What to Run Before Your Business Plan Course John W. Mullins London Business School © John Mullins 2006 1
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 © John Mullins 2006 2
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? © John Mullins 2006 3
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 © John Mullins 2006 4
How Do You Build It? • The seven domains of attractive opportunities © John Mullins 2006 5
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. ” © John Mullins 2006 6
Pro. Com • Bootstrapped the business with money from 3 Fs to prove the model • Raised $4 million from GE Capital when elearning was all the rage • Have treaded water since, no exit, but still around: the “living dead” © John Mullins 2006 7
Oxiden • • • Raised £ 5 million from 3 i Took two years to get product to market Then, a very lengthy sales cycle followed There was another solution… Died after 4 years © John Mullins 2006 8
Darian Holdings • Raised small amount of angel money • An opportunity arose to buy a competitor at a very attractive price • Having considerable success © John Mullins 2006 9
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 © John Mullins 2006 10
Research Question How can entrepreneurs (and investors, too? ) best assess market opportunities? © John Mullins 2006 11
Point of Confusion #1: The Market / Industry Distinction • What’s a market? • What’s an industry? • These are frequently confused! © John Mullins 2006 12
The Seven Domains of Attractive Opportunities Market Domains Market Attractiveness © John Mullins 2006 Industry Domains Industry Attractiveness 13
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… © John Mullins 2006 14
The Seven Domains of Attractive Opportunities Market Domains Macro Level Market Attractiveness Industry Domains Industry Attractiveness Micro Level Target Segment Benefits and Attractiveness © John Mullins 2006 Sustainable Advantage 15
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” © John Mullins 2006 16
The Seven Domains of Attractive Opportunities Market Domains Macro Level Industry Domains Market Attractiveness Industry Attractiveness Mission, Aspirations, Propensity for Risk Ability to Execute on CSFs Team Domains Micro Level Connectedness up and down Value Chain Target Segment Benefits and Attractiveness © John Mullins 2006 Sustainable Advantage 17
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 © John Mullins 2006 18
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 © John Mullins 2006 19
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. ” © John Mullins 2006 20
For the Rest of the Story… The New Business Road Test © John Mullins 2006 21
To Download an Examination Copy of Chapter 1… www. faculty. london. edu/jmullins Instructor website at www. pearsonbooks. com/roadtest See Amazon for Reader Reviews © John Mullins 2006 22
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