Shaun Collins
McKinsey commentary
Associate partner
We have often said that it’s important for companies to take more of an investor approach when it comes to business building, and it’s interesting to see some specifics on how that manifests. External investors, for example, are comfortable with a four-year timeline to profitability—and sometimes longer. They recognize that it takes time to build a strong business and that it requires what we like to think of as “active patience.” That doesn’t mean, of course, that companies sit on their hands for four years to wait for the outcome. They push, adjust, communicate, reallocate, learn, and adapt along the way.
The other point that stands out is that they expect 30 percent of new businesses to succeed: a success rate that might encourage companies to develop a portfolio of new businesses. We know from our other surveys that a portfolio approach is important for building the muscle to build new businesses—the more you do so, the better you get—but it bears repeating that not all of your new businesses will become big winners. That’s OK, if you have enough businesses going. These two takeaways, in particular, should provide CEOs with significant reassurance that investors understand the dynamics of business building and will reward companies that embrace them.