JOHN MULLINS SEVEN DOMAIN MODEL

AN OPPORTUNITY EVALUATION FRAMEWORK

Overview
Below is a interesting 7 domain model presented by John Mullins, Chair Entrepreneurship
Faculty, London Business School in his book The New Business Road test. He is a three time
entrepreneur and says he practices what he preaches. This extensive and comprehensive
framework comprises all that one needs to know even before writing a business plan. As a
consultant you may find it useful while facilitating an idea generation & opportunity session for an
audience with considerable knowledge of entrepreneurship.(For e.g., Management students)
The Seven Domain Framework
(Excerpt from The New Business Road Test: John Mullins)
In analyzing your business ideas you must be able to pass them through a test to determine if
they truly are valid opportunities. All of your ideas must have a demonstrated need, ready market,
and ability to provide a solid return on investment.
Is the idea feasible in the marketplace? Is there demand? Can it be done? Are you able to pull
together the persons and resources to pull it off before the window of opportunity closes? These
questions must be considered and answered.
Opportunity-focused entrepreneurs start with the customer and the market in mind. They would
prefer to serve attractive rather than unattractive markets. They analyze the market to determine
customer needs, barriers to entry, market structure, market size, growth rate, market capacity,
attainable market share, cost structure, the core economics, time to breakeven, opportunity costs
and exit strategy issues. This framework offers a better toolkit for assessing and shaping market
opportunities and provides the basis for a customer driven feasibility study.
It is based on seven domains viz. Market domain that addresses macro level
1) Market attractiveness and micro level
2) Target segment benefits and attractiveness; Industry domain that addresses macro
level
3) Industry attractiveness and micro level
4) Sustainable advantage; Team domain comprising three sub-domains5) Mission, aspirations, propensity for risk,
6) Ability to execute on Critical Success Factors and
7) Connectedness up, down and across value chain.
At first glance, the seven domains model appears to simply summarize what everybody already
knows about assessing opportunities. But upon careful scrutiny, the model goes further to bring to
light three crucial distinctions that most entrepreneurs may overlook:

Adapted from 'The New Business Road Test' by John Mullins

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Markets and industries are not the same things

Both macro-and micro level considerations are necessary: markets and industries must
be examined at both levels.
The keys to assessing entrepreneurs and entrepreneurial teams arent simply found on
their resumes or in assessments of their entrepreneurial character.

The framework does not give a simple scoring sheet at the end. But it helps in answering the
most vital question every aspiring entrepreneur asks himself why will or wont this work? So
this will not only help you in understanding if your idea will work, but why it will or wont work!
Below is the framework that can help evaluate your idea for feasibility and qualify it as an
opportunity; you may not be able to answer some of the questions but an attempt will help to
assess your idea in an effective manner. It can trigger your thinking in more than one dimension.
Here is the framework:

1.

Micro level market assessment:

a) Micro level questions about target markets

1. Is there a target market segment where we might enter the market in which we offer the
customer clear and compelling benefits, at a price he or she is willing to pay?
2. Are these benefits, in the customers minds, different from and superior in some way
better, faster, cheaper or whatever to whats currently offered by other solutions?
3. How large is this segment, and how fast is it growing?
4. Is it likely that our entry into this segment will provide us entry into other segments that we
may wish to target in the future?
b) Three ways to define market segments
1. Who the customers are i.e demographic terms (age, gender, education, income etc) if it
is business to business, then it will refer to the industry in which the customers do
business, plus firm size and firm characteristics.

Adapted from 'The New Business Road Test' by John Mullins

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2. Where the customers are in geographical terms?

3. By how the customers behave (life style terms) or in business to business how the
products may be used.
c) The micro market test
1. What customer pain will your offering resolve? How strong an incentive do customers
have to give you their money? Will customers buy what you propose to offer?
2. Who precisely are the customers that have the pain? Do you have detailed accurate
information about who they are, where they live or do business or what they do?
3. What benefits does your offering provide that other solutions dont?
4. Does the target market have the potential to grow?
5. Are there other segments that could benefit from a related offering?
6. Can capabilities that are transferable from one segment to another be developed?

2. Macro-level market assessment:

Information from secondary sources library materials, internet, newspapers, and publications on
recent industry trends should suffice to answer the following questions.
The macro market test
1. What sort of business is sought? One with potential to become a huge business, or a
small lifestyle operation? This along with the answers to the following question will
determine the need for venture capital. A high potential business in a huge, rapidly
growing market will require venture capital whereas a small lifestyle operation in a niche
market will not need any.
2. How large is the market?
3. How fast can it grow?
4. How quickly can it grown in the next six months or two/three/five years?
5. What economic, demographic, socio cultural, technological, regulatory or natural trends
can be identified and how will it affect the business?

3. Macro-level Industry assessment:

a) Five macro-level questions to assess your industry:
Michael Porters
forces
Threat of Entry
Supplier power
Buyer power
Threat to substitutes
Competitive Rivalry

five

Questions to ask
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?

b) The Macro Industry test:

1. What industry will you compete in? Define it carefully.
2. Based on all five forces, what is your overall assessment of this industry? Just how
attractive or unattractive is it?
3. If your industry is a poor performer overall, are there persuasive reasons why you will
fare differently?

Adapted from 'The New Business Road Test' by John Mullins

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4.

Micro-level industry assessment:

The Micro industry test:
1. Do you require proprietary elements - patents, trade secrets and so on that other firms
cannot likely duplicate or imitate?
2. Can your business develop and employ superior organizational processes, capabilities or
resources that others would have difficulty in duplicating or imitating?
3. Is your business model economically viable i.e. can you show that your company wont
run out of cash quickly? That depends upon the answers to these questions related to
working capital cycle:
Will your revenue be adequate in relation to the capital investment you need and
the margins you get?
How much will it cost you to acquire and retain customers?
How long will it take to attract customers?
Will your gross margins be adequate to cover your necessary cost structure?
How much cash must be tied up in working capital (inventory or other) for how
long?
How quickly will customers pay?
How slowly will suppliers and employees be paid?

5. The mission, personal aspirations and risk propensity test for entrepreneurs:

Whats your entrepreneurial mission:

o To serve a particular market?
o To change a particular industry?
o To market a particular product?
o Is the passion really there?

What level of aspirations do you have for your entrepreneurial dream:

o To work for yourself?
o To build something small or something big?
o To do? To manage? To lead?
o To change the world in some way?

What sorts of risk are you and are you not willing to take:
o Will you risk a secure salary and the things that go along with your current
employment? For how long?
o Will you risk losing control of your business?
o Will you put your own money at risk? How much?
o Will you risk your home or time with your family or loved ones?
o Do those you love accept the risks you will take?

6. The can you and your team execute? test

What are the few - only a handful, please critical success factors (CSFs) in your industry? What
support can you provide to show that youve identified them correctly?
Can you demonstrate - in past deeds, not mere words that your team taken together can
execute on each and every one of these CSFs?
Alternatively, have you identified which CSFs your team is not well prepared to meet, for which
you need help in filling out your team?

Adapted from 'The New Business Road Test' by John Mullins

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7. The Connectedness test

Who do you and your team know up the value chain in the companies that are likely suppliers to
your proposed business and to your competitors? In suppliers to companies in other industries
that offer substitute products for yours? Be sure you have names, titles and contact info.
Who do you and your team know down the value-chain among customers you will target, both
today and tomorrow? Names, titles and contact info, please.
Who do you and your team know across the value-chain among your competitors and
substitutes?
Names, titles and contact info, please.
Putting the seven domains model into action
Using the seven domains model requires a considerable amount of data. Mere opinions that an
opportunity is attractive will not suffice and will destroy the credibility of the aspiring entrepreneur
in the eyes of others.
Where do we get all the data we need?
Much of the data the model calls for can be obtained quickly from secondary sources: trade and
other business publications in the library or on the Internet, government reports and so on.
Typically, though, some primary data - from interviews, observation, focus groups or surveys of
prospective customers and/or industry participants, or market experiments - are necessary for the
two micro-level assessments comprising the lower row in the model and for understanding the
industry's critical success factors. View the seven domains model <>
So, build a simple mockup or prototype, pick up the phone and get some feedback! Make the
connections up, down and across the value chain that your team will need to assess fully your
opportunity and to run a successful venture.
pick up the phone and get some feedback!

How do we interpret all the data?

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.
The wrong combination of factors can kill your new venture, and enough strength on some factors
can mitigate weaknesses on others. So, if a checklist is not sufficient, then how should the
entrepreneur who completes a seven domains analysis draw conclusions about what it means?

Adapted from 'The New Business Road Test' by John Mullins

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Why won't this work?

Along the seven domains path, concerns inevitably crop up that may be potentially fatal flaws that
can render one's opportunity a non-starter. The key task in answering the crucial question 'Why
won't this work?' is to find that major flaw that cannot be resolved, the opportunity's Achilles heel.
The crucial things to look for on the downside are elements of the market, industry or team that
simply cannot be fixed by shaping the opportunity in a different way.
If flaws that cannot be fixed are found, then the best thing to do is to abandon the opportunity at
this early stage and move on to something more attractive.
Most business plans should have been abandoned before they were written.

Adapted from 'The New Business Road Test' by John Mullins

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