McKinsey's Leap programme is looking to take the agility enjoyed by start-ups and apply it to incumbents when business building

The ability to build a new business model is a crucial skill for market leaders, according to McKinsey

The ability to build a new business model is a crucial skill for market leaders, according to McKinsey

A new programme from management consultancy firm McKinsey is aimed at helping incumbent companies build new business ideas from scratch to compete with the new generation of disruptive start-ups.

A team of 500 business builders and entrepreneurs are behind the new project, which formally launches today, and companies that join the Leap initiative will also be able to benefit from McKinsey’s pool of 5,000 engineers, designers and technologists, to help make their new business ideas a reality.

Leap focuses on five B’s: Breakout, blueprint, build, boost, and branch — taking companies from the concept stage to a new replicable business model.

Previous examples of the programmes achievements include developing a new app to promote a Pizza chain and helping a bank compete with fintechs in the SME loan market.

Senior Partner and global co-leader of Leap by McKinsey Ralf Dreischmeier claimed that the longevity of business leaders has “imploded”.

“It has never been such a short period of time that you could be a leader in your particular field,” he said.

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Ralf Dreischmeier, partner at McKinsey and a global leader of Leap (credit: McKinsey & Company)

“As a result, this reinventing yourself by creating new businesses that will fuel your future value proposition and growth are absolutely crucial.

“We believe business building is a strategic priority and clients who can actually do this will be the leaders of tomorrow.”

While start-up incubators focus on business agility and the ability to “move fast and break things”, Leap looks to combine disruptive ideas with a company’s existing assets.

Dreischmeier added: “The ability to leverage an existing customer base is something we call the unfair advantage of an incumbent that could not be copied or recreated by a pure start-up.”


How McKinsey Leap helped a pizza business build a five-star app

To date, Leap has helped 200 companies explore new ideas and build new businesses.

One such company was a large pizza retailer, whose app had an unsatisfactory rating of 1.5 stars and had been putting off customers with frustrating load times.

Dreischmeier and his team looked at the customer “pain points” and tried to redesign the experience from the eyes of a tech company, rather than a pizza retailer.

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Re-thinking the pizza company’s app helped to increase conversion by 40% (Credit: Scott Bauer/Wikimedia Commons)

This involved re-structuring the app menus, speeding up the order process and improving responsiveness.

The app is now rated five-stars, customer conversion rates were boosted by 40% and it is now being rolled-out across the chain’s top 30 markets.

Another example comes from an incumbent bank that worked with McKinsey in order to compete with a number of new fintechs disrupting the small business loan sector — an area that is not served well by the traditional banks, according to Dreischmeier.

Over a period of 12 months, they developed a fully digitised solution for small enterprise customers that slashed the wait time for getting a loan application approved from days to 10 seconds.

Dreischmeier claims that loans for larger amounts can be approved in under a minute by using a number of technologies, including AI, to completely automate the decision-making process.

He added: “A start-up could do the technology part of it but they don’t have the business insight, the knowledge of lending and the experiences that are required to actually automate the process.

“So this again is a good example of creating the start-up style, benefit and environment combined with existing assets of an incumbent business.”

The process typically takes a year, at which point McKinsey’s team will exit and allow the business to take over the project.

Part of the solution involves helping with recruitment and bringing in new talent.

“The aim is not just to get the new business to launch, this is about creating a sustainable businesses that actually have a long-term impact for our clients,” Dreischmeier said.

The overall aim is to provide businesses with the skills and capability to replicate the business building model employed by Leap.

He added: “I want to have helped our clients to realise the impact that this business build capability can actually create.

“In the future I would like to see that some of the clients that we’ve helped build new businesses are industry leaders, and I’m pretty convinced they will be.”