend said again, “Hiring a business developer seems to make a lot of sense.” “So, go ahead and hire one,” I responded somewhat curtly. Taken aback, my friends asked me why I thought it was a bad idea. “Because you own this problem,” I said. “Generating revenue will determine whether you and your firm succeed or fail, and none of you wants to own the problem. But, like it or not, you own it. You can’t off load it onto someone else.” Had even one of the three been an aggressive business getter, my advice might have been different. A business developer might complement their efforts, but never replace them.

I was reminded of this exchange yesterday, when a practice head at a mid-sized firm faced with declining revenue suggested hiring a business developer. I will call him James. James has probably worked for the firm for fifteen years and knows hundreds of former clients. Others in the firm say that many of these clients worship him. Adjusting for the obvious hyperbole, I have no doubt this is true. He is brilliant and kind and extends himself for his clients, should they make the smallest request. He knows his business cold. Yet, once these people become former clients, he never calls them, nor lifts a finger to get more business. A business developer might actually pick up the receiver and dial, but how empty the calls would be compared the ones James could have.

When business falls off in a downturn, you can count on someone suggesting hiring a professional business developer. And, sometimes it makes sense to do so. More often it is simply a professional’s attempt to avoid responsibility for sales. People who do that aren’t thinking like partners.

(My next post will address when it might be a good idea to hire a business developer.)

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10 Responses to “Who Owns Revenue Responsibility? On Thinking Like a Partner, Part 1”

  1. Mel Lester Says:

    Ford,

    Great topic and very timely. I am generally not a strong advocate of hiring a full-time business developer (although I used to be one) for the very reasons you mention.

    Case in point: I have been working with an engineering firm since last spring, trying to help them improve their business development process. From our first meeting, there has been a contingent of the firm’s management who have thought the solution was hiring a full-time seller. I suggested whether they did or not that management needed to take more ownership of the responsibility or whoever they hired to sell for them would likely fail.

    So we did sales training, developed a BD plan, organized the “sales team,” assigned a number of sales and marketing actitivities, met regularly to try to keep the process going, etc. But follow-through has been generally dismal. Despite falling revenues and layoffs, there’s still a remarkable lack of urgency among the management team. Some are still holding out for someone else to do it.

    Now they are bringing another consultant in for a two-day meeting to help them define their business development strategy (i.e., try to help them reach a consensus on hiring a BD professional). I’ve seen this type of scenario play out many times, as I’m sure you have. In my experience, until management takes full ownership of business development, the chances of a full-time seller succeeding are slim.

    I look forward to your next post,

    Mel

  2. Ford Harding Says:

    Mel:

    Thanks for the comment. BDs (business developers) may disagree with us. I’m sure we would both like some of them to weigh in on this subject. For the record, I think they add tremendous value in the right circumstances. The job description is important and perhaps a different title would make partners less inclined to abdicate sales responsibility to them. Any suggestions for a better title?

    Ford Harding

  3. Tom "Bald Dog" Varjan Says:

    I think the other problem with the dedicated business developer is that client acquisition doesn’t become an organisational competence but an individualised activity.

    And when the business developers leave, they take their best clients. After all, they got the clients, not the firm, so the clients belong to them not to their firms.

    And the questions is: What is the value of a business that doesn’t have a built-in client acquisition capability? Nothing. Not a sausage.

    So my idea is that firms can hire business development folks who are cranking the client acquisition system, but the firm’s partners must be on the front lines doing the face-to-face interaction.

    For instance, when I need legal help, I want to interact with a lawyer not with the law firm’s business development guy who can’t help me. But the business development system, cranked by the business development folks can qualify me as a client.

    It also bugs me a bit that in may cases a “business developer” actually means a cold prospecting peddler.

    Great post, Ford.

  4. David Harkleroad Says:

    Challenging post, Ford…

    On the one hand, I agree with Tom that when I need a lawyer or doctor (or a consultant) I want to talk to the principal. On the other, when you call for a doctor’s appointment, you generally don’t speak to the doctor: s/he depends on others to set up the appointments, determine my needs and then, when I get there prepare for our meeting (all those questions and diagostics) – common sense dictates that, properly done, this is time (and cost) effective for both of us.

    Where the system starts breaking down, I think, is when roles and responsibilities aren’t clearly understood, or agreed to. If the partner thinks that the business developer’s role is to hand over a piece of ready-to-go business (don’t laugh! happens more often than any of us want to accept), then the partner clearly doesn’t understand the value that s/he can add. On the other hand, if all the business developer does is set up appointments, then all you need is a secretary (BTW, Tom, cold calling does work, especially if you can find ways to increase the odds by targeting).

    I agree that the title is potentially a challenge: “business developer,” while not inaccurate, is internally v. client-focused. But what would replace it? If you undershoot (say, ‘appointment booker’) you undermine the role with clients, and probably aren’t going to attract the caliber of folks you need. If you misname it, you cause confusion (IBM marketing today suffers from misnaming their sales reps as ‘marketing executives’ decades ago). The most accurate title would have sales in it (e.g., sales executive), but I understand the reluctance of many professional services firms to use this.

    So here’s a modest proposal: why don’t we call these folks Consultant, or Principal – or even Partner (assuming they contribute enough to the firm to qualify as one) – in other words, the same titles as everyone else. This assumes some significant mindset and behavior changes, on both sides.

    First, the business developer must now take accountability for understanding the business sufficiently that s/he can actually add value to a client conversation, but how is this different for a senior partner meeting with a client to agree on the problem and then select the team that will work on it?

    And the partners must recognize that the business developer is a real professional who can add as much value to the business as they can.

    David Harkleroad
    CMO Hay Group
    http://davidharkleroad.wordpress.com/

  5. Ford Harding Says:

    Sims Wyeth left the following comment:

    Ford,

    I love this post. It’s a story. It has conflict. I can see you getting irritated. And it reminds me that being a business developer is a state of being–sort of like being a football player, which I was in high school–joyfully. You have to love the contact, the battle, and the feeling of overcoming everything they put in your way. In fact we could say being a business developer is a contact sport, if it weren’t a little too cute to say such a thing.

    Sims

  6. Ford Harding Says:

    Tom

    It is exactly because their business wouldn’t be worth a sausage if they palmed off sales to a business developer (BD) that I recommended against doing so. But must hiring a BD always lead to this?

    David

    Role definitions are key if partners and BDs are to work together. I also agree that BDs should have access to the partner track.

    Sims

    You played football in high school? I thought you played Hamlet.

    Thanks for the comments and encouragement, all.

    Ford Harding

  7. Tom "Bald Dog" Varjan Says:

    Ford: But must hiring a BD always lead to this?

    I think this only happens when the BD folks are on 100% commission. This alone alienates them from the company and sends them a loud message: You eat what you hunt. So, they work for themselves not for the company.

    In good companies where BD folks are part of the company and have the same pay structure as everyone else, BD folks actually belong to the company.

    In a way the BD folks are like the squires of medieval knights. They would shine the weapons and armours, feed the horses, etc. but when it was time for battle, it was the knight’s turn to shine. The quires prepared everything to their best to give their knights the highest chance for victory. But they could not win the battles FOR their knights.

    BD folks are diligently cranking the company’s BD system in order to put the subject matter experts in front of highly qualified (qualified by the system) prospects.

    Just like in football. The whole team is working on preparing the goal. And at the right moment they pass the ball to the person who is a great scorer. For instance, defence guys don’t even try to score because they know there is a better chance to score by passing the ball to the offence guy.

    What I’m also thinking is that BD folks should never be asked to do personal interaction with buyers because there is no peer-level match. Or the other option is that some BD folks should be content experts too.

    So, if I sell to doctors, I hire some former nurses for BD. Nurses understand the way doctors think and how the medical world operates. That creates credibility. So, these ex-nurse BD folks can carry out basic diagnoses and then call the top experts to do the proverbial MRI and DNA analysis.

    Thought?

    Tom “Bald Dog” Varjan

  8. Ford Harding Says:

    Tom:

    I agree with much of this. Note that United Research Corp, later Gemini Consulting, became a consulting powerhouse by using a sales force made up of people who could carry themselves as peers with C suite execs. They weren’t content experts and half had never consulted. First meetings were one-on-one with execs. It was a hugely successful model.

    These were partners working on a small base plus 10% of what they sold.

    Many have tried to duplicate this model with mixed success.

    Ford Harding

  9. Tom "Bald Dog" Varjan Says:

    Ford: Many have tried to duplicate this model with mixed success.

    Ford,

    I think the mixed success was caused by the missing element. Yes, many imitated the pay scheme or other visible elements, but I think many missed out on Gemini’s culture and organisational values.

    Gemini treated these people as partners not as salespeople. And as a result, the market treated them as partners too and regarded them as peers.

    What do you think?

    Tom

  10. Ford Harding Says:

    Tom

    Yes, and they were an integral part of the organizational design, where others tried to glue BDs, including some ex-Gemini BDs, onto the side of a very different kind of organization. That seldom worked.

    Ford Harding

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