WHU General

"The winners take it all"

A new study by WHU and mm1 explains the factors that matter if a company wants to increase its “New Business” success.

Investing in New Business ideas is risky, but it can also be a big hit for companies. A new study carried out jointly by WHU – Otto Beisheim School of Management and mm1 explains the factors that matter most if a company wants to increase its “New Business” success.

There are two reasons that established companies are particularly active in the New Business sector: First, the profit opportunities are very high; and second, this presents a way to avert the kinds of threats that a company might face – through digitalization, for instance. But great success is not easy to achieve, and by no means can every good business idea ultimately celebrate its breakthrough. A study conducted last year by WHU and mm1 shows that just one in 1,000 business ideas actually results in a great success.

These low chances of success have led to significantly stiffer competition in recent years: many investors are willing to invest vast sums of money, and sometimes even accept years of losses, if they see an opportunity to ultimately take their place among the big winners. Researchers have identified six success factors that determine whether or not a company will eventually rank among the victors in the end: high relevance for the customer; significant market potential; a superior product; an outstanding team; a leading market position that can also be defended over the long term; and the necessary resources along with a corresponding level of perseverance.

The researchers have identified three recommendations from the study results that can significantly boost New Business success for established companies. First, companies should devote more and more effort in developing radical new business ideas. They should strictly assess and improve upon these ideas along all of the success factors. Subsequently, the New Business concepts selected must be implemented with complete commitment, dedication, and the necessary perseverance.

The study was issued as part of a collaborative effort with researchers from WHU and employees of mm1 and was entitled “The winners take it all. Warum New Business immer schwieriger wird, die New Business Chancen systematisch überschätzt werden und was etablierte Unternehmen tun müssen” [“The winners take it all. Why New Business is becoming increasingly difficult, New Business opportunities are being systematically overstated, and what established companies need to do about this”].

For further information: mm1.de/the-winners-take-it-all-internationale-vc-studie-in-kooperation-mit-der-whu/.