New business development, defined as new customers that are actually buying your products and services, is the lifeblood for most businesses, at least those that are trying to grow. Unfortunately, many entrepreneurs, owners and CEOs oversimplify the business development process to what sales or BD person has the biggest Rolodex. That’s a critical mistake, and many top executives fail to learn from history and make it over, and over, and over…
So just how should CEOs be looking at new business development to actually get a real and sizable return on investment?
The Rolodex Rainmaking Fiction
First let’s look at the belief system of many top executives; in particular, small firm owners and CEOs. They built the business by bootstrapping their past people networks, delivering exceptional products and services, and word of mouth. This is a typical American entrepreneurial story and it’s a good one. Now there is a need to grow the business and there comes the healthy realization that the owner has neither the contacts nor the time to reach out to all of them. Often there is a cash flow need to strike quickly, going from initial contact to sale in a matter of weeks. Now here comes the big LIE.
If I hire someone from this industry who is well-connected (big Rolodex or LinkedIn network) and they can get me appointments, I can have the crucial conversations necessary to develop business and close it.
There are many things wrong with that statement, but we’ll just look at a few of the most glaring problems.
- There is an implicit assumption that the “someone” has a quality network.
- There is another assumption that this network good faith is transferrable between companies; that is, from the company where the reputation was established to the new company.
- A 3rd assumption is that these people will be ready to buy something from the new firm soon.
- The CEO is still in the middle of the sales process, necessary to develop leads beyond early stage and present and close.
Statement #1 may be true; it’s a gambler’s chance. Statement #2 is rarely if ever true, regardless of the sweet talking salesperson who believes that her network will follow off of a cliff if she led them. Statement #3 is true only in very small percentages, and statement #4 remains a barrier to growth by placing the CEO as the bottleneck of this ad hoc sales process. Even worse, with a BD person making the contacts and the CEO necessary to carry the ball between the 20s and eventually score, the chances of failure by way of poor follow through are greatly enhanced.
So here is what happens, and rap your hoof on the floor if this sounds familiar. A smooth business development person blows in the ear of the CEO telling about his incredibly large network and how he’ll make it rain almost immediately with new business. The CEO loves this story. There is no pain associated with training and the results are immanent. You’re hired! BD guy gets a series of “courtesy meetings” with his network over the first 3-6 months and things are looking good. But nothing is closing, and after a while, the network well is running dry and even the appointments start to dry up. BD guy is shown a new career path apart from the company. The CEO is tearing her hair out because of the lost investment in base salary and perhaps even more importantly, the lost time in effectively building more business.
I just didn’t find the right person. That guy was a schmuck. This time I’ll find the right person and it will work!
Rinse and repeat. She doubles down on the Rolodex Rainmaking strategy.
Evaluating the Current Network
I want to state for the record that having a large personal network is a good thing…usually. The fatal flaw in our example CEO’s thinking was that this by itself is enough to generate quick business. Whether our executive knows it or not, this is a Sales Process. It’s just an incomplete and unbounded process that doesn’t lend itself to success or replication to grow the business.
Any people network needs to be evaluated as to who is in it, how it was built, and strength of relationships to truly understand and tap the potential. That means quality and applicability to your business. Never make the assumption that a large network is a well maintained one that produces when needed. It could have been built very shallow as part of a former job that involved list calling.
So how was the network built in the magic Rolodex of the new BD wiz? Was it purposefully constructed with top executives and decision-makers, or haphazard? Every network has different relationship strengths. How many of the new guy’s contacts have enough good will to generate a real discovery meeting? What percentage are willing to listen to a sales presentation? To refer your business?
How applicable are the primary contacts in the network to your business? Are they in a position to have a need for what you’re selling or able to refer you in one degree of separation to someone that fits? If the mythical Rolodex of your new BD person is filled with retail store managers and you sell to CIOs, it likely won’t benefit you that much.
The ugly truth is that the big personal network of your business development specialist prospects is likely to only have a partial chance to drive success for your business. It simply wasn’t built with your company in mind. All is not lost, my frustrated business executive. There are better questions to ask prospective business developers to improve success.
Effective Rolodex Process
So here is what I want to know when evaluating business development talent that is the right fit for my business:
What is his or her process for building and exploiting a business network?
Harvey Mackay of Swim with the Sharks fame handed me another less famous book he wrote when I was fortunate enough to meet him at a National Speaker’s Association convention about 15 years ago. It was called Dig Your Well Before You’re Thirsty, and was all about building your personal network before you ever need it. I also need to know how my business development people continue to dig wells and how they plan to get water out of them. I want to know if I dropped her in a new city with no contacts that she can build a producing network like an oil and gas wildcatter can find a target rich oil field with his technological divining rod.
Targeting and Building
There are many ways to target potential prospects or those who can help us from a business perspective, either as customers, referral sources, mentors, etc. A business social network like LinkedIn makes this more attainable than ever. The main thing you need to know is, does this person have a purposeful process to find, connect with, and establish his key contacts. Ask him to explain it to you? His process will either pass the smell test or fail it.
What is he or she doing to add value to key connections in the network? That can be providing informational content as needed, referrals or other resources. Here is the digging the well first part. People love to be asked for help, but they also like to know there is reciprocation and not to be asked too much. If you’re BD prospect is constantly selling to his network or has over the years, the network well may have run dry.
When needed, how does the person tap the network? Get meetings? Segment her contacts to find to most likely fit to the value your business provides? Ask her to give examples of how she has successfully tapped her network in the past that has led to business, hopefully in short order. If she can do that without stammering, there is a good likelihood she knows how to tap her network for actually developing business.
Does Rolodex Rainmaking Work?
Based upon what you’ve read so far, you already know the answer. Most of the time, oversimplified for convenience and without do due diligence, Rolodex Rainmaking doesn’t work. But that doesn’t mean it never works. If there is a business development process designed specifically to target, build, strengthen, and ultimately tap a network, you will find shorter sales cycles now and into the future as that effective business Rolodex continues to grow.