The Importance of Business Development and the Challenges in Putting It into Practice

In today's business environment, achieving sustained corporate growth requires more than optimizing existing businesses — it requires the business development capability to create new value. Yet many companies, while recognizing the importance of business development, face a variety of challenges in putting it into practice.

Through our global business development support practice, enableX has witnessed the successes and failures of many companies. Drawing on this rich track record, this article explains why business development matters for companies and why so many companies see their business development capability decline.

The backdrop to business development's rising importance

The accelerating pace of market change

The advance of digitization, the diversification of consumer behavior, and the intensification of global competition — the environment surrounding companies is changing rapidly. In one case enableX supported, Manufacturer A faced a halving of its main product market within five years. The company could not respond through optimization of existing business alone; by taking on new business development in earnest, within two years it grew its new businesses to account for 10% of revenue.

In this way, as the speed of environmental change accelerates, companies need to continuously explore new growth opportunities and optimize their business portfolio. Business development has become one of the most important management functions for responding to this change.

The maturation of existing businesses and the need for innovation

In many industries, the maturation of existing businesses is advancing. According to enableX's proprietary interview research, roughly 70% of companies have experienced a decline in the growth rate of their core business, making the creation of a new growth engine an urgent task.

Rising expectations from stakeholders

Every stakeholder — investors, customers, employees — is paying attention to corporate growth and innovation. Investors in particular now place greater weight on the mid- to long-term growth story, not just short-term performance.

At Financial Institution C, which enableX supported, in addition to traditional financial services, the company actively pursued new business development in the FinTech domain. This initiative not only improved investor perception but also contributed to recruiting top talent and energized the entire organization.

The concrete value business development brings to companies

Achieving sustained growth

Business development is the driver that continuously lifts the company's growth curve. enableX's analysis shows that companies aggressively pursuing business development achieve, on average, a five-year revenue growth rate several times higher than those that do not.

In the case of Chemical Manufacturer D, the company was dependent on an existing business undergoing commoditization. By simultaneously advancing the development of high-value-added materials and pioneering new markets, the company drove a significant improvement in margins — from 15% to 25%. Behind this success was a deep understanding of market needs and the effective use of technology seeds.

Risk diversification and improved resilience

Dependence on a single business raises vulnerability to environmental change. By diversifying the business portfolio through business development, the company's resilience improves.

Retailer E, which enableX supported, was severely hit on its brick-and-mortar business during the pandemic. The e-commerce (EC) business and subscription model the company had developed beforehand grew rapidly and supported overall performance. This case shows that investment in business development during normal times can determine corporate survival in a crisis.

Strengthening organizational capability and developing talent

The process of business development also contributes to lifting the capability of the entire organization. Launching a new business requires a broad skill set — market analysis, strategy formulation, execution management, and more. Through these experiences, the next generation of leaders is developed.

Why does business development capability decline

Pressure on short-term performance

The biggest challenge many companies face is short-term performance pressure. Driven by quarterly performance reporting, investment in business development — where outcomes take time to materialize — tends to be deprioritized.

According to enableX's research, roughly 60% of business development projects are halted or scaled down midway on the grounds that they do not show short-term revenue contribution. However, analysis of successful companies makes clear that securing at least a three-to-five-year investment window is critical.

Conflicts of interest with existing businesses

When a new business competes with an existing business, you can run into internal resistance. So-called "cannibalization" fears not infrequently kill innovative ideas.

At Telecommunications Operator G, internal pushback emerged from concerns that new digital services would threaten the revenue of existing telecom services. By designing a model in which both businesses could coexist, and developing a phased migration plan, enableX helped overcome this challenge. What matters is managing the business portfolio from the perspective of enterprise-wide optimization.

Shortage of business development talent

Business development requires a specialized skill set. Reading the market, designing business models, mobilizing stakeholders — diverse capabilities are needed. But in many companies, this kind of talent is in short supply.

According to enableX's talent assessments, only about 20% of business development professionals at Japanese companies hold the required skills at a sufficient level. To address this challenge, we recommend a hybrid approach that combines practical development programs with the use of external experts.

Rigidity in organizational structure and processes

The larger the enterprise, the more complex the decision-making process becomes, and the harder it is to deploy a new business with agility. Organizational structures and processes optimized for existing businesses can become an anchor for business development.

At Pharmaceutical Company H, the rigorous processes designed for new drug development were impeding the rollout of the digital health business. With enableX's support, the company designed an organization and processes dedicated to business development, enabling agile deployment. What matters is adopting different management approaches for existing businesses and new businesses.

A culture that does not tolerate failure

Business development inevitably involves risk. In an organizational culture that does not tolerate failure, however, bold initiatives are unlikely to emerge.

At Machinery Manufacturer I, which enableX supported, the concept of "intelligent failure" was introduced. This is an approach that fails small and early, accumulates learnings, and then connects those into larger success. Through this cultural change, the number of business development proposals tripled, and the success rate also improved.

A practical approach to raising business development capability

Securing executive-level commitment

Strong executive commitment is essential for business development success. enableX places weight on the following elements.

First, positioning business development at the top of the management agenda. Progress is reviewed at regular executive meetings, and the needed resources are secured. Second, introducing an evaluation system that takes a long-term view. A mechanism that evaluates not only short-term performance but also contribution to future value creation is required. Third, having executives themselves engaged in business development. By being directly involved as mentors or as sponsors, they send a message to the whole organization.

Establishing a dedicated organization and delegating authority

To drive business development, establishing a dedicated organization is effective. More than 80% of enableX's supported companies have established a dedicated business development organization in some form.

What matters is delegating sufficient authority to this organization. Granting budget authority, hiring authority, and decision-making authority enables speedy deployment. Maintaining the appropriate distance from existing business divisions while securing the necessary collaboration is also important.

Building a systematic business development process

enableX recommends the following five-stage business development process.

In the exploration stage, identify market opportunities and build the initial hypothesis. In the validation stage, validate the hypothesis through customer interviews and prototype development. In the design stage, conduct the detailed design of the business model and develop the business plan. In the launch stage, enter the market with minimal investment and accumulate learnings. In the scale-up stage, scale the successful model and pursue full-scale deployment.

Gate evaluations are conducted at each stage to make continue / modify / halt decisions. This systematic approach lets you manage risk while improving the probability of success.

Strategic use of external resources

There is no need to do everything in-house. enableX's analysis shows that more than 70% of successful business development engagements leverage external resources in some form.

Collaboration with startups, joint research with universities, alliances with other companies — a variety of options is available. What matters is accurately understanding your own strengths and weaknesses, and finding complementary partners. Building open-innovation mechanisms and effectively absorbing external ideas and technology is also important.

Cultivating a learning organizational culture

Continuous learning is essential for raising the probability of success in business development. enableX recommends a "Learning by Doing" approach.

Specifically, this includes regular retrospective sessions, sharing of success and failure cases, and study of external best practices. Cultivating a culture of learning from failure is also important. By not blaming failure, and by accumulating the lessons learned as organizational knowledge, the probability of success in the next attempt rises.

The value of business development support enableX provides

Global insight and local practice

enableX has business development support experience in more than 20 countries and accumulated global best practices. At the same time, we deeply understand the characteristics of each country and region, and provide localized approaches.

For example, when a Japanese company enters an Asian market, we formulate a business development strategy that accounts for local regulatory environments, business practices, and consumer behavior. By combining a global perspective with local insight, the probability of success can be significantly raised.

Hands-on support and capability transfer

enableX's support style is not advisory alone. We work alongside the client's team to drive the actual business development, while simultaneously pursuing the lift of organizational capability.

At every stage of the project, enableX consultants engage as mentors and conduct hands-on skill transfer. We also conduct systematic knowledge transfer through regular workshops and training. This "learn by doing" approach enables the building of sustainable business development capability.

Lessons from success cases — keys to business development

Manufacturer J: Business model innovation through digital transformation

J Company, a traditional manufacturer, succeeded — with enableX's support — in shifting from product sales to service-based business. The company launched, one after another, new businesses centered on digital technology: predictive maintenance services using IoT sensors, optimization services using AI, and more.

The key to success was redefining customer value. Rather than simply selling products, the company established positioning as a partner that solves customer challenges. The company also adopted a phased approach and, by accumulating small successes, transformed the entire organization.

Service Provider K: Building an ecosystem-style business

Service Provider K evolved from a stand-alone service provider into an ecosystem-style business that operates with multiple partners. enableX provided comprehensive support — from designing the ecosystem to selecting partners and building the governance structure.

What mattered was building a win-win relationship. We designed mechanisms by which each partner could obtain clear value, realizing a sustainable ecosystem. Today, this ecosystem has become the industry standard, and K has established a central position within it.

The path ahead for business development

Evolving technology and new opportunities

With the emergence of new technologies such as AI, IoT, and blockchain, the possibilities of business development are expanding significantly. By leveraging these technologies, business models that were once impossible are becoming feasible.

enableX continuously monitors technology trends and leverages them in client business development. What matters is conducting business development that starts from customer value — not from technology for its own sake.

The fusion of sustainability and business development

Solving environmental and social issues is creating new business opportunities. Business development centered on sustainability — circular economy, carbon neutrality, social impact, and more — is drawing significant attention.

enableX supports business development that aligns economic value with social value. By treating the SDGs as a business opportunity and creating innovative solutions, sustainable growth becomes achievable.

Reconciling globalization and localization

While market globalization advances, the importance of addressing local needs is also rising. Rather than uniform global rollouts, business development that accounts for the characteristics of each region is in demand.

By leveraging enableX's global network, you can capture market opportunities around the world while realizing localized business deployment.

Summary

Business development is one of the most important functions for realizing sustained corporate growth. As environmental change accelerates, its importance keeps rising. Yet many companies are also, in fact, struggling with putting business development into practice.

The keys to success lie in executive commitment, the right organizational structure, a systematic process, and the building of a learning culture. By using external resources strategically, the probability of success can also be raised.