Many CEOs are looking to build new business ventures with a focus on using generative-AI-powered tools to provide more personalised services and expand opportunities for value creation.
In a global survey report, McKinsey found that 6 in 10 executive leaders said their companies are pursuing generative-AI-related business ventures. McKinsey surveyed more than 1,100 business leaders in May through to July.
The report, How CEOs Are Turning Corporate Venture Building Into Outsize Growth, said capital constraints from years of rising interest rates means a smaller share of CEOs are prioritising venture building than seen during the early years of the pandemic. However, nearly half of respondents who expect to build new ventures “predict that they will create such a business in the next five years”, up 11 percentage points from last year, the report said. “CEOs are 1.3 times more likely than other business leaders to expect their organisations to build new ventures in the year ahead.”
Generative AI is an area of focus for many CEOs. Respondents in financial services see promise in new ventures in which core aspects of the value chain are powered by generative AI, the report said. “In insurance, for example, these ventures could include gen-AI-powered underwriting of insurance policies for segments that weren’t previously served, such as microenterprises.”
To get the most out of generative AI’s features, about half of business leaders expect to reap rewards from using Microsoft Copilot in their businesses, the report said, to reduce effort or improve decision-making.
Industry breakdown: How leaders expect technology to drive value
Leaders in the financial services, travel, logistics, and infrastructure sector predict that generative AI ventures could streamline hyperpersonalised services.
The latest survey results found that, relative to 2023, companies, across industries, are more likely to plan to build data, analytics, and AI platforms.
Business leaders surveyed in the technology, media, telecommunication, travel, logistics, and transportation industry point to data, analytics, and AI platforms most often as areas for building new ventures, according to the report.
Digitisation is also top of mind in the consumer goods and retail sector, with leaders expecting to build digital retail ventures.
Technological advancements are also expanding interest and potential in environmental sustainability as a business venture, the report noted. These advancements allow companies to build better, more sustainable new products, but interest in such ventures is mostly concentrated within the energy and materials sector.
Value creation lies beyond the core
Expert builders are twice as likely as novices to give new ventures a “high degree of decision-making independence” from the core businesses, the report said, and they’re nearly twice as likely to report building a venture in a different industry from that of the core organisation.
More successful venture builders are also 2.3 times more likely than novices to have a dedicated leader of new venture building, the report added, and 1.4 times more likely than novices to have more than one member of their C-suite who championed their new ventures.
Balancing independence with connection to the core is key. “Most companies building new ventures, expert and novice alike, benefit from access to the core organisation’s capabilities or other assets,” the report recommended. “However, expert builders are more courageous and give their new ventures greater independence to pursue exceptional advantages.”
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