Business building — whether inventing, launching or scaling new business lines, units and services, or even accelerating the growth of existing enterprises — is one of the most consistent ways of accelerating growth.
According to How Companies Can Speed Up the Business of Business Building, a report published by BCG X, Boston Consulting Group’s tech build and design unit, that surveyed more than 1,000 senior business leaders, 73% said that business building is a major priority for them.
“Companies have always done business building by branching out into new areas,” says Juergen Eckel, managing director and partner at BCG X and a co-author of the report. “Over the last five years, we've seen a massive increase in terms of speed. Innovation is becoming an ever bigger topic for the large players and incumbents looking for growth vectors.”
Eckel believes business building can offer significant opportunities for startups, both as collaborators and for funding.
“Business building, corporate-driven investing and innovation growth are a toolset that can help the European startup scene catch up with the US,” he says.
Best practices
Business leaders are renowned for having to wear many hats within their company — and even more so when pursuing business building, when attention can be easily diverted to new opportunities. However, Eckel notes the importance of a focus on core assets and strengths to successfully build a business.
“Success in corporate business building truly lies in leveraging what you already have — that can be IP, or other existing assets like production capabilities,” he says.
Shelley Copsey is CEO at FYLD, a digital platform for the heavy industries sector that uses machine learning to change video and audio into workflows, video risk assessments and predictive analytics. In the company’s infancy, Copsey says the team was highly focused on the utility sector in the UK, but acknowledged the market was slow to adopt new technologies and knew it was never going to be enough to achieve their growth ambitions.
“FYLD began to think about how it could begin to build businesses in different regions and verticals,” says Copsey. “For example, we came across to the US and focused heavily on construction.”
Copsey notes the importance of risk assessment for the core business when considering a new business venture. For FYLD, she says this wasn’t an issue thanks to the company’s approach to keeping a focus on its core operation throughout business building.
What was imperative, Copsey says, was finding the right people in the team to support business changes.
“Find one or two people in the team who are high performers and are going to be frictionless in a new market,” she advises. “Once you find these people, you need to give them a high degree of trust and think about risk a little differently — we think about the risk of inaction more heavily than the risk of action.”
But while hiring new staff who have that desire to build has been crucial, so too has recruiting people who can further stabilise its core function as the business has grown.
“When you're in one market, you think about how that market operates,” says Copsey, “We've now built businesses in five different countries, so we've had to learn to make the platform more adaptable so that it works well in multiple markets. Having that platform thinking approach is absolutely key.”
Honing your strategic assets
Based on BCG X’s experience launching more than 200 builds, they see the following nine strategic assets as most critically important:
- Intellectual property (IP), including patents, trade secrets and methodology
- Data (drawn from inside and outside the company)
- Access to sales and distribution networks
- A strong brand
- A financial position with healthy cashflow
- A culture of innovation
- Strategic partnerships (with other companies, universities, community groups and government agencies)
- The requisite technology
- Talent
Even when businesses do have all of these assets, only half of the companies surveyed said they are effective in leveraging them to build new businesses. And what about the rest who aren’t quite ticking off all nine?
“Very few companies have data as an accessible asset that they can actually use and unlock,” says Eckel. “For some, that will mean fixing some of those basic internal topics first before moving ahead.”
Prepare early
Expanding to new business lines, units and services is a huge step for any company, and preparation is essential to boost chances of success.
BCG X’s report found that, on average, companies spend up to three years considering whether to add a new business to their portfolio — and it then typically takes another three years to commercially launch the offering.
The report adds that moving quickly, especially in the early stages of building a business, usually leads to a higher success rate — and 48% of company leaders acknowledge it would take them longer to release a product than it would take a startup.
“Go out and test as early as possible with real customers or good representatives of your customers,” advises Eckel. “The most overlooked aspects of the success of many tech players is their willingness and the ability to gather primary data with real customers versus spending a lot of time talking to internal stakeholders, or looking at the past.”
By doing this, Eckel says business leaders can solve a lot of tough questions upfront, get their strategy right, their assets and incentive systems in place, plus gain enough information on whether they're going in a good direction.
“The benefits of doing this typically pay off massively.”
