The big picture
- The growing urgency of the climate crisis is forcing global players to invest in a greener future and to fundamentally shift their current business models.
- According to our research, green ventures will dominate the business-building market in coming years, presenting a €500 billion opportunity for the machine and equipment industry alone.
- Rapid innovation and cutting-edge approaches to business-building will play a pivotal role in the successful reversal of climate change.
The challenge at hand
The next wave of business-building must be green. According to a McKinsey Global Survey of over 1,000 executives on new business-building, 92 percent of respondents believe that businesses built within the next five years will address sustainability in some way. Companies must identify new, rapidly growing green businesses and find opportunities that align with their in-house market expertise and projected market growth.
To stay competitive amidst these new market dynamics, a world leader in energy solutions decided to pivot towards new ventures in the sustainability space while prioritizing growth and minimizing risk. The organization wanted the business to smoothly integrate into its existing product offering and to have a sound organizational structure to ensure the continued profitability of its core services.
Results achieved
To help our client navigate this uncharted territory, we assisted them in identifying approximately 40 green business opportunities in areas such as synfuels, hydrogen, energy storage, heat pumps, and green energy production. We then evaluated our client’s opportunity to enter these markets based on factors such as competitive position, customer access, and technological affinity. As a result, five green businesses were scaled up through a structured process:
- Built up all five opportunities using an ambitious strategy and business plan that tapped into the resources offered by the global McKinsey Platform for Climate Technologies (MPCT).
- Integrated separate business plans into a holistic company plan that tells a motivating, credible change story about the shift to climate-friendlier technologies.
- Supported operational changes that enabled the client to work more efficiently (such as accelerating the product development process, identifying ways to improve costs, and jointly improving product design).
- Implemented appropriate venture-building governance structures for the new businesses to expedite the scale-up (for example, set up a sounding board with external industry experts).
The successful development of the five businesses allowed our client to tap into the €500 billion opportunity available in green ventures. More important, our client can now leverage its technology for green solutions that may help its customers reduce their energy footprints.