idea to opportunity: using a framework close to the heart debrief
DESCRIPTION
Are all ideas good? Often good ideas fail or are replaced by better ideas led by the market response; it is the customers that determines the success. Most businesses fail in less than two years Fewer than 1% of the business plans submitted to VCs get funded Business failures lead to huge “collateral damages” Failures are planned by lack of planning National Entrepreneurship NetworkTRANSCRIPT
Idea to Opportunity:Using a framework
Close to the Heart Debrief
National Entrepreneurship Network
Ideas -Dos and Don’ts• Having a flow of new ideas is critical to successful
entrepreneurship but having a love affair with one idea does not help
• It is always better to detach from emotions while assessing an idea; sacrificing or letting go of an idea will not be a huge problem then
• It is ok to share ideas in a forum. An opportunity is ideally derived from an idea which is executed with a great plan by an excellent team. So most often no one can steal an idea
National Entrepreneurship Network
Are all ideas good?• Often good ideas fail or are replaced by better
ideas led by the market response; • it is the customers that determines the success.• Most businesses fail in less than two years• Fewer than 1% of the business plans submitted to
VCs get funded• Business failures lead to huge “collateral damages”• Failures are planned by lack of planning
National Entrepreneurship Network
Idea to Opportunity• One needs to be able to evaluate if ideas are
really opportunities• Objective assessment can lead to an accurate
judgment of an opportunity• Potential customers, facilities/infrastructure,
availability of resources have control and influence on an idea turning into an opportunity
National Entrepreneurship Network
What defines a good opportunity?An opportunity is characterized by the following:
• There are customers willing and able to purchase your product that either solves their problem or satisfies a need
• A large enough number of customers exist
• The industry allows you to start and build - no regulations or monopoly, no supplier domination
• An ability to differentiate your offering from your competitors
• A good match with your own and your team's interests, abilities, and network
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
How to evaluate an opportunity?• Opportunity evaluation is not rocket science
and can be learnt
– You already instinctively ask many of the relevant questions; that is good but not enough
– the key is to not ignore any of the critical questions, hence having solid frameworks to work with is important
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Are there any logical questions or frameworks?
How to evaluate an opportunity?
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Opportunity evaluation…• Who is your customer/market?
• Which industry will you operate?
• Who is going to execute this and how?
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
First step to assess opportunity
TEAM
MARKET
INDUSTRY
National Entrepreneurship Network
What do we mean by market?• A market consists of a group of current and/or
potential customers having the willingness and ability to buy products to satisfy wants or needs
• Thus, markets consist of buyers - people or organizations and their needs - not products
Example: Businesspeople who get hungry between meals during their workday = market for workplace snacks“ Markets consist of buyers, not products ”
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
What do we mean by industry?• An industry consists of sellers - typically
organizations - that offer products that are similar and close substitutes for one another
Example: What industries serve the market for workplace snacks? – Producer level: salty snack industry, the candy
industry and the fresh produce industry etc– Distribution level - supermarket industry, the
restaurant industry, the coin operated vending machine industry, the coffee bar industry etc
– Some of these industries are more attractive than others
“ An Industry consists of sellers ”
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
Market Vs. IndustryIf Market and Industry are different - So, if
market and industry attractiveness are both important, how should each
be assessed?
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
• Is there a target market segment in which we offer the customer clear and compelling benefits, at a price he or she is willing to pay?
• Are these benefits, in the customer’s minds, different from and superior in some way –to what’s currently offered by other solutions?
• How large is the market?• How quickly can it grow in the next 6 months or
2/3/5 years?• What trends can be identified and how will it
affect the business?
Opportunity Evaluation - Market
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
• Is it difficult for companies to enter this industry?• Do suppliers to this industry have the power to
set terms and conditions?• Do buyers have the power to set terms and
conditions?• Is it easy or difficult for substitute products to
steal the market?• Is competitive rivalry intense or genteel?
Opportunity Evaluation - Industry
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
• Do you require proprietary elements - patents, trade secrets so that other firms cannot likely duplicate or imitate?
• Can your business develop and employ superior organizational processes, capabilities or resources that others would have difficulty in duplicating or imitating?
• Is your business model economically viable i.e. can you show that your company won’t run out of cash quickly?
Opportunity Evaluation - Industry
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
• What level of aspirations do you have for your entrepreneurial dream?
• What sorts of risk are you and are you not willing to take?
• What are the Critical Success Factors required in this Industry?
• Does your team have it?• Who do you and your team know across the
value-chain among your customers, suppliers, competitors and substitutes?
Opportunity Evaluation - Team
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
Mullins’ 7 Domain Framework
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Wrap Up • Using the model is not a simple matter of constructing a
score sheet that adds scores for the seven domains • The domains are not additive and their relative
importance can vary. Thus, a simple checklist will not suffice
• A wrong combination of factors can kill a new venture• If flaws that cannot be fixed are found, then the best thing
to do is to abandon the opportunity at this early stage• The crucial things to look for on the downside are
elements of the market, industry or team
Source: The New Business Road Test, John W Mullins
National Entrepreneurship Network
“Most business plans should have been abandoned
before they were written.”- Prof. John W. Mullins, London Business School
The New Business Road Test
National Entrepreneurship Network
NEN Resources
All materials used in this session are available in the NEN CD Kick-Starting the
Entrepreneurial Campus under Inside the Classroom –
section “Entrepreneurship Concepts”, subsection “How to evaluate opportunities”