What separates the success and failure of new businesses, as seen from the "Survey on New Business Initiatives” | Insights

In recent years, the business environment has been changing at an accelerating pace, driven by the advancement of digitalization and the growing importance of sustainability management. As a result, more and more companies are exploring new businesses in pursuit of new opportunities.
At ABeam Consulting, we have received numerous inquiries related to new business initiatives. However, many companies tell us that while they have started considering new business ventures, reaching the launch phase remains a challenge.

Drawing on the findings from ABeam Consulting’s Survey on New Business Initiatives conducted in September 2023, we will examine the key factors that set successful companies apart, such as the capabilities required of those in charge of new businesses and the types of internal support that should be secured.

ABeam Consulting Announces Survey on New Business Creation | Press Releases & Announcements | ABeam Consulting

About the Author

Introduction: The majority of new business ideas do not materialize into actual businesses. Moreover, less than half of those that do reach the launch stage become profitable.

The Fact-finding Survey on New Business Initiatives was conducted online from September 11 to 13, 2023. It targeted individuals who had been involved in new business development within the past five years at companies with annual sales of 20 billion yen or more. A total of 620 valid responses were collected.
Figure 1 shows the phases of new business development in which the respondents had been involved. In such surveys, it is generally assumed that individuals with experience in relatively successful projects tend to respond more actively. Therefore, the actual rates of business launches and profitability in the broader market are likely lower than the survey results suggest. Notably, even among the businesses that managed to launch after overcoming various challenges, more than half failed to achieve profitability. This underscores, once again, the difficulty of generating profit from new business ventures.

In this insight, we define a “successful” new business as one that has progressed beyond the stage of achieving a single fiscal year's profit. We analyzed the characteristics of these successful cases and identified several common trends.

Additionally, we observed that organizations responsible for new business development generally fall into two categories: Corporate divisions, such as corporate planning, business development, and R&D departments, and Business divisions responsible for existing operations.

How to Understand “Customer Issues”

While it may seem self-evident, the survey reaffirmed that a deep understanding of customer issues is the most critical factor for success.

Listen directly to customer feedback or gather alternative voices.

Due to limited direct contact with customers, corporate divisions face a disadvantage compared to business divisions. Therefore, businesses that actively seek to understand customer needs—whether through direct engagement or by collecting diverse perspectives—tend to show higher success rates (see Figure 2). Specifically, projects based on issues and needs identified by internal business divisions or through external market research demonstrate greater potential.

Corporate divisions, by nature, lack direct customer touchpoints. Thus, without systematically gathering insights from both inside and outside the organization, their understanding of customer issues remains insufficient. While this may seem basic, it is a foundational and highly effective practice.

Conversely, business divisions benefit from ongoing relationships with customers. New businesses grounded in customer feedback or built upon the company's advanced technologies show a higher probability of success. In other words, leveraging existing customer and technology assets is essential when developing new businesses within business divisions.

The probability of success is notably higher when business divisions lead initiatives for existing customers and when corporate departments take charge of initiatives targeting new customers.

An interesting trend emerged when organizing these findings using the Ansoff Growth Matrix—a framework that classifies growth strategies along two axes: “products” (existing/new) and “markets” (existing/new) (see Figure 3). This framework is commonly used to assess strategic growth directions.

When it comes to delivering new products or services to existing customers, success is more likely when the business division drives the initiative. In contrast, projects of this nature led by corporate departments tend to have a higher failure rate.

On the other hand, in initiatives targeting new customers, success rates increase when corporate departments take responsibility, regardless of whether the offering is an existing or new product/service.

In short:

For existing customers, success is driven by the business division's deep understanding of the customer.
For new customers, success is more likely when the responsible department can engage with customers without pre-existing biases—a strength often found in corporate departments.

It is essential to understand customer issues objectively and quantitatively

The turning point for success lies in whether these issues are validated through questionnaires and interviews—serving as objective evidence—rather than remaining as internal hypotheses.

In areas adjacent to existing businesses where customer understanding already exists, it is important to quantify needs through questionnaires. Conversely, in new business domains where customer issues are not yet well understood, conducting interviews is crucial to uncover the underlying problems and thoroughly examine potential opportunities.

When selecting target customers from existing customers, corporate data and questionnaire analysis are effective.

When selecting target customers from existing customer bases, leveraging corporate data and questionnaire analysis proves highly effective—regardless of whether the initiative is led by a corporate department or a business division (see Figure 4). A key to achieving profitability lies in taking advantage of established communication channels, securing quantitative insights through surveys to explore business opportunities, validating feasibility through user testing, and maintaining the flexibility to revise approaches as needed.

In this context, surveys are a success factor because the ability to gather actionable information is critical. On the other hand, interviews are not considered a primary success factor when targeting existing customers.

Targeting new customers requires gathering all possible information.
When selecting target customers from new customer segments, a key success factor—particularly for corporate departments—is the ability to gather a broad range of information through all available channels (see Figure 5).

For business divisions, conducting interviews with external industry experts significantly contributes to success. This suggests that adding objective external perspectives to complement the company’s existing understanding of customers enhances the effectiveness of business development efforts.

If you lack internal resources, proactively bring in external expertise.
In the context of new business development, the role and impact of external partners differ significantly between corporate departments and business divisions (see Figure 6).

Corporate departments often rely heavily on external sources of knowledge, which becomes a key factor for success. This reliance stems from corporate departments lacking in-house capabilities to drive a new business from development to execution. Moreover, they are frequently tasked with developing innovative and non-continuous businesses—ones that do not build on existing operations—further necessitating outside support.

In contrast, business divisions tend to have a low rate of external partner utilization. This is likely because the new businesses they develop are often extensions of existing operations, leveraging internal strengths such as customer relationships, manufacturing know-how, logistics infrastructure, and distribution channels.

An additional success factor lies in the internal collaboration gained from other departments within the company. In the case of corporate divisions, success is driven by strong cooperation in areas such as R&D, manufacturing, and customer access, including technologies, patents, sales channels, and customer data (see Figure 7).

For business divisions, key areas of collaboration include funding, facilities and equipment, brand assets, and external networks. It is important for these divisions to secure support without being limited by the boundaries of their own assets or brand ownership.

In summary, regardless of whether a new business originates from a corporate or business division, a critical success factor is to go beyond existing departmental skills and assets, proactively leveraging internal company-wide resources and external partners where capabilities are lacking.

How can you involve your company's executive class?

The involvement of company executives in promoting new businesses has proven effective in two key roles: as the driving force behind business development, and as key supporters of those leading such initiatives.

Directors and executive officers play an important role in advancing new business efforts, while section managers are particularly critical within business divisions.

First, examine the survey responses, identifying which positions demonstrated substantial leadership in driving business development (see Figure 8).

When we examined which positions had taken a leading role in promoting new businesses, we found that the probability of success was higher when the corporate department led the initiative and when directors, executive officers, or general managers demonstrated substantial leadership. This is likely because corporate-led initiatives require cooperation across multiple departments to leverage the company’s broader management resources.

Conversely, when business divisions were responsible for business development, success was more likely when section managers took the lead, although the involvement of executive-level leaders also had a positive effect. This reflects the significant role that section managers play, particularly in Japanese organizations where business divisions tend to utilize internal resources tied to their existing operations.

Beyond those directly in charge of new business development, it is also important to secure support from directors and executive officers, and to obtain cooperation that is not limited by departmental boundaries.

Next, regarding the question of "who should provide support for business development," the survey also confirmed the effectiveness of executive support from individuals outside the immediate team responsible for new business (see Figure 9).

First, when the corporate division is in charge of business development, the support of the directors and executive officers from the business division is extremely effective. Similarly, the support of corporate directors and executive officers also increases the probability of success when the business division is leading the initiative. In addition, the support of directors and executive officers within their own divisions cannot be overlooked in either case.

In any scenario, the company’s executives' involvement is indispensable in promoting new businesses. It is important to leverage the decision-making authority and influence of directors and executive officers to mobilize resources, such as promotion team members and core business functions, including sales, logistics, marketing, and funding.

So, what kind of support should be obtained? (see Figure 10)

Regarding the content of cooperation obtained from existing business divisions and corporate divisions, it is possible to confirm the effectiveness of support for direct business resources, such as sales and sales channels, customer data, technology and patents, and purchasing power, when the corporate division is in charge of business development. Since the corporate division does not possess such resources directly, the success or failure of a new business largely depends on its ability to secure strong cooperation from departments that do.

Second, when a business division is in charge of business development, it can be confirmed that it already possesses a certain level of the resources required to operate existing businesses. In such cases, the provision of funds (budgets) to allocate part of those resources to new business initiatives proves highly effective. In addition, the support for brand assets, facilities, equipment, and external networks has also been shown to contribute to success. Projects that correctly identify the novelty and characteristics of the new business and can obtain appropriate resource support tend to perform well.

Mechanisms that should be developed in-house

There are two key perspectives to consider when building internal mechanisms that support the success of new businesses: knowledge management and mechanisms that promote cooperation within the company.

Utilization of knowledge that is not confined to departments

First, let's examine the results of the knowledge responses used within the company regarding knowledge management (see Figure 11).

When we examined what types of in-house knowledge were utilized during new business development, we found that using examples of past new business initiatives within the company was particularly effective when the corporate department was in charge. In such cases, the ability to locate and apply relevant knowledge from across the organization appears to be a key success factor.

On the other hand, when a business unit leads new business development, the effectiveness of directly accessing in-house experts becomes apparent. For business divisions, the key to success lies in reaching beyond their departments to access specialized knowledge at the right level and gaining deep, practical insights.

Mechanisms to promote cooperation within the company

Next, we will examine the results regarding mechanisms promoting cross-departmental cooperation (see Figure 12).

When we examined the internal mechanisms introduced to promote cooperation from other departments, it became clear that securing dedicated time for new business development is a key success factor when the corporate department is in charge. Success depends on establishing systems that allow employees to realistically allocate time to new business initiatives and foster an organizational culture supporting such efforts at a structural level.

It was found that gaining grassroots-level collaborators is highly effective in cases where the business unit is responsible for new business development. Diverse knowledge and voluntary cooperation play a critical role when launching new businesses that differ from existing operations. This observation applies to both business divisions and corporate departments.

So, how can collaborators be acquired? (see Figure 13)

When we examined efforts to increase internal allies and organizational understanding, we found that, within corporate departments, sharing information through venues such as departmental general meetings was particularly effective. In recent years, digital communication tools and voluntary study sessions have become more common. However, initiatives that involve broad information sharing, rather than limited-participant settings, are more effective, as they help create a sense of organizational endorsement and alignment.

In business divisions, it is important to confirm the effectiveness of information sharing through digital tools and chat platforms while fostering commitment by sharing updates in settings where collaborators can see each other face-to-face. This visibility contributes to stronger engagement and trust.

Summary: Are You Neglecting the Obvious?

Thus far, we have explored success factors in new business development by comparing the overall responses from all participating companies with those that achieved successful outcomes. The insights presented here represent only some of the survey findings, but are significant to us.

What do we recommend based on the survey results?

Rather than focusing on themes or trending technologies promoted by top-down directives, identify and solve real customer issues.
Customer issues should be verified quantitatively and objectively, based on direct user feedback.
Coordinate proactively with other departments and external partners to obtain the knowledge and resources necessary for business execution.
Ensure the involvement of directors and executive officers, leveraging their decision-making authority and access to management resources.
Create an internal environment that encourages knowledge sharing and cross-departmental collaboration.

While many of these success factors may seem self-evident, the comparison between successful companies and the broader survey base reminds us that projects that address these areas achieve real results.

In particular, “understanding customer issues” has long been considered a given. However, it is worth asking whether we truly understand these issues deeply in today's digital context. Are we simply using buzzwords like DX or digital transformation without clear intent? What value are we aiming to deliver through technology? What specific problems are we trying to solve for our customers?

We have encountered many cases where these questions are not answered. In supporting our clients with new business development, we hope to contribute to their success by applying the insights gained through this survey, including those that may seem obvious.