Idea to Opportunity:
Using a framework
Close to the Heart Debrief
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
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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
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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
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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
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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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How to evaluate an opportunity?
Are there any logical questions or frameworks?
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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
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First step to assess opportunity
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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
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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
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Market Vs. Industry
If 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
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Opportunity Evaluation - Market
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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?
Source: The New Business Road Test, John W Mullins
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Opportunity Evaluation - Industry
• 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?
Source: The New Business Road Test, John W Mullins
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Opportunity Evaluation - Industry
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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?
Source: The New Business Road Test, John W Mullins
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Opportunity Evaluation - Team
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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 valuechain among your customers, suppliers, competitors
and substitutes?
Source: The New Business Road Test, John W Mullins
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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
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The New Business Road Test
“Most business plans should have been abandoned
before they were written.”
- Prof. John W. Mullins, London Business School
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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”
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