Oscar-winning actor, Nicolas Cage who’s made a pretty penny over his career now claims he’s dead, flat broke as a result of his business manager’s incompetence. He’s actually suing Samuel Levin for $20 million for leading him to financial disaster.

Cage claims that Levin handled his money irresponsibly, took unnecessary risks and failed to pay taxes on several properties, so now Cage owes the IRS some $6 million in back taxes.
Interestingly, this is the exact dynamic I’ve seen in so many smaller IT companies.

Executives don’t wants to get involved in business development because they regard it as substandard activity to their highly developed technical minds, so they hire armies of salespeople on straight commission and clearly communicate to them the key message…

“Your job is to bring us signed contracts and purchase order. Do whatever needs to be done but don’t disturb us with the details. We’re extremely busy, and we’re not interested in it anyway. You get clients and hand them over to us for further work.”

I bet my bottom dollars that this mentality has led Nicolas Cage down the doom loop too.

“Look, business manager. I’m an actor. I don’t care about the dirty details like money or business. I’m an actor. I’m an artist. You take care of the business but leave me out of it.”

In this dynamic two strong factors work in favour of salespeople…

First, salespeople can do whatever they want to do in order to get clients, and since they work in isolation, no one can really supervise what they do and no one in the company knows what’s happening around business development.

Second, salespeople have no rules for their work. Since the company doesn’t care about the details, salespeople focus on 1) what’s good for them and then 2) what’s good for the company. One thing they don’t focus on: What’s good for clients. So in the process of maximising their personal earnings, shoddy often practices raise their ugly heads.

By shoddy practices I don’t mean nasty practices but that can happen too. One areas of shoddy practices is short-term vision.

The company may be interested in landing long-term repeat and referral clients, but due to their compensation model, commissioned salespeople only care about the “right here” and the “right now”. And we can’t even blame them, since they have to eat too.

And we haven’t even mentioned the huge attrition of salespeople in the IT industry. Again, due to their archaic compensation model, they keep looking for greener pastures.

And when that happens and they decide to move to the competition, they take all their clients with them.

And executives get pretty pissed off for this “stealing” act.

But let’s see the other option of not “stealing” clients

Fred salesman leaves the company where he worked on a “Do it and spare us from the details” basis. The company has no built-in business development.

So, what happens to the prospective clients and past clients after Fred’s departure? These are the people the company should stay in touch for future business. And they get neglected.

Here is why…

These prospective and past clients have relationships with Fred not with the company.

Fred has his own stay-in-touch system but the company has none.

So, it’s only fair to say that the company’s haphazard stay-in-touch programme will soon go down the toilet and these prospective and past clients will be unceremoniously abandoned.

And what are the executives doing in the meantime?

They are probably naval-gazing in the boardroom about executive compensations, website colour schemes or the latest management fads that have just come out of one of the Ivey League business schools.

And what happens when the company runs out of money due to lack of clients?

Simple…

Bring on the next round of venture capital.

And when no more money is to be had, the company quietly goes tits-up.

The way I see it, unless business development is a centralised organisational function, it’s not a business but a glorified hobby.

Yes, salespeople may be needed, although I doubt it, these salespeople have to work on executing the company’s business development strategy not merely doing their haphazard work to get clients here and there.

Message to IT companies: If you want to hire great salespeople, show them that your company actually has a business development strategy.

Message to IT salespeople: Ask you would-be employer about the company’s business development strategy. And when the recruiter says that you just go out and hunt for clients on your own, you’d better run because the end can be near.

What do you think? Is this a reasonable perspective on business development?