Business development: 94% of challenges are internal

Business Development

Business development is everything, especially if you believe the old executive adage that “if you’re not growing, you’re dying.” Companies love to show growth, and investors love to reward it. Consider a company like Pandora — wasn’t/isn’t making a profit, but investors love the growth potential. Same with Amazon. We love the high-growth, high-potential companies. That’s kind of the essence of business development.

Baked into all this is the supposed emergence of startup and entrepreneurial cultures. I say “supposed” there because (a) entrepreneurship may actually be dying and (b) per legitimate research, most organizations are becoming more bureaucratic. But the deification of the startup culture leads to a lot of ideas about business development. Foremost among those is probably “hustle,” and then a bunch of people barking about “scale” and the like.

(By the way, post I want to write someday: “Men sound like assholes when they use business terminology.” I think it would be fun. I digress.)

For years and years, the idea of business development was predominantly external. You needed better talent (hiring). There were factories and equipment to be bought. The technology wasn’t there yet. Scaling and becoming profitable were about defeating the challenges out in the marketplace.

It’s a very different picture around business development these days.

Business development and lessons from Bain

Bain is a fairly-respected consulting firm. If you ever head to a business school career fair, most people make a beeline for that table. (They pay well.) Well now, here’s an interview with Chris Zook — he’s headed the global strategy practice of Bain for two decades. The article is about business development and the “startup mentality.” (More on that in a second.) Here is maybe the most interesting part:

One of the most amazing and powerful statistics from our five-year study, where we visited 40 countries in the course of it, is that for the largest of companies, 94% say that there are barriers to achieving their growth targets. But by my other statistic, 94% of the barriers are now internal. They are not lack of a market, market saturation, technologies they couldn’t possibly have, unbeatable competitors, government regulation, economic slowdown — none of that. They say in 94% of the time it is internal, and we found that many more than two-thirds of these primary reasons were related to complexity and how some companies age prematurely.

Business development: now it’s all about the internal barriers. By the way, Zook wrote a book about all this.

What are some of the internal barriers to business development?

The normal ideas apply here, including:

  • Poor communication (yes)
  • Unclear roles and responsibilities (yes)
  • Senior management meddling (yes)
  • Too many middle levels (yes)
  • General issues with ethics and trust (yes)
  • Everyone spending all their time in meetings/calls (yes)

Zook says that the “founder’s mentality” is about three things that supposedly help defeat this. Namely:

  • Insurgent Mission: This means you’re “at war” with the current standards of your industry
  • Frontline Obsession: This means you care deeply about how customers are perceiving your product/service.
  • Owner’s Mindset: This means you have an aversion to bureaucracy and want to jump on problems yourself.

I’m good with 1 and 2 above, but “owner’s mindset” is worrisome. To me, that seems like a slippery slope down towards micromanaging.

How can the business development internal barriers be overcome?

Zook’s research through Bain shows this: companies who reach $5 billion in value usually have 9-14 layers between ‘the front lines’ and upper management. That’s an insane amount of layers. Here’s another example with a high-growth medical company. In that second example, they’re making billions and yet, anywhere between 5-7 of 10 people have no clear role.


This is a real problem for organizations as they ‘scale.’ Basically, the focus tends to become money. (Money or growth.) I’d say about 1.3-2 positions out of every five are actually pointed at revenue. So, those jobs become the people the executives care about. Now you have an entire suite of people, from social media managers to HR to operations managers, who no one with power cares about. This takes unclear job roles and makes the problem 61 times worse. Now the job roles are (a) unclear and (b) probably don’t need to exist. It’s a brutal 1-2 punch.

I’d love to say here that business development problems can be solved with “strong core values,” but we all secretly know that’s bullshit.

Internal barriers to business development typically aren’t solved. The problems are ignored so long as the money/growth is there. Then the problems fester, and people get annoyed and leave. But if the money/growth is still there — and the CEO’s lieutenants are still there — it’s all good in the hood.

If we want to solve internal barriers to business development, though, it really comes down to focusing on people. Or, at the very least, caring about people somewhere near products and processes.

Unfortunately, most people don’t seem to “get” that.

Internal business development barriers and disruption

When we talk about “disruption,” this is what we mean. Bigger companies lose sight of what got them there. They become susceptible to getting jacked in the mouth by smaller companies. Their business development is typically thwarted by internal barriers. This leaves them ‘exposed’ in the marketplace.

That’s disruption in a nutshell — slow decision-making or crappy product deployment to ‘make a quarter,’ which then adds up time and again — and that’s why companies need to start focusing on change management.

Change management efforts will actually make your business development better, but again … most people don’t “get” that.

What executives hear when someone says “change management” is “HR’s thing.” Since HR is the ultimate cover-your-ass department for most top dogs, anything parked there is an also-ran topic to someone with real authority. That’s why “change management” is a buzzword to most, and that’s why companies will eventually lose market share to some hipster pounding out an app at a coffee shop as they sit in 37 hours/week of meetings.

That’s shitty business development — and that comes from internal barriers, not external ones. Too many meetings and calls? That’s an internal barrier. That’s why your business development isn’t good. See? When your managers have their entire calendar blocked off on Monday at 10am, that’s actually bad business development. It’s not “collaboration.” It’s a “giant time suck.”

Any other thoughts on business development?

Ted Bauer

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