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The Risk of Sharing

by Micah on December 18th

Last night, I had the pleasure to meet Eric Olson, the business development guy at BuzzFeed.

We met up at Bug Labs Bug+NYC Meetup (which was rad, by the way. The device is truly a marvel of engineering, and while about the size of an old school GameBoy, it certainly would be something I would buy and play with).

After hanging out at the Meetup, we headed over to Lombari’s Pizza on Spring Street. And, as must often happen when two people of a similar ilk and profession get together, we began to discuss the perceptions of what we do.

The over-arching question was: Is Sales and Business Development the same thing?

After all, its hard to outline what “Business Development” is and is not. Sales, is much more of a process and a science. While the two disciplines share many attributes, they are different in distinct ways.

The major difference is risk. Follow me with this:

Sales: The process by which one person provides access to a product or service at the optimal price point.

For example, a sales person would rather provide a bottle of water to a thirsty person, than a quenched person, because the thirsty person will pay more.

Business Development: The process by which two groups of people determine the optimal business relationship to mutually drive revenue, and/or develop new revenue sources.

For example, I provide a widget to a blog that creates additional ad units and share in that revenue and/or am paid for the space.So what is the major difference between the two? Risk.

With Sales, there is truly limited risk to the sales person or the purchaser. Mechanically, there might be several ways a sales person is taking a risk (the price point is too high; the product stinks; etc.). But most of those are solvable through process.

With Business Development, there is a need for mutual risk to proceed mutual success. The publisher has to 1) be willing to install the widget; and 2) trust/believe that the widget will be used in such a manner that the resulting traffic will be significant enough to drive real revenue. The Business Development person has to believe that the publisher is of high quality and generates enough traffic to make the transaction viable.

Remember, with a Sales person, money is exchanging hands, while the Business Development person only has a contract with expectations for success.

This also wrecks havoc with the tracking of success. With a Sales person its relatively easy: Units sold is the primary metric. With Business Development, its not Deals Closed, but rather the results of those deals, which are not allows immediately evident.

So, at the end of the day, if you are unsure if your organization needs a sales or business development professional, think about the transaction and if it inherently carries shared risk.

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Viewing 4 Comments

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    Educational, Micah (and by the way, every time I listen to This is Why I'm Hot I sing, I got the East Coast bumpin' Micah, I got the West Coast bumpin' Micah). Where was I? Ok, my question is this. If we can't measure the success of a Business Development transaction, how do we pay tehe Biz Dev associate correctly? If a person comes on early in the game, it's obvious because the Biz Dev person is sharing in the risk of the company with which they're involved (if it's a startup, there is less guarantee for success than for an established company). But in an established company, is it really simply a matter of stating goal? And if yes, how do we know when the goal has been reached? Do you have personal goals within a company that let you know when you've reached goals? (I know it may be impossible to talk about w/regards to your current company, but what about in the past?) I switched the theme to pink, btw. So hot. Sexy blog!
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    Sweet post Micah. Good to see some clarity on this one.
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    Micah, I agree with your assessment. I always think of biz dev as being the art of marrying to distinctly different companies together such that the sum of the two is greater than the parts. It is more of a B2B play, where sales is a B2C play, and not to over generalize, when I think of sales, I think of used cars (sorry to all you sales folks)
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    Thanks on the theme. It was all Jeff LeDoux. So with sales its is easy to figure a comp plan - sell X and make Y. With BizDev, it can still be specific metric (page views, partnerships, etc.) but normally a BD person doesnt have a widget to sell, and the transaction isnt usually one time (even reocurring sales revenue can be tied to a single transaction). The hope is that both parties make more revenue by partnering, and the risk is shared, because the end result could be zilch. In a sales world, there is always a winner. So goals are always good, and can be developed, but a real BD person causes a lot of positive waves, ultimately leading to the moving of some needle. BTW, everyone when hired shares in the risk of the company's success or failure. With BD its company to company shared risk, whereas sales is personal risk (Lose my job). Make sense?
 

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