Business building in 2022: Growth in volatile times




Key findings

  • Eight in ten surveyed CEOs report new-business building as a top five priority despite recent heightened economic volatility.
  • Surveyed business leaders report that their companies are building 50 percent more new businesses per year than they did two to five years ago.
  • Business leaders report that every dollar of revenue from new businesses generates almost twice the enterprise value versus every dollar of core business revenues.
  • Sixty-three percent of surveyed business leaders expect their investment in new business building to increase from 5 percent of revenues today.
  • Organizations will need to more than double their rate of business building to achieve leaders’ expectations that 29 percent of revenue in 2027 will come from new businesses.
  • Responses suggest that new businesses built by large incumbent organizations currently generate $5 trillion in revenues and could grow to $30 trillion in five years (see sidebar, “New-business building and the economy”).

In the past three years that we’ve been surveying executives about new-business building, we’ve witnessed a marked shift in their perspectives on the topic: the 2020 findings reflected how many business leaders were starting to prioritize new business building.
The following year’s survey results captured their thinking on the strategic value of those efforts as well as potential factors for success,
and the latest McKinsey Global Survey on new-business building finds that markets, too, are recognizing the value of new businesses.






The latest survey, which garnered responses from more than 1,000 business leaders in 75 countries, shows that companies that have made business building a top strategic priority have grown more quickly than other organizations during this year of high economic volatility. In an effort to create new revenues and capture more market share, they are creating new products, services, or businesses that require them to develop new capabilities. By doing so, they are setting themselves up to be rewarded by the market: the enterprise value multiple of reported new business revenues represents nearly twice that of core business revenues.

Surveyed business leaders say their companies are already investing a meaningful share of their revenues in new businesses and that their companies are building more businesses now than they were just a few years ago. Yet, to meet respondents’ expectations for the share of revenues that will come from new businesses built in the next five years, companies—particularly larger ones, with annual revenues of $1 billion or more—will need to quickly ramp up the number of businesses they build and increase their scaling and success rates. The findings show that companies see a broad range of new business opportunities. Our research also points to best practices that set apart successful new businesses from those that underperform or are discontinued.

A continuing priority despite heightened economic volatility: New-business building continues to be a priority for business leaders, especially so for CEOs—although when looking at all survey responses, its ranking as a top three priority has declined since the previous survey.
Among all respondents, 46 percent say it is one of the top three strategic priorities for their organizations, compared with 57 percent who said so last year. However, nearly three-quarters of respondents in the latest survey consider it a top five priority—in line with last year’s finding. In both surveys, CEOs were more likely than other leaders to say building new businesses is a top three priority, and the share of CEOs considering it a top five priority has increased this year. Companies’ continued prioritization is reflected in the number of new businesses being built. Respondents say their organizations are currently building an average of 1.5 new businesses per year, up from one business per year two to five years ago.

New-business building and financial outperformance: The survey findings suggest that companies that make new-business building a top three strategic priority or higher grow faster than other companies, even during times of economic shocks. In fact, respondents from those companies are more than twice as likely as others to report growth that is more than 10 percent above the market rate. This outperformance in revenue growth is one of the primary attributes we have historically seen among resilient companies.

The value of new businesses: The survey responses indicate that organizations that build new businesses are on their way to positioning themselves for growth and higher valuations. In the findings, the enterprise value multiple of reported new-business revenues represents almost twice that of core business revenues. Respondents estimate that new businesses built in the past five years accounted for 12 percent of their companies’ revenues and 21 percent of their enterprise value. This finding holds broadly across industries with different levels of digital maturity.

Investment in new-business building is strong—and expected to increase: Companies recognize that building these new businesses requires significant investment. On average, surveyed business leaders say their companies are investing about 5 percent of their revenues in building new businesses. Respondents in advanced industries and technology, media, and telecommunications report the highest share of investment by revenues.
Most respondents—63 percent—expect their companies to increase their investment in business building over the next 12 months.

The need to increase new-business-building activity: To meet business leaders’ expectations for the revenue contribution of new-business building, companies will need to quickly ramp up their new-business-building activity and increase their scaling and success rates. Survey respondents say they expect that the new businesses their organizations develop over the next five years will contribute 29 percent of total organizational revenues—about 2.4 times the share of revenues that respondents say have been generated by new businesses that launched in the past five years. Assuming the average success rates of new businesses remain constant, organizations will need to more than double the number of new businesses they build per year, from 1.5 today to 3.5 per year, to meet those revenue expectations. Respondents from companies with more than $1 billion in annual revenues will need to set their sights even higher: the number of businesses they would need to build to achieve their revenue expectations (27 percent from new businesses built in the next five years) would grow from about 1.5 per year today to about seven per year over the next five years.

The next wave of new-business building: Respondents expect to build many different types of new businesses in the next five years. While respondents most often say they expect their organizations to build data and analytics platforms and digital retail businesses, responses were fairly evenly distributed across the seven types of businesses we included in the survey. There are significant differences by industry, however. For example, energy and materials companies are expected to focus on environmental-sustainability-oriented businesses, while respondents working in consumer goods and retail and in financial services most often expect their companies to develop digital retail businesses.

Increased interest in green-business building: Responses suggest that companies are building more environmental-sustainability-oriented businesses now than they were five years ago, and 29 percent of respondents say their companies will build a sustainability-focused business in the next five years. The respondents most often say they expect those businesses to offer sustainable intangible services, such as supply chain tracing or green financing, or sustainable products or materials, such as solar cells or batteries. Among industries, energy and materials have the most even distribution of types of new green businesses that respondents expect to build. Respondents in travel, logistics, and infrastructure expect most of their new green businesses to be focused on intangible services or sustainable infrastructure, while in consumer goods and retail, the focus is on physical services and products.

The leading-edge technologies that will enable new businesses: More than half of respondents expect that they will need to incorporate artificial intelligence into their new businesses to deliver on their value propositions, and 35 percent say the same about the Internet of Things. The technologies cited by smaller shares of respondents are of particular interest in certain industries. For example, respondents in advanced industries often point to physical robotics and 3-D printing, as well as augmented or virtual reality as requirements, and respondents in travel, logistics, and infrastructure also cite augmented and virtual reality more often than respondents in most other industries.

Sources of funding for new businesses: While internal funding is the most common source of investment in new-business building, with roughly similar splits between CEO discretionary, business unit, and function budgets, we are also seeing external sources of funding such as from venture capital and private equity firms, as well as grants. Responses show that successful new businesses—businesses that respondents say met or exceeded organizations’ expectations for scale or growth—are more likely than other businesses to have received external funding. The benefits of external funding are self-reinforcing. It is no doubt easier for businesses to secure external funding when showing signs of success, and the funding itself brings operational benefits. Venture capital firms can also encourage a greater level of discipline, resource efficiency, and potentially a greater degree of separation from the core.

The best practices of successful new businesses: In addition to increasing investment, organizations seeking to develop large-scale new businesses can look to the practices in place at companies that have succeeded with business building. The findings suggest that these successful new businesses are more likely than others to make decisions backed by data and to have an effective strategy for achieving customer acquisition at scale. They also tend to have sufficient resources from their core organization and a clear and standard process for scaling new businesses.


Business leaders indicate that markets already recognize the value of building new businesses, and the scale of investment suggests that incumbent organizations have the potential to lead the next wave of innovation and disruption within their industries. However, companies will need to start building many more businesses than they have so far—and do it quickly, with increased investment—to meet their revenue expectations for the years ahead. Continuing with the current approach will not be enough. Companies can become better at scaling new businesses—and we anticipate, and prior research shows, that the more companies build new businesses, the better they become. Building this critical muscle over time will support their values ​​and longevity.



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