This may be the most challenging time to be a CEO in more than a generation. Global uncertainty, a contradictory set of technology-driven disruptions, and an ever-increasing set of risks have added to an already daunting set of pressures in running a business.
These pressures probably go a long way towards explaining the increasing importance of new business building. More than half of CEOs and business leaders consider building new business as a top three priority, and for 21 percent, it is the number one priority.
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1. Set the bar high: Look to launch unicorns
More significantly, business leaders expect 50 percent of total revenue to come from new products, services and businesses in five years.
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And, as leaders look to the increasingly tough economic outlook, building new business is also an important pillar in building resilience. On the same subject : How to Manage Your Business Exit. During the COVID-19 pandemic, we saw that the organizations with the best organic growth strategy were more resilient in building new business, reporting smaller declines or larger increases in their growth rates than their peers.
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2. Protect the new business from business as usual
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Those new business aspirations are simply impossible without an active and engaged CEO. On the same subject : Unlock business resilience by prioritizing your people. In fact, if a CEO is not ready to make a commitment, it is probably better for the company not to pursue new business.
Competing priorities mean that CEOs must be aware of the unique aspects of their CEO role that allow them to have the greatest impact on building new businesses (see sidebar, “CEO characteristics and behaviors that support new business”). Of course, delegating various tasks to teams and empowering leaders across the business is an important function of the CEO. But our research, combined with our experience of building more than 300 new businesses, reveals a cluster of activities for which the CEO is highly influential – from continually raising aspirations to systematically building and nurturing support for the new business to resolve natural organizational tensions and barriers.
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3. Identify a leader who could one day be CEO and create the right talent blend
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In building this series of activities, we discovered that there are five tasks that cannot be delegated—tasks that can only be performed by CEOs with overarching strategic focus and decision-making authority. See the article : Business travel is making a comeback, but it looks different. When CEOs adopt these steps as part of a clear playbook, they can succeed in building new businesses.
If companies expect 50 percent of their new revenue to come from new businesses, products and services, they need to aim high.
Too often, however, new businesses fail to result in transformative value, with about four-fifths generating less than $50 million in revenue, according to our research.
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4. Give leaders in the incumbent a stake in the new business’s success
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The CEO has a challenging role to make sure that the time and resources that go into a new business are worth it. The CEO’s laser focus on value is critical to keeping the organization from being swayed by the latest hot idea that may be good but lacks the market potential to be transformative.
When the whole company is oriented towards this level of value, clear aspirations, ambitious goals and specific targets begin to be identified. For example, the CEO of one insurance company was clear that he wanted to quadruple the size of his B2C business within five years by building a new customer-focused digital B2C offering. From the beginning, the goals included ambitious and concrete milestones, such as launching a minimum viable product within five months and lifetimes in two additional countries within one year, as well as key operational performance indicators (KPIs), such as one million websites. visitors within the first nine months.
5. Communicate, and when you feel you’ve done enough, do some more
Another example is Patrick Hylton, president and CEO of NCB Financial Group, Jamaica’s largest and oldest bank. Hylton oversaw the launch of Lynk, the bank’s digital payments business. He set targets for the new business to achieve the 35-40 percent market share of unbanked individuals. “I have big ambitions for Lynk, the digital payments business we’ve launched,” he said. “I want him to compete with the incumbent and even surpass him.”
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This sentiment is consistent with broader patterns we’ve seen in which successful CEOs are uniquely bold in their ambitions.
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