How CEOs Are Turning Corporate Venture Building Into Outsize Growth

麦肯锡 ’s latest Global Survey on new-venture building reveals that amidst shifting economic conditions, including geopolitical tensions and easing inflation, 50% of CEOs now rank developing new business ventures among their top three strategic priorities.

The report, named “How CEOs are turning corporate venture building into outsized growth" discusses the increasing importance of new venture creation among CEOs. This marks a notable resilience in the focus on venture building, despite challenges posed by the COVID-19 pandemic and tightening capital conditions.

Key Findings

1. Continued Prioritisation: The survey, conducted from May 21 to July 2, 2024, with responses from 1,176 senior managers and C-suite executives, indicates that interest in venture building remains robust. Although fewer CEOs prioritise it compared to early pandemic years, it is still more common than pre-pandemic levels.
2. Investment in Growth: Companies that allocate at least 20% of their growth capital to new ventures experience revenue growth that is 2 percentage points higher than those who do not invest in venture building. For larger organisations (over $1 billion in annual revenues), this investment correlates with a 2.5 percentage point increase in growth.
3. Emerging Trends: There is a strong interest in ventures enabled by generative AI, with 60% of respondents expressing eagerness to pursue such initiatives within five years. This reflects a broader trend where companies are increasingly leveraging technological innovations to foster growth.
4. Challenges and Constraints: The primary barrier for companies not prioritising venture building is limited capital availability. However, those that manage to navigate these constraints often see significant benefits, including higher organic growth rates—about 2.8 percentage points higher than companies with limited capabilities in venture building.
5. CEO Expectations vs. Other Leaders: Approximately two-thirds of CEOs expect to develop new ventures within the next year, which is more than those anticipating other strategic moves like mergers or organisational transformations. This suggests a potential misalignment between CEO priorities and those of other business leaders, who may focus more on restructuring due to economic pressures.

Strategic Implications

The article emphasises the importance of aligning leadership around the priority of venture building. As economic conditions improve and interest rates potentially decrease, there is an opportunity for companies to increase their focus on creating new ventures. The findings suggest that successful venture builders are characterised by mature capabilities and support structures that facilitate ongoing innovation and revenue generation.

To conclude, it's clear that venture building is an increasingly valuable strategy for growth and innovation. There are three main approaches to this strategy: internal spin-offs or intrapreneurship, where companies cultivate new ventures within their existing structure; corporate venture building, which involves partnering to co-develop new ventures; and independent venture building, which Flagship Founders exemplifies by creating and nurturing new companies autonomously. Each approach serves different needs and strengths, enabling businesses to thrive in today’s dynamic market while responding flexibly to emerging opportunities.