McKinsey’s yearly report on new-business building leaves some useful insights that didn’t go unnoticed for the Corporate Lab team. The Global Report reveals interesting new data about critical topics for us. As venture builders, the creation of new business and the importance of if for companies is essential.
Today, we break down some of the most important insights on new-business building.
👀📝 In order to read the full report, visit the McKinsey website.
What is new-business according to McKinsey’s Report?
Before getting started, it is important to understand what we mean when we talk about new-business building.
At the Corporate Lab blog, we have stated our own idea of what is a venture studio and a venture builder, and we have elaborate on our own idea of what corporate innovation and corporate venturing is. The truth is, the sector is filled with different ideas on what innovation is, what types of innovation there are, and what terms to use.
New-business building is defined as an alternative or complement to M&A and corporate venturing. In this survey, corporate venture is considered an investment process for external startups, while new-business building corresponds to an internal way of coming up with new products, services or business models. In our own words, this definition can correspond to a kind of internal or closed innovation, intrapreneurship or corporate entrepreneurship.
In any case, reports like ‘2021 global report: The state of new-business building’ highlight the importance of building new businesses and coming up with new business models, products or services to keep up with the business transformation.
1. Building new businesses, one the main concerns of business leaders
The business world is showing an increasing interest in creating new businesses. While in previous years, this rate was constantly increasing, the 2021 reports shows even more relevant numbers. McKinsey’s report shows that more than 60% of surveyed business people name new-business building as one of the top 3 priorities.
This number becomes even more relevant if we take into account the powerful number of business leaders that have been surveyed: a total of 1116 business leaders, including CEOs, C-level executives, and department heads, among others.
🎯 20% or respondents say new-businesses building is their companies’ top strategic priority. 55% consider it a top 3 priority.
👨💻CEOs are now twice as likely to say it’s the top priority than they were in previous years.
🌎 The vast majority of business leaders worldwide confirm new-business building as top 3 priority.
2. Seeking revenues coming from new business
Logically enough, the interest in building new business corresponds with an interest in opening new sources of revenue or improving the existing ones. Depending whether the innovation process is disruptive or incremental, business leaders believe this will be a new source of revenue or an improved one, respectively.
In other words, the majority of the respondents believe that one of the sources of income for their business will come from a business that is not built yet, and that will have to be ideated, created and scaled within 5 years.
💫 80 % think new-business building will help them respond to disruption and shifts in demand.
✌️ 62% prioritizing new-business building to generate one or more new revenue streams.
💰 Respondents believe that 50% of their future revenue will come from new products, services or business models.
💡24% of respondents believe the results of their innovation efforts will be the primary source of revenue growth.
3. Sustainability: the focus of all the innovation projects
Even though surveyed business leaders come from all kinds of industries, sectors and types of companies, sustainability is drawn as one crucial topic for the new ventures. The vast majority of respondents say that their new ventures will be created in order to reach sustainability goals. Plus, sustainability is in some cases considered a value proposition for the new business.
🌱 42% of respondents put sustainability as a value proposition of new businesses.
🙋♀️ 90% of respondents say they will build new businesses in order to meet demand for sustainability
4. Balancing autonomy and being strategically aligned
The report analyzes the performance of businesses that invest in intrapreneurship and establishes a relation between the amount of autonomy that the new business has in relation with its corporation.
The results reveal that successful businesses grant these new ventures more autonomy in core IT, marketing, and analytics; while the corporation has more control over human resources, legal or privacy. This data illustrates the pros and cons of large corporations, compared to the pros and cons of intrapreneurial startups and new ventures. Balancing these and keeping all the departments and objectives aligned with the business strategy is key to success in new business building.
➕ The level of autonomy in successful new businesses is higher for departments such as core IT, marketing, product development, and data and analytics.
➖ The level of autonomy in successful new businesses is lower for departments such as strategy, legal, privacy, and finance.
5. Deeper customer insights
Once the ideation and conception phase has passed, there are obstacles when it comes to scaling the new business and maintaining its success in the long term. In order to overcome these obstacles, surveyed business leaders have responded to questions regarding the strategies carried out to help new business succeed. One of the most crucial factors in this regard is customer experience and customer engagement.
📊Successful business builders use holistic metrics regarding customer experience, such as surveys, feedback forms, and market studies.
❓Respondents most often wished they understood their customer’s needs, expectations and pain points better, before starting their new businesses.
If you too are worried about the future of your company, leave us a message. Our corporate venture builders can help you identify new business opportunities and build your own new venture without interfering with your current business line.