Finding the right balance in business development is both a strategic decision as well as a matter of self-awareness and consistency. Strategically, if the firm asks professionals to mostly rely on their personal reputation and charisma, then the firm should be prepared for the consequences. Those consequences can be harsh: “unsystematic growth,” loss of scalability, lower retention of talented people who don’t want the “star” career track and ultimately an unstable culture.
The “superstar” firms built around a few rainmakers are also very vulnerable. Creating leads through an individual reputation is difficult and an unreliable process. Even the best business developers are not quite sure how they have become successful and have a hard time helping others replicate that success. Individual networking is also very vulnerable to personal characteristics as well as background and circumstances. Finally, individual reputations develop slowly and not much can be done to accelerate them.
Firms that rely on a high percentage of individual effort in their growth strategy inevitably find that only a select few professionals are successful and the rest are frustrated. The successful rainmakers may also feel entitled to most of the “spoils,” since the ability to bring clients to the firm is clearly exposed as a scarce skill. The resulting cultural and economic implications can be profound.
The mix can be skewed heavily the other way. There are good examples of firms in the industry that develop new business through marketing methods—radio shows, direct mailing or referral relationships with custodians. Firms that are part of an accounting firm or a financial institution may also be assigned to this end of the spectrum. In such firms, the leads arrive through the “pipe” and most professionals have no trouble “closing” the qualified cases.
Such “institutional” business development tends to swing the pendulum the other way: The firm dominates the cultural landscape and individual egos are less important. Compensation is not invested in new business development, and the firm tends to be in control of the brand. The consequences of a “super-firm” can be equally severe—stagnant growth, slow careers, and a dogmatic culture where everyone competes on how well they have memorized the strategic plan. Other hallmarks of these firms are lack of innovation and inability to change. “Super-firms” may be more stable than the “super-star firms” but only in the sense that a blister on your foot during a long walk is more “stable” pain than stepping on a nail.
Institutional strategies create very repeatable and stable business models, but implementing such strategies successfully may be more difficult. In addition, the investment in the brand needed may be very high. The “institutional” source may also imply its own vulnerability, especially if the source of leads changes or disappears.
In Culture And Decision-Making
The mix between the individual and firm is ultimately a cultural decision. A firm that relies heavily on individual skills and efforts will predictably have a culture that celebrates individual success and rewards it with positions, money and praise. A firm that seeks to institutionalize will likely subdue the individual praise and instead focus on building unity, consensus and internal harmony.
The mix is self-perpetuating. Firms that rely on individuals for business development tend to end up with individualistic culture, which then grows individualistic-inclined professionals. Firms that spell “team without I” tend to attract and groom professionals who are less tolerant of the big egos. This self-perpetuating loop makes changes very difficult.
Changes in the mix usually occur only if a “star” very consciously subdues their ego to build a firm that is less “star-driven” or if a “star” departs and the firm has to learn to survive without their former leader. Such events are often tied to the succession of the founders. The founders are often the stars that can change the firm or they can force the firm to function without them.