David Horesh is the founder of ‘The Unit,’ a business development firm that carries out strategic assignments for decision-makers. After almost a decade in a military environment, he now implements his soldier skillset in the business world. He is currently working with tech companies, startups, universities, investors, and leaders, as their execution arm on strategic matters.
How do you define business development?
When I ask corporate executives this question, they describe it slightly differently. Sometimes it’s an operational role, sometimes it’s more about sales, maybe a bit of PR. In a nutshell, I would say it’s a bit of everything—something like a swiss army knife. To create a methodology, we need to define our mission accurately.
This is the definition I use: “Business development entails tasks and processes to develop and implement growth opportunities through partnerships.”
The most crucial part being – growth opportunities through partnerships.
Perfect. This is our mission statement — we’re on the hunt for partnerships. But what kind of partnerships? Tech partnership? Distribution ones? Do we want to share customers? What do we want?
There’s a sense that business development is like, “Ok guys, go make me some partnerships.” When I started doing BizDev, I admit that for businesses, government organizations, and even nonprofits, that was my attitude. Create partnerships, it doesn’t matter with who, and it doesn’t matter why.
I’ll give you an example. I sat down with a CEO of a company using drones for agriculture, and his attitude towards partnerships was that every company in the agriculture space is a potential partner. So, he reached out to tractor manufactures, fertilizer producers, and a dozen other companies that the only common ground he had with them was that they were both in agriculture. He thought that if you take what he does and put it together with what they do, you will magically create some new value. It’s much easier to sell drone software together with fertilizers, right? Wrong – Very wrong. The two have nothing to do with each other. Even if the other side goes for them, partnerships of this sort are just doomed to fail. The simple reason that the whole point of alliances is not to create 1+1=2 opportunities, but to create 1+1 = 3,4,5,100 types of options.
How is this done? How do we find significant partnerships?
With time, I began to understand that I am wasting lots of time and money on relationships that aren’t going anywhere, so I decided to end this. I will not reach out to anyone that isn’t part of my value chain.
Let’s talk a bit about orange juice. Who is the end consumer of orange juice? You, me, the 13-year-old walking home from school on a hot day. Where do we buy orange juice? From the store. Where does the store buy it from? The distributor. Where does he buy it from? The factory. Where does the factory get oranges from? The farmer. And that is the orange juice value chain.
For example, let’s say that I invented a sweetener that makes orange juice the best thing ever. I can sell it directly to the end consumer. I can sell it to the store, the distributors, or even the factory to mix it with their product. Either of them is a viable option. Now let’s get some things straight — whomever I sell my sweetener to is my customer, but the rest of the value chain are not, making them potential partners. If the store is my customer, I can partner with the distributor. If I sell to the distributor, I can partner with the factory. Now take this methodology and apply it to the software you developed, your offer’s financial services, or the electronic device you invented. It works.
What is an ideal partner profile?
For each of our value chain’s links, we need to create a profile of the ideal partner. This is a checklist of attributes we want our partner to have. For example: where is it located, in which market? And what stage is their product? How big is the company? Are they a known brand?
Pretty basic stuff, right? And yet, to find our ultimate partner, we need to be very specific about what we are looking for.
What is the next step?
Next, we need to determine which function in the company is the one that we give value to the most. This might be a bit of a cliché, but we do business with people at the end of the day. Therefore it is essential to reach out to the company’s personnel to whom we give the most value. It is annoying to invest an incredible amount of time into a relationship, to discover you have been talking to the wrong person all along. What also creates a feeling that the company as a whole isn’t interested in what we’re doing when the real problem is that we’re just not talking to the right person.
Let’s say I have a software solution that turns TVs into smart devices. It makes sense to reach out to our potential partner’s product manager and say, “Hey, I have a great software for you. I’ll install it on your TVs for free, you save money on software development, and I get to reach my customers which is where I make my money from”.
Our product manager says to — “Hmmm Na… It doesn’t cost me much to develop the software, I don’t need you,” and he’s not interested. On the other hand, the company’s sales manager knows your software because he heard the name of your brand in different deals, and he thinks that combining your software with his hardware gives his sales team extra value. So he’s interested, and he knows how to get his company on board.
What is a business development map?
After going through this process, we gather the collected information and structure it into a visual list — a business development map. It is a sheet that gives our methodology context regarding the ecosystem we want to operate. For example, if we wanted to create a business development map for the laptop ecosystem, it would look something like this:
The business development map serves as a compass for all business development operations. Every actor we engage, we make sure that it’s the right link in the value chain, holds the suitable characteristics, and is conversing with the right function in the company. Only after ‘ticking all the boxes’ we can be sure our invested resources are being used to promote the company’s business development strategy.