Learn the 3 stages of business development from start-ups

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When executing new business development initiatives established organizations can learn from start-ups. Three distinct steps characterize the building of a new business. And each phase requires different skills in the organization.

Prototype Creation

Inventors and scientists lead the first phase. The idea is considered unique, but not yet proven.  Focus is on developing a prototype ready for demonstrations.  This phase is technology intensive. Execution is lean to prove the main concepts before burning too much capital.

Key roles in focus are System design, Product Implementations and Business development resources. The R&D resources focus on getting the concept to work. The Business development resource/s drives identification of client needs and initial client engagements.

First client

The second phase is about nailing the offering with the first client. The proof is when you have landed the first commercial contract. Your understanding of client’s needs is clear.  Refined to a point where it can serve as a basis for design of your offering and for crafting a clear value proposition. The solution scope is clear for all the main product and services components. The business model hypothesis has gone through a number of iterations and is stable.

The best clients for this phase are the ones you can learn with for all aspects of the solution. What needs to focus on, with concrete pains playing a larger role than expected gains.  A client enabling you to launch with a minimum viable solution, and an evolution path. Which business levers to focus on when designing the business model.  Your first client also needs to serve the role as a strong reference for your solution.

Four types of clients could serve as the ones you could target. It can be a client you expect to drive initial volumes. Second it can be a client with high reference value, a market maker many will follow. The third type is smaller innovative clients who move fast and can take you to goal quicker. The last client type is the ones you find close to home.

In this phase Marketing plays a key role as well as solution design and implementation organizations.

Scaling volumes

Scaling sales and operations is the most capital intensive step in the solution introduction. A solid operational structure is the foundation for growth. Sales ramp-up focus on the markets you want prioritize initially. Your business operation is designed to meet initial business demand. Parts of the resources are targeted for a variable cost structure as the exact timing in the volume ramp up is hard to predict.

In this phase, management, sales and operation build is in focus.

Question taking your team forward

  1. Do we have a clear idea today about the three phases for our business – most if not all new businesses follow the path described here.
  2. Do we have a clear view of the lead roles in each phase – don’t expect the same people to lead you through all three stages.
  3. Who are the clients you target for nailing your solution – Not all client are suitable as partners for nailing a solution.
  4. How do you plan to build your funnel for scaling the business while you nail the first deal – building funnel and nailing first deal are parallel activities.
  5. Which learning structure do you have in place for each phase – expect building new business to be an order of magnitude more learning intensive than running an established business.

Further reading 

For further insights in this field the following is suggested.

One thought on “Learn the 3 stages of business development from start-ups

  1. Pingback: Prioritized business expansion across a portfolio of opportunities | Tweeter Linder

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