By: Michael Kaiser
It is an accepted fact that Business Development is not the same as Corporate Development, although they may (or can) intertwine. Even today, business development stands as a euphemism for sales and marketing, but especially in the case of high technology that definition is less acceptable and more complex. Whereas business development is an organic growth, corporate development’s inorganic role is the opposite, with its emphasis on mergers and acquisitions, alliances and joint ventures.
What is Corporate Development?
There are several definitions of Corporate Development but the following ones address the essence of this subject:
A) Corporate Development applies to planning and strategies that assist a company to achieve its goals (Wise Geek -1)
B) Corporate Development refers to the planning and execution of a wide range of strategies to meet specific organizational objectives (Wikipedia – 2)
C) Corporate Development encompasses the various facets of the corporate portfolio, growth, and strategy. (Boston Consulting Group – 3)
Does a startup need a Corporate Development team?
The answer could be “No and Yes”.
“No” because the entrepreneur(s) behind the birth of a new company based on their vision, initiative, creativity, technology, personal values, trade connections, etc. are building their product and/or service offering on the premise that the growth of their business is dependent on sales and marketing. At the onset of a startup, its actions will resemble more those of guerrilla warfare than those of a strategic military operation. And therefore…
“Yes” because a lack of growth, or inversely, an unexpected growth demand requires the help of seasoned experts for corrective advice to prevent mistakes and steer the company towards success. And that’s where the professional corporate colonels and generals devise the client’s strategies.
More importantly, a primary reason a startup has to deal with a corporate development team is the need for investment sources, such as venture capital and crowd funding described as the “the collective effort of individuals who network and pool their money …to support efforts initiated by other people or organizations… in support of a wide variety of activities, startup company funding, inventions development, scientific research… Crowd funding can also refer to the funding of a company by selling small amounts of equity to many investors.” (Wikipedia – 2)
Corporate development strategies
The strengths, weaknesses, opportunities and threats (SWOT) analyses of startups, mid-sized or large companies is just one basic tool used by corporate development professionals in order to objectively determine and address the challenges and opportunities of new technologies, products and services. Here is a brief example provided by a consulting firm on the subject of some critical questions for an alliance or joint venture case (Boston Consulting Group – 3):
- In which areas—geographies, product lines, or functions—might an alliance or joint venture make sense? Is it better than an outright acquisition?
- For a given opportunity, who are the right potential partners?
- How can we prepare for alliance or joint venture negotiations—for example, for value capture and split?
- How can we ensure constructive management and decision making in the alliance?
- How can we set up an active joint-venture-and-alliance portfolio-management process for evaluating strategic options?
Another consulting firm defines corporate development as a function with three features of excellence (Ernst & Young – 4):
- Strategic alignment with broader business goals
- Well-documented transaction processes
- Close relationships between corporate development and the rest of the organization
The bottom line
As social media, software and hardware applications, local and global connections and narrower opportunity and time horizons emerge due to advanced technologies, startup companies in the life sciences and other high technology sectors have to increasingly depend much earlier on the role of professional corporate development working in unison with a company’s organic business development in order to sustain their financial and market viability.
- Wise Geek (http://www.wisegeek.com/what-is-corporate-development.htm)
- Wikipedia (http://en.wikipedia.org/wiki/Corporate_development)
- Boston Consulting Group (http://www.bcg.com/expertise_impact/capabilities/corporate_development/default.aspx)
- Ernst & Young (http://www.ey.com/GL/en/Services/Transactions/Toward-transaction-excellence–The-DNA-of-the-corporate-development-function)
- Deloitte (http://www.deloitte.com/view/en_US/us/Services/Financial-Advisory-Services/Corporate-Development/696435131bc16310VgnVCM1000001a56f00aRCRD.htm)
- Forbes Magazine: (http://www.forbes.com/sites/scottpollack/2012/03/21/what-exactly-is-business-development/)