FEATURE
Leaders are leaning into building new ventures as a strong financial strategy to drive growth and outperform the market . Global research revealed that companies investing 20 % of growth capital into building new ventures achieve revenue growth that ’ s 2 % higher than those not investing . Paul Jenkins , Senior Partner at McKinsey , discusses how leaders can build a financial strategy around building new ventures and what type of ventures are likely to be the most popular in the next five years .
In a period of sustained disruption , both geopolitical and financial , many CEOs are facing a critical choice : should we buy or build new capabilities as we continue to pursue growth ? While mergers and acquisitions remain a viable option , our research highlights that for many companies , venture-building can be the stronger financial strategy .
In fact , regardless of the bumpy ride since COVID first hit , CEOs ’ commitment to venture-building has remained resilient – even as interest rates have fluctuated from pre-COVID lows of near 2 % to the recent highs of around 5 %.
This isn ’ t necessarily reflected across the C-suite , though . Our latest global survey of over 1,100 senior business leaders , including 177 CEOs , shows that CFOs and other leaders tend to respond to economic pressures by focusing on organisational restructuring . CEOs , on the other hand , want to launch new ventures to drive a potential 1.5x organic growth . Our study revealed that only 22 % of CEOs expect to complete a merger or acquisition in the next year , but over 60 % expect to build a new venture .
It can feel counter-intuitive in such a volatile market , but the right amount of investment in venture-building can unlock significant growth . Here ’ s why the C-suite should unite around venture-building .
WHY THE C-SUITE NEEDS TO FOCUS ON BUILDING NEW VENTURES TO DRIVE GROWTH
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