Leap by McKinsey works with organizations to build innovative new businesses from scratch. As a Senior Partner and Global Leader of Leap, Ari Libarikian helps some of the world's leading companies to find new value at the intersection of business, design, and technology. In his work co-leading Leap along with his colleague Ralf Dreischmeier, Libarikian helps organizations to develop holistic, well-structured approaches to business building, creating strong digital businesses by combining the experimental nature of start-ups with the operational excellence of corporations. He sat down with Consulting to discuss the recent global launch of Leap by McKinsey.
Consulting: How did Leap by McKinsey go from concept to reality?
Libarikian: McKinsey & Company has always focused on how to drive huge and significant impact for clients over time. I think in the last six or seven years that there's been a realization among our clients that building new businesses is required for long-term success. If you look at the largest companies in the world today and you compare it to the same list from 20 years ago, every company on the list today is either a startup or a large incumbent that has regenerated or reinvented itself through business building. This element of reinventing yourself by building new things and scaling them is becoming a key ingredient to long-term success. We started noticing this as clients started asking us about how do they best execute on this new strategy. Do they build something new or do they focus on the core business? We actually started years ago as part of our digital transformation; we started to hire a variety of profiles—from designers to data scientists to engineers to market research specialists—all of these new skill sets that we felt we needed to bring together with our classic consultants to help clients start up and build a business. We've been doing this now for five or six years and it's been ramping up pretty rapidly, and we've recently pulled it together into this practice called Leap by McKinsey. I lead it along with my fellow senior partner Ralf Dreischmeier and our role is to bring the best of McKinsey to our clients to help them build businesses.
Consulting: Does Leap operate as its own business unit or is it a part of all practices?
Libarikian: Leap is its own practice, but it's very well integrated into the digital practice with the rest of the firm. Some of our work is just Leap from the get-go; the client will call and ask us for help. Or, Ralf will be in conversations with clients and we'll tee up an opportunity. So, to answer your question, it's a little bit of both.
Consulting: Is Leap typically identifying and cultivating new revenue streams within existing companies or building new brands?
Libarikian: Usually the burning platform that we hear from clients is that there are start ups or tech players entering our space and they're asking how to become the disrupters rather than the disrupted. So, Leap is a fundamental part of that. It's almost always a new revenue stream, but there have been cases where a legacy company wants to build a brand new business. For instance, if an investment bank wants to launch a retail bank but realizes that the way to accomplish that is not to do it within the traditional four walls of its investment banking business because it's so different that they need to build out a new brand. Often times, the company will decide to rebrand because they've done such a good job with the existing brand that consumers are trained to think of it in a certain way. While that's good, it's not necessarily ideal for a new business step out. In that case, the company will be more successful if they brand things differently.
Consulting: What markets are ripe for Leap? Are there client industries more ready for Leap than others?
Libarikian: We believe there is an opportunity here for every sector and in every geography and we're seeing that in our client work. The reality is that there are some sectors that are hotter right now in terms of new business building: banking, for instance; healthcare, technology, media telecom. We're seeing a lot of industrial companies trying to go digital by building new businesses rather than trying to transform the core. Were also seeing private equity industries looking at this. So, it's across the board but we see certain hotspots where it's been taking off over the last several years.
Consulting: How would you describe the clients' current mindset around business building and Leap?
Libarikian: If you had asked me this question five years ago I would've said that most companies view new business building as an experiment and if it doesn't work, that's OK. I think now were seeing a lot more urgency and for many companies it's a question of survival. When companies reach out there is an acceptance that this is something they have to do rather than something we'd like to do with some excess capital. The conversation is shifting; we're seeing a lot more urgency with this over the last 18 months and my guess is that's going to continue.
Consulting: Can you talk a little bit about the market potential? How bullish are you on Leap?
Libarikian: I can't give specific numbers, but I can say that Leap is on a short list of one of the fastest growing parts of the firm. We don't see it slowing down; we see it accelerating. We are just at the beginning of the curve.
Consulting: So, digital disruption is everywhere. Why Leap by McKinsey? What sets it apart?
Libarikian: There are a couple of differentiators; the first is that we ground our approach in creating business value and frankly a lot of our competitors help build stuff but it's not always grounded in the core strategic framework that McKinsey is known for. So, we help companies not only build businesses but deliver value. And that's a really important part of the equation. Second, we invest in capability building in ways that others don't. So our goal is not to just help a client build a business but to help a client be prepared to grow a business, adapt and thrive with this business long after we're gone. Third, for a client to succeed in business building, it really needs to bring together an ecosystem of capabilities. In many cases, it may need to partner with other firms, it many need to partner with companies in different sectors, and we feel that McKinsey is uniquely positioned to orchestrate that network of that ecosystem given our global reach, given our scale and given our penetration of different sectors. That's unique.
Consulting: Can you give me a Leap success story?
Libarikian: Sure; we helped a food services company, one of the largest pizza companies in the world, build a digital business. They realized that more and more customers were going to go digital in how they ordered pizza. So we helped this company stand up an e-commerce and digital business within nine months. We temporarily staffed in some of the key roles in this new business to help the client accelerate. We linked the new system back to the legacy core of the pizza company and now they are up and running to the point where the majority of their business runs through this digital business versus the traditional business. We also helped them set up the non-digital part of this business—call centers, service centers—understanding that sometimes customers follow up their digital orders with phone calls if they're comfortable with that level of customer service. I think that illustrates the power and McKinsey and the impact of Leap.
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