In a recent conversation, the managing partner of a business law firm asked, “why is organic business development slow, painful and, for the most part, ineffective when it comes to actually developing new business?” He went on to cite the percentage of revenue his firm invests in marketing and business development efforts, and wondered aloud whether it was enough, and whether increasing the investment would make any difference.
He is not the only one asking the question. So what does an effective initiative look like?
In a recent post we discussed the cultural tension that exists when attempting to inject a proactive sales mindset into an organization that is reactive by nature. With the content of that post as precursor, let’s take a look at four factors that dramatically increase the odds that your business development efforts will gain traction and deliver ROI.
Success Factor 1: Leadership That Participates
Any initiative whose success hinges on a measurable cultural shift must be a top-down initiative. And make no mistake — suggesting a business development mindset is a cultural imposition in most law firms — or for that matter, most any professional service organization that has thrived by waiting for something to happen in the marketplace, and then responding to it.
The approach taken by many firms whereby leadership relegates a business development focus to areas where performance lags is doomed from the start. Leaders who are too busy or rainmakers who are perceived to be doing their own thing in a high profile way serve to undermine the idea that an initiative is essential to success.
If you have hopes of instigating the kind of behavior that results in the development of new clients, firm leadership must come forward with more than lip service or token involvement.
Success Factor 2: Participation Is Measured
We measure what matters. That’s the axiom. In fact, we tend to measure what has always been measured…what we believe matters, without consideration to changes in infrastructure, service delivery methodology, and market demands.
In an enterprise where hours is what we inventory, and hours-worked defines productivity, there is little time and often less respect for things referred to as non-billable…like the activities attendant to nurturing prospective clients and developing new business.
Here is the challenge. There are two ways in which one acquires new business — through relationships, or through the random good fortune of being in the right place at the right time. (It is worth noting that those who invest in relationships also tend to end up in the right place more often than their counterparts…but that is a conversation for another post.)
If your firm has any expectation that resources invested in the current (or forthcoming) business development initiative will deliver value, the way you measure time and resources invested — especially in the early days of the process — should reflect this belief.
On the other hand, penalize someone for missing a billable hour benchmark without any consideration to the future value of the hours spent (legitimately) on business development, and you’ve just told everyone that the only thing that really matters is billing hours.
Devalue non-billable time, and don’t be surprised when no one jumps at the chance to do the work necessary for quality blogging, strategic networking, and doing the research necessary to understand the business drivers of potential new clients. (Ultimately, this value system will permeate everything, and impact the value of the firm’s brand.)
Where business development is essential, time spent engaged in the process is valued and measured.
Success Factor 3: Results are Rewarded
If you want to instigate action, then right up there on the list of cliches grounded in fact — alongside measure what matters — is put your money where your mouth is.
You can talk until you’re blue in the face about the importance of business development, the value in writing and speaking, and the essential nature of relationships. If the compensation system does not incentivize an opportunistic mindset, hunting-in-packs, collaboration, and making every decision based on value to the client (in lieu of keeping work on my desk so I have hours to bill), don’t expect any cultural shift — at least not toward becoming more business development oriented.
This is certainly not to suggest that landing on the right compensation system is easy. Nor are we insinuating that one culture is right and another wrong. It is to underscore the fact that firms that do not find appropriate ways to incentivize business development will never have a proactive business development mindset.
Determining the appropriate way to incentivize and compensate for business development without impacting other valued aspects of a firm’s culture is extremely difficult. It is likely one of the moments that calls for outside perspective, experience and facilitation. In any event, just as we measure what matters to us, we almost always follow by putting our money into what we value.
Success Factor 4: Commitment To The Process
If you believe that building relationships is central to business development, your initiative cannot be a series of experiments with flavors-of-the-month. Rewarding relationships are not created overnight. Or by the end of this quarter. The kind of relationships that will refer, recommend, counsel and hire you take time to build.
So for everyone starting from scratch, count on investing an appropriate amount of time. Assuming you’ve identified strategic targets, the challenge is to create visibility, connect, deliver value, and eventually enter into a dialogue with an individual that can hire you.
How long does it take?
Quality relationships are rarely the byproduct of a cookie-cutter. It almost never happens in a handful of months. Eighteen to twenty-four months is a decent benchmark for noteworthy progress. And for everyone that believes that is simply too long, consider how much completely new business you’ve generated in the past two years. I know of one professional who invested a decade in developing a relationship without receiving a single piece of busines. But the target was a long-term strategic play. And the investment paid off — with multiple years of more than $3 million in revenue each year, and counting.
When you begin to measure effectiveness in terms of the life-time-value of a client, your perspective regarding the time it takes to build a new client relationship begins to change.
Buy into gimmicks that promise short cuts and you’ll be looking for a new answer in a few months. Start a new business development initiative every year or two and be prepared to share the frustrations and questions posed by the managing partner mentioned at the top of this post — why is it so hard? Is it worth it? What do we have to do to realize a pay off?
Organic growth is possible in any size firm. Business development can produce not only discernable, but compelling results. But it will require intentional focus on these four key success factors.