1© John Mullins 2006 What to Run Before Your Business Plan Course John W. Mullins London Business School.

1© John Mullins 2006

What to Run Before Your Business Plan Course

John W. MullinsLondon Business School

2© John Mullins 2006

What’s Terrific About Your Business Plan Course?

• Pulls things together • Applies theory learned in the core• Gets students engaged: work on

their own ideas• Learning by doing

3© John Mullins 2006

What’s Not So Good About Your Business Plan Course?

• A “sales” mindset: no critical thinking • Puts them in a difficult position vs.

judges• Some students disengage if the idea

is not theirs• Most plans are pretty bad! Why?

4© John Mullins 2006

One Solution: Opportunity Assessment

Course• Course project: a feasibility study

for an opportunity they choose• No confirmation bias: “go” or “no-

go” are both OK• No embarrassment with judges• Brings together strategy, marketing,

OB• Jump-starts the business planning

5© John Mullins 2006

How Do You Build It?

• The seven domains of attractive opportunities

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Motivated by Warren Buffett…

“When a business with a reputation for poor

fundamentals meets a management team with

a reputation for brilliance…

it’s the reputation of the former that remains

intact.”

7© John Mullins 2006

ProCom

• Bootstrapped the business with money from 3Fs to prove the model

• Raised $4 million from GE Capital when e-learning was all the rage

• Have treaded water since, no exit, but still around: the “living dead”

8© John Mullins 2006

Oxiden

• Raised £5 million from 3i• Took two years to get product to

market• Then, a very lengthy sales cycle

followed• There was another solution…• Died after 4 years

9© John Mullins 2006

Darian Holdings

• Raised small amount of angel money

• An opportunity arose to buy a competitor at a very attractive price

• Having considerable success

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Glencoren

• Turned down by several investors, but did eventually raise a small amount for proof of concept

• Now trying to raise the next round• A very long lead time play –

changing surgeons’ behavior takes a long time

11© John Mullins 2006

Research Question

How can entrepreneurs (and investors, too?) best assess

market opportunities?

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Point of Confusion #1: The Market / Industry

Distinction

• What’s a market?• What’s an industry?• These are frequently confused!

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The Seven Domains of Attractive Opportunities Market Domains Industry Domains

Market Attractiveness Industry Attractiveness

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Point of Confusion #2:The Macro / Micro

Distinction

• Large and growing markets are important, but…

• Structurally attractive industries (in a five forces sense) are also important, but…

15© John Mullins 2006

The Seven Domains of Attractive Opportunities

Macro Level

Micro Level

Market Domains Industry Domains

Market Attractiveness

Target Segment Benefits and Attractiveness

Industry Attractiveness

Sustainable Advantage

16© John Mullins 2006

Point of Confusion #3:What’s Crucial about

Entrepreneurs and Their Teams…

• It’s not found on their CVs• Not simply about “chemistry” or

“character” or “entrepreneurial drive”

17© John Mullins 2006

The Seven Domains of Attractive Opportunities

Macro Level

Micro Level

Market Domains Industry Domains

Mission, Ability toAspirations, Execute Propensity on CSFsfor Risk

Connectedness up and down Value Chain

Team Domains

Market Attractiveness

Target Segment Benefits and Attractiveness

Industry Attractiveness

Sustainable Advantage

18© John Mullins 2006

In Summary, for the Seven Domains…

• Scores are not additive: summing the scores across the seven domains is meaningless

• Strong scores at the micro level can mitigate poor macro-level scores

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What to Do Before (Or in?) Your Business Plan Course? • The seven domains

– Identify key weaknesses• Questions to be answered

– Suggest avenues for reshaping the opportunity if not mitigated by other domains

– Identify key strengths• Crucial in telling your story to resource

providers

20© John Mullins 2006

Remember Warren Buffett’s Words

“When a business with a reputation for poor

fundamentals meets a management team with a

reputation for brilliance, it’s the reputation of the former

that remains intact.”

21© John Mullins 2006

For the Rest of the Story…The New Business Road Test

22© John Mullins 2006

To Download an Examination Copy of Chapter 1…

www.faculty.london.edu/jmullins

Instructor website at www.pearson-books.com/roadtes

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