Business Development – Compound Value Theory

Business Development Requires A Bird’s Eye View



Everybody knows relationships are fundamental to good business development. Think about the phrase itself, “business development.” This is all the activities required to build the business. It takes into account a diverse group of disciplines like sales, marketing, and operations. It is the intersection of those thought processes and mentalities. You need sales to build a real company, marketing helps attract sales, and operations makes it possible to fulfill whatever you sell. Simple, right?

Not so fast. How do you develop business? Through relationships, of course. If you’re fresh starting out in a business development or sales role, that means you likely have few or no professional contacts that can help you. So your job is to go find the people that can help bring you sales, market yourself to different people to see what works, and develop as many relationships as possible. Easier said than done sometimes especially as you’re also learning the business’ operations!

Getting A Shot / Turn

In most distribution channels, there are many players involved in bidding for contracts or project work. If there isn’t competition, then something is wrong if you live in a region with a free market. Considering that you do, if you’re not getting a shot at bidding or a turn with orders, you have to build relationships.


Maybe get your company to provide a prototype or demo product. Show the client you’re working for them and get them something they haven’t seen before. Or you could take somebody out to lunch. I’ve learned from my father’s business partner how much people love that! It’s true. Don’t you???

Follow The Leader(s)

When you make a contact who helps you grow your business, you want to follow them wherever they go.

If your contact goes from GE to Philips, you want to make sure you get that Philips business. In this view it doesn’t necessarily matter what company you’re doing business with so much as it does the person you deal with and how you help each other. That is really important to remember, especially if you are enamored about the possibility of working with a specific company or brand to build your business.

That is also a reasonable marker of relationship building. Showing you can work with the biggest and best definitely can attract other business of similar size or comparable scope. Other leaders, especially competitive ones, may want to hire you away from their competitors so they can be the only ones to use your special set of skills.

Brands Are People Too (…sorta)

On a B2B level, company to company, it’s like a relationship of two people. Microsoft and Intel. Walmart and…everybody else. However, you have to look below the surface in these cases, because at the end of the day it’s still a person at one company ordering parts from another person at the supplier’s company.

So make sure to find a balance between building relationship with individual people, and the entirety of an organization. Both mentalities & approaches have tremendous value. Having a strong relationship with a specific person (the buyer) at your target client or customer’s company means security in some sense. If they move on and take you with them, you can likely keep the same level of business (if their new company has the same needs and no other conflicts).

On the other hand, if you have a good relationship with many other people (even people who aren’t direct buyers) at the company, and your contact leaves, you may still be involved. That way you get the both worlds. New business and business with your current account. That is a win/win!

Compound Value Theory For Business Development

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  • Identify Potential Value: Who is incentivized by what, and by how much?
  • Assess Parties’ Assets & Conflicts: What does everybody stand to gain and where are there pitfalls?
  • Analyze Success Rate: Which variables can be taken into account to determine our probability?

This Process Considerably Reduces Risk

By taking into account the potential value for yourself, your partners, their customers, and the rest of the market, you can see what the boundaries are. Seeing this situation from each party’s perspective will give you new insight to other value you can add for them (and yourself) as well as being clear about what pitfalls might occur. So you can plan for those. Lastly, good old fashioned analysis will help predict reasonable success rates and what safeguards there are for any potential failures.

There is an oppositional correlate to the amount of value compounded against risk. Meaning, the more value you create, for the most ideal # of partners, with as many variables taken into account as possible, the less risk there should be. This is kind of obvious on the one hand, but incredibly impactful to practice.