The CEO Can Champion the Next Business. Can the Organization Build It?
What a recent McKinsey Quarterly essay gets right, and the enterprise-capability question it leaves open.
The premise
Growth is scarce enough that corporate venture building has become a standing item on the CEO agenda again. In a July 2026 McKinsey Quarterly essay, “The CEO’s Critical Role in Building New Businesses,” partners Daniel Aminetzah, Jorge Grieve, and Paul Jenkins report that ~ 40% of global CEOs now name new-business building among their top three strategic priorities, despite cost pressure elsewhere in the enterprise. Their research also finds that successful new ventures are reaching $10M in revenue faster than ever, averaging just 31 months, and that companies where the CEO personally prioritizes venture building see new businesses contribute close to 20% of enterprise-wide revenue within five years.
The essay’s central claim is straightforward: venture building succeeds when the CEO treats it as a top strategic priority, makes deliberate where-to-play choices, commits patient capital, and builds the culture, talent, infrastructure, and governance a new venture needs to survive contact with the core business. Most ventures, the authors argue, struggle to scale because the incentives, governance, and cultural norms built for the existing business work against the speed, risk tolerance, and autonomy required of a new venture.
It’s a sound diagnosis that doesn’t fully answer the harder, follow-on question: once a CEO has built that priority, that capital discipline, that culture, what happens to everything the moment the CEO who built it is promoted, retires, moves on, or simply shifts attention elsewhere? That’s the question on which the rest of this piece explores.
What the essay gets right
Four points stand out as genuinely well-observed, and support how these situations tend to play out in practice. The first is the emphasis on explicit intent. A CEO who sets venture building as a stated strategic priority and defines the boundaries where the company will and won’t play gives the rest of the organization something to make decisions against without escalating everything back to the top. The second is capital discipline: patient, stage-gated funding tied to real milestones, rather than a fixed annual budget, protects a venture from being judged by the wrong clock. The third is governance, complete with its stage gates, funding thresholds, and clear decision rights over when to kill or scale a venture, as ambiguity about who pulls the plug can be more damaging than a wrong call made cleanly and early. The fourth is culture: treating failed experiments as information rather than as a mark against the person who ran them, which the essay rightly notes most organizations still only pay lip service to.
The essay is also unusually good at describing the tension underneath all four of these: the same budgeting, risk, and performance-management systems built to protect and optimize the core business can, left unmodified, quietly suffocate a venture that needs a fundamentally different operating rhythm. That distinction is important because three situations can look remarkably similar from a board seat—declining momentum, missed milestones, or an underwhelming update—yet require entirely different responses: a genuinely weak venture; a sound venture constrained by a parent organization that has not adapted; or an enterprise pursuing more simultaneous bets than its leadership and operating systems can support. Conflating those three is one of the more expensive mistakes a board can make, and the essay gives useful language for telling them apart.
What it leaves open
Where I feel this article is less complete in its account of what holds a venture-building capability together over time. Its focus is CEO-centric, where the CEO sets priority, resolves tension, tells the story, allocates capital, protects pilots from bureaucracy, and, in the essay’s closing line, turns business building into “a durable operating capability.” If you only read the topic sentences, then the implicit claim is that sustained venture building is a feat of individual leadership, held together by whoever occupies the role.
The case examples the authors selected tell a slightly fuller story, and they’re worth reading. At the Saudi Telecom Company, the CEO didn’t personally shepherd each venture; he built a system: a dedicated venture capital arm, a formal internal incubation pipeline, and a structured approach to partnerships and spin-offs, running in parallel rather than as isolated bets. At Banco de Crédito del Perú, the mobile wallet venture Yape succeeded because it was staffed independently of the bank’s existing talent pool, organized into small cross-functional squads with genuine decision rights over product development, and measured on user growth rather than the bank’s standard metrics. At an unnamed Middle East commercial bank the essay describes, the CEO’s contribution was establishing cross-functional protocols across business, technology, and risk, and a stage-gated funding model that let teams kill weak ideas early. Each case reinforces the notion that what worked was the structure the CEO put in place, not the CEO’s sustained personal attention.
A harder version of the same test of what happens once the CEO who built the structure is no longer there comes from outside McKinsey’s own examples. Stanford’s Charles O’Reilly and Harvard’s Michael Tushman, working with former IBM strategy executive J. Bruce Harreld, studied IBM’s Emerging Business Opportunities program, which was a formal initiative launched under CEO Lou Gerstner in 2000. That program identified promising internal ventures and gave each one a dedicated senior owner, ring-fenced funding protected from routine budget cuts, milestone-based governance, and a defined mechanism for pulling resources and expertise from across IBM’s business units. Between 2000 and roughly 2005, EBOs added more than $15B to IBM’s revenue during a period that covers the transition from Gerstner to his successor, Sam Palmisano. The process didn’t just survive a CEO change; it kept compounding through one. O’Reilly and Tushman later documented a contrasting case at Cisco, which attempted a similar structure and saw it falter under the weight of excessive complexity, unclear accountability, and senior leadership support that never matched what IBM provided.
It’s worth noting that O’Reilly and Tushman’s own broader finding is that even IBM’s individual EBOs still depended heavily on a committed, senior executive sponsor. That’s not really a flaw to explain away. A venture cut loose from the core too early loses exactly what a good sponsor provides — capital, credibility with the rest of the organization, political cover, and access to insight and capability the venture doesn’t yet have on its own. The relevant distinction is not sponsor versus no sponsor. It is whether the link between venture and core - how resources and insight flow from the parent, and how that relationship changes as the venture matures - has been designed and governed or exists only because one executive personally maintains it. IBM’s EBO process endured across the Gerstner-to-Palmisano transition because the mechanism for drawing on the core’s assets, and the milestones that would eventually change that relationship, were built into the process itself rather than into Gerstner. Cisco’s effort had no equivalent architecture, so when strong senior backing wasn’t consistently there, the whole structure had no support.
The essay’s own material therefore points toward a question it does not quite ask outright: Has the relationship between venture and core—how resources and insight move, and how that relationship evolves as the venture matures—been deliberately designed, or is it determined by whatever the current sponsor happens to maintain? McKinsey gets close to naming this toward the end, noting that product–market fit is the handoff point rather than the finish line, and posing its own follow-on questions: will the venture stay standalone, fold into a business unit, or become a shared platform; who owns the P&L as that happens; how are incentives reconciled without stripping the venture team’s upside too early; how does governance itself need to change as the venture crosses from an option to an operating reality. Those are exactly the right questions, but the essay stops short of answering them.
From CEO Intent to Enterprise Capability
McKinsey identifies the architecture new-business building requires. What it leaves open is how to determine if that architecture is functioning. That’s the layer a structured diagnostic is built for. SCALE™ examines that operating reality across five load-bearing pillars: Strategic Alignment, Capability to Execute, Accountability & Governance, Leadership & Culture, and Enterprise Resilience, and turns the essay’s recommendations into testable organizational conditions. McKinsey’s four priorities sit inside that structure with little translation required.
Architecture is only half the test. The statements management brings to a board about venture readiness are often entirely sincere as expressions of intent, while still unproven as operating realities: “Innovation is a strategic priority.” “The venture has executive sponsorship.” “Teams are empowered to experiment.” Each describes intent. None, on its own, demonstrates that the relationship between venture and core has been deliberately designed rather than personally maintained by whoever holds it together. That’s where SCALE’s Evidence layer picks up the question, testing whether capital is genuinely reallocated when the underlying evidence changes, whether venture leaders can make consequential decisions without routing them back through the core hierarchy, and whether a failed experiment gets treated as data or as a mark against the person who ran it.
McKinsey’s own four stage-appropriate markers of Validation, Momentum, Sustainability, and Evolution provide useful external references for that Evidence layer: a way to judge an early-stage venture without prematurely holding it to core-business P&L expectations. What they don’t test is whether the support behind them would survive pressures of margin compression, executive turnover, and an unplanned risk event. That’s what SCALE’s Forward Stress analysis is built for. The IBM and Cisco comparison discussed above doesn’t prove the framework; it illustrates why the distinction matters in practice: one process established clear accountability, protected resources, milestone-based governance, and durable senior sponsorship, while the other attempted something comparable but never achieved the same organizational coherence. Boards rarely ask the underlying question directly. It’s exactly the kind of question a structured diagnostic surfaces before it becomes a crisis rather than after.
The reframe
The sharper way to frame the question this essay raises isn’t whether the CEO is committed to building new businesses, or even whether a given venture has a strong sponsor. Both are good things, and as McKinsey rightly recognizes, a well-placed champion gives a venture something it can’t generate on its own. Venture building, then, is not primarily an innovation challenge; rather, it is an enterprise-readiness challenge. A strong CEO or executive sponsor provides capital, credibility, and access to the core’s capabilities, but that sponsorship delivers organizational capability only when the relationship between venture and core has been deliberately designed, governed, and adapted as the venture matures. That is what allows a promising business to survive shifting conditions, changing priorities, and eventually, a change in who carries the CEO title.