Monetisation delivers the economic value missing from the Business Development function.
Is the role of the Business Development Manager living up to its title? Does the required deliverable of monetisation fit within the current sales mandate? Do founder team Chief Executive’s leave the responsibility to execute on complex and financially driven commercial deliverables under the helm of the sales function?
There is no doubt that the business development function in an early-stage, entrepreneurial business has grown in status over the years. This is consistent with the increased funding available to founder management teams. Once successfully having raised funding there is a requirement to substantiate the investment received. This is achieved by developing traction in the market. Management teams need to put in place strategies to establish revenue streams to validate “proof of concept”. On the surface, this is a function of acquiring customers. A sales team initiative whereby a business development manager is mandated to conclude business partnerships. Being a sales team deliverable the KPI’s and OKR’s to measure success are sales orientated. However, in order for these partnerships to be effective, they need to be commercial and therefore, measured in terms of financial metrics.
Are Business Development Managers successfully in converting leads into measurable cash flow.
Founder executive teams are finding that business development managers are failing to convert sales leads and established partnerships into business opportunities that are sound commercially, measurable and economically add value.
Reflecting on my experience of twenty two years working across numerous financial, commercial and business development roles. It is my opinion, that this failing is the result of Chief Executive Officer’s fundamentally misunderstanding the mandate of the business development manager in the context of a growth orientated digital platform business. In traditional established companies, the role of the sales manager is one of selling a product or service to a trusted customer base. The sale would be executed at an agreed price taking into consideration known overheads. From a financial perspective it would result in the expected gross margin being earned by the business.
This strategy requires the seller to be sales driven. In addition, to having strong people engagement skills to win over customers and to develop trusting and mutually agreeable “win-win” partnership. In conclusion, the result is a quantifiable and measurable sale.
Business Monetisation Executives are responsible for driving partnership strategy. Key to this is to deliver on financial performance with measurable metrics.
Today’s digitally-driven economies and consumer marketplaces win over customer loyalty and drive sales by engaging with a range of diverse participants across businesses. In platform driven economies these functions and relationships have all become integrated and interdependent. Whereas, in a vertical market the focus on sales is skewed toward targeting specific buyers, when dealing with platform economies, network effects www.medium.com/networkeffects-explained make all users potential customers. Users are driven by specific needs and the interdependencies they have with each other. In order to convert users into loyal customers whilst, leveraging the network relationships inherent in the platform the origination, deal structuring and negotiation strategy that is implemented needs to be commercially driven.
Is ownership of the deliverable a Finance or a Sales team function ?
Your focus needs to be razor sharp. Focusing on the financial and economic benefit to be derived by both of the negotiating parties. In addition to, taking into consideration a range of measurable financial metrics, and agreed on deliverables and milestones. Enter the opportunity for the role of Business Monetisation Executive.
To be effective in this role the management team needs an experienced and financially savvy leader. Most importantly, the deliverable is to execute on a commercially driven strategy as opposed to a sales orientated customer acquisition role. I believe that the ownership of this function and the related OKR’s and KPI’s to measure success should reside with the Chief Executive Officer ,or there is one on the executive team the Chief Financial Officer. Moreover, this is a finance orientated mandate and the responsibility should not be that of the Sales Director.
After delivering successful growth, the natural progression would be for the Business Monetisation Executive to assume the role of the Chief Financial Officer. Therafter, it is the Chief Financial Officer’s responsibility to recruit a commercially astute manager with a robust financial background to oversee business monetisation.
Monetisation Growth Strategies
In summary, based on my experience it is no longer sufficient for founder teams to emphasise the need for a sales driven customer acquisition and partnership strategy. To remain relevant CEO’s and executive teams need to focus on originating and implementing customer and product monetisation strategies. The objective is to structure, to implement and to execute annuity based growth partnerships. Above all, the focus needs to be on generating high margin, sustainable cash flows. A great read that highlights the need for management teams to be focused on economic value and financial drivers is Blitzscaling. This is must read with insights and learnings for all founder management teams. blitzscaling-the-lightning-fast-path-to-building-massively-valuable-companies/