Business Development [BD] is one of the most stressful and yet rewarding responsibilities of any business. It is betting your budget against an uncertain payoff. Whether making a strategic move or pursuing a new client, success is always an unknown constant. BD refers to the processes, strategies, and tasks intended to increase and expand opportunities within and between companies. This could mean business expansion, increasing revenue, making strategic business decisions, or improving profitability through strategic partnerships. Decisions made for business development activities are a bet. Most are well calculated and thought out, but a bet, nonetheless. This is because good decisions can lead to either a successful outcome or not, the same thing can happen with bad or poor decisions. Let us also remember that decisions are judged by evaluating the outcome, before then, they are merely speculative gambles. It is a strange proposition and Annie Duke explains further in her book, Thinking in Bets.
“One of the reasons we don’t naturally think of decisions as bets is because we get hung up on the zero-sum nature of the betting that occurs in the gambling world; betting against somebody else (or the casino), where the gains and losses are symmetrical. One person wins, the other loses, and the net between the two adds to zero. Betting includes, but is not limited to, those situations.”
Well-calculated and throughout decisions can certainly improve the odds but do not guarantee successful outcomes. The problem is and will always be due to the limited and asymmetric information at the time of making the decision. This is the uncomfortable truth that businesses and BD teams face. “Uncertainty is an uncomfortable position,” said the French philosopher Voltaire, “but certainty is an absurd one”.
To properly manage the stress and uncertainty of business growth, BD teams need to be comfortable with calculated risks and think of their bids as long shots. There are four common gambling concepts that could be applied in BD strategies as explained by Dan Roche, Vice President at Publicis Sapient.
Bet – This is the cost of pursuing an opportunity. It is also the opportunity cost of not pursuing other opportunities or the distraction of a bid to your organization. A pursuit that will take many months and many people to support will have a higher stake than a proposal someone can put together in a week.
Jackpot – This is the potential value of an opportunity should you win. Jackpots are not always about money. Winning can have other collateral benefits, like positive exposure for your company, experience for your people, and so on. In some cases, even a loss gives your company valuable experience. Consider the jackpot from all angles.
Odds – This is, to your best estimation, your odds of winning an opportunity. If you are selling to a known client, your odds may be high. If you are up against a field of competitors, it may be lower. Every bid has a shot at winning, and no bidder is ever guaranteed a win. Estimating your odds is a useful exercise in assessing your position in a marketplace.
Stack – This is, in simple terms, the number of bids you expect to submit in a month, year, etc. It is useful to have a sizeable number of bids because not all of them are going to work. BD team needs to pursue as many leads as possible to increase chances of converted opportunities.
In BD, you are best positioned when you think as gamblers do. Consider the jackpot. Estimate your odds. Determine how much you can afford to lose. Place your bets. And most importantly, have patience. Once you have established a strategy, give it time to succeed. Your overall success or failure should never come down to one hand, one stake, or one bid.