How new-business building unlocks growth

It’s been an encouraging earnings season — amid supply chain woes, we’re still seeing company after company beat analyst estimates. Business leaders aren’t just focused on surviving the current environment, but thriving in it, taking advantage of immediate opportunities while also planning for long-term success. Banks have been big winners so far, experiencing organic growth thanks to the ongoing economic recovery bolstering dealmaking and loan performance, as Morningstar reports. Of course, financial services are less affected by aforementioned supply chain problems, but even big-name retailers are thriving, thanks in part to logistical workarounds like rerouting shipments.

But there’s also a key strategy driving growth at a number of companies: New-business building, or NBB. Some of the positive earnings reports we’re seeing are the direct result of the world bouncing back from ongoing pandemic concerns, but corporate venturing through new products and services can transcend short-term economic rebounds and supercharge revenue for years to come. In fact, business leaders in our annual survey predict that a sizable share of revenues in the next few years will come from products, services, and businesses that don't yet exist today.

The current earnings season is giving us a taste of that, with a number of earnings estimate-beating companies having launched new products and services earlier this year. Retailers, for example, are introducing new clothing lines, while fintech companies are diversifying their offerings and expanding their outreach to target more customer segments.

To be clear, this isn’t “Field of Dreams”: If you build it, consumers won’t automatically come. We’ve found that two-fifths of new businesses are discontinued within four years of their launch.

How can leaders and companies succeed in new-business building? It’ll take smart hiring, savvy acquisitions, realistic expectations and (deep breath) a willingness to invest in growth even at the expense of near-term profitability.

Leap by McKinsey takes a closer look at these and other critical steps for successful new-business building in our new report, “The State of New-Business Building.” We’ve surveyed over 1,100 business leaders to discern key new-business building insights and we’re excited to share them with you. Stay tuned for the report’s launch this Tuesday, Dec. 7 (and follow #NewBusinessBuilding #LeapbyMcKinsey).

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