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Where Delegation fails: Five things only the enterprise CEO can do to build new business

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Where Delegation fails: Five things only the enterprise CEO can do to build new business

Business building is increasingly important for company resilience, and CEOs are uniquely suited for the job. Here are five tasks that CEOs can undertake to build successful new businesses.

McKinsey,

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CEOs should never outsource these five new-business building tasks to anyone else in the company.

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Editorial Rating

8

Qualities

  • Analytical
  • Applicable
  • For Experts

Recommendation

When a parent company builds a new business, it increases its growth and resilience – if all goes well. Not surprisingly, data from McKinsey, as reported by consultant Shaun Collins and partners Ari Libarikian and Kurt Strovink, show that in 2021 more than half of CEOs saw new-business building as among their top three priorities. McKinsey’s researchers examined real-life cases to identify five new-business building tasks CEOs should not outsource to anyone else. These are the areas in which chief executives can bring the unique strengths of their position to bear and make a unique impact.

Summary

Corporate CEOs need to set high goals and focus on becoming serial new-business builders.

While companies expect to build revenue from new businesses, many new ventures fail to generate sufficient value. The CEO is responsible for ensuring that the money and time invested in a new business earn sufficient ROI. The new project should bring in expected results and have transformational value. To achieve these effects, business leaders must set ambitious targets with clearly outlined goals.

Chief executives shouldn’t place all their bets on any single new project. Instead, they need to develop a serial new-business building capability, in recognition that some new businesses will falter or fail.

Chief executives must protect the independence and allocated funding of a new business.

Incumbent parts of a company often want to take back financing when a new venture inevitably encounters challenges. Funding for a new project should be independent, and should follow an agile venture-capital style in which the parent company unlocks funding as...

About the Authors

Shaun Collins is a consultant in McKinsey’s New York office. Ari Libarikian and Kurt Strovink are senior partners at McKinsey.

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