So you are now charged with leading the business to new markets, driving revenue growth in territories that were hitherto foreign to you. Yours is an important function because the company's future may be riding on your success, and the pressure is big. What do you do? How do you go about ensuring that you succeed? While it is not rocket science, business development requires a set of skills and mindset that are different from a more traditional functions. Here are 7 things about business development that your boss wants you to know...
1. Identify the right market segment
You may well be successful in your current market, and you have a great business model, but now you are penetrating a new market, with different demographics and psychographics. Before you even enter the market, you need to identify the segment you wish to "attack", understanding that it is better to be narrowly focused with a laser-sharp value proposition, than trying to cast the net far and wide, hoping to catch something. The latter strategy will lead to weak market definition, and with that, poor value proposition. For example, supposing you are currently offering traditional tuition classes in Singapore and you now wish to enter the online market; instead of taking all your curricula and transforming them into a large online learning portal, you should instead identify one smaller segment like mathematics for primary school leaving examination success. Firstly, this makes your portal development much more focused, much more streamlined. Secondly, as you do this, you also learn how to navigate the online space, realising that your offline solutions may well not work in the online space; and thirdly, you go to market faster with less cost, allowing you to "fail fast and fail cheap". So be prudent and make a clear definition of the segment you wish to enter.
2. Deeply understand your customers
Once you have your segment identified, dive deeper into the psychographics of your customers. Outline their significant jobs to be done, understanding that there are functional, social and emotional jobs. From there, uncover the pains and gains of getting their jobs done. The pains show what the market is currently lacking, and represent opportunities for you to enter the market. So entering a new market is NOT about your product or service, but it is about your target customers, and what they need to get their job done. The better you are able to meet their unmet needs, the better you will be able secure a foothold in the new market.
3. Embrace the growth mindset
Moving into a new territory requires you to learn quickly, deal with "failure", manage risk, continuously fine-tuning your value proposition. These are all traits of the growth mindset. There are five behavioural traits dimensions that impact the growth mindset:
curiosity & development
resilience & boldness
diligence & courage
progress & agility
humility & discipline
If you like to know more of your growth mindset traits, do sign up for your FREE assessment here.
4. Adopt the hypothesis-driven process
Whatever market you enter, whatever product you are offering, you are basically running a hypothesis. Going back to our online mathematics programme for primary school leaving examination success, you are basically testing the hypothesis that online PSLE mathematics learning is a viable way to be successful in the exams. You are also testing whether students can learn well online, and that parents are happy to have their children stuck behind the computer to learn mathematics. However, even though you may be successful today, it does not prove that your hypothesis is correct. It just says that it is not wrong - yet! As a result, you need to treat all your business development activities as a means to find out where the hypothesis is wrong, and when that happens, to pivot your business.
5. Know when to pivot, and when to scale
A pivot is a shift from your current hypothesis. If your current hypothesis is wrong, you must search for a new angle - a new way - to meet your customers' needs. Since there are many routes to scale a mountain, there are also many roads you can take to meet your customers' needs. Hence, you need to be ready to pivot onto a new hypothesis when you have found that the current one is no longer valid. And this means that you must have identified your pivot point, the performance metric that tells you that your current hypothesis is not working. For example, if you have identified that to be viable, your online learning school needs to have 400 students on a monthly subscription. You have also identified that you require 9 months to reach this registration level. Hence, you might have a pivot decision on your hands if you only have 200 subscriptions after 12 months. You either need to change your marketing, your outreach, your channels, your pricing, to reach that level. If after making the changes you still cannot achieve your success metrics, you might need to significantly change your product or service.
Conversely, if you attracted 800 students within 6 months, and realise that you might be reaching the limits of service quality - either by bandwidth or warranty issues, this may signal the time to scale your solution. You will have to deploy resources to enjoy economies of scale. This is called the scale point.
6. Strive for product-market fit
When your product meets market needs, you have product-market fit. The ideal, of course, is 100% fit, but we know that is not possible; however, the lesser the fit, the lesser will be your value proposition. This will make it more difficult to penetrate the market, and more difficult to grow. Therefore, even though product development may not be your responsibility, its impact on you is so great that you will have to be involved in it. In other words, business development will involve product development, and your inputs from the ground, the lessons you learn from the market, must be fed back to your product developers, and from there, co-create the solution. And as you improve, you increase product-market fit.
7. Hack your way to new growth
Growth hacking is the technological solution to growth. Traditional methods use channels to promote your brand, but growth hacking looks for non-traditional technological solutions. For example, Hotmail was one of the first companies to use growth hacking. Without a budget for advertising, and wanting to make sure that their efforts paid off, Hotmail decided to do one small thing as they gave their software away for free, it added a line at the end of each email that was sent out that said, "P.S. I love you - Get your free email at Hotmail". Since then, many other companies had used growth hacking in various ways. Dropbox created a signup waiting list, so there was pent-up demand; eBay partnered with Gogo to offer in-flight wifi access to eBay auctions for free for all passengers onboard Delta and Virgin Atlantic flights; Uber gave out free rides during the Austin SXSW conference for several years to build up their fan base, as did Airbnb. There are many ways you can growth hack, and I shall share some of them in an upcoming post.
Business development is not sales
Business development is not simply taking your current product, using your current business model, selling to a current customer segment. That is sales. Instead, you need to look at your potential market with fresh eyes, identify market white space, and offer a new value proposition that will help you address your customers' pain points, and gain expectations. It is only when you are able to make that connection between your product/service and your target customers' unmet needs will you then be able to meet your objectives of building new business streams.
I wish you all the best!
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