Right now there are two million entrepreneurs in

the UK actively engaged in starting a new

business. Many of their ventures will never get off
the ground. Of those that do, the majority will fail.
There are more than 15 million entrepreneurs in
the US doing the same thing. Most of their
ventures will fail too. Less than one per cent of
those who submit business plans to business
angels, venture capitalists or similar sources of
funding will be successful in raising the money
they seek.
This picture of entrepreneurship is not a pretty
one. The odds are daunting, the road long and
difficult. Why, then, are a stunning one of every
19 adults in the UK and one in 10 in the US
actively pursuing entrepreneurial dreams? In a
word: opportunity! Opportunity to develop an
idea that seems, at least to its originator, a sure-
fire success. Opportunity to be ones own master
no more office politics, no more downsizing, no
more working for others. Opportunity for change.
Opportunity to experience the thrill, excitement,
challenge and just plain fun inherent in the
pursuit of entrepreneurial adventures. As a
former entrepreneur, I know, because Ive been
there too.
But theres a problem. Most opportunities are not
what they appear to be, as the business failure
statistics demonstrate. Most of them have at
least one fatal flaw that renders them vulnerable
to all sorts of difficulties that can send a
precarious, cash-starved new venture to the
scrap heap in a heartbeat.
An abundance of research makes it clear that the
vast majority of new ventures fail for opportunity-
related reasons:
! Market reasons: perhaps the target market is
too small or simply wont buy
Business Strategy Review Spring 2004 ! Volume 15 Issue 1 Entrepreneurial gold mines 2
Entrepreneurial
gold mines
John Mullins asks the question: Where do good ideas come from?
Upfrontcomment
! Industry reasons: its too easy for competition to
steal your emerging market
! Entrepreneurial team reasons: the team may
lack what it takes to cope with the wide array
of forces that conspire to bring fledgling
entrepreneurial ventures to their knees.
As long-time venture capitalist William Egan
notes: You may have capital and a talented
management team, but if you are fundamentally
in a lousy business, you wont get the kind of
results you would in a good business. All
businesses arent created equal.
In The New Business Road Test: What
Entrepreneurs and Executives Should Do Before
Writing a Business Plan, I develop a framework
for assessing just how attractive an idea for a new
venture really is. It addresses a question thats
important for aspiring entrepreneurs and investors
alike: Is your idea really an opportunity thats
worth investing the time and effort to develop a
business plan and perhaps ultimately worth
pursuing or is it among the majority of ideas
that simply wont fly? But such a framework begs
a more fundamental question, that of finding an
attractive opportunity in the first place.
Great opportunities: where do they
come from?
Everyone who aspires to be an entrepreneur has
ideas. For some, ideas arise on a daily basis.
The real challenge, though, is to find good ideas,
ideas that are more than just ideas theyre
opportunities! Where do great opportunities
come from? How are they born?
History tells us that there are four common
sources of opportunities opportunities that are
more than mere ideas that any would-be
entrepreneur can use.
! Opportunities created by macro trends in
society
! Opportunities found by living and experiencing
the customer problem
! Opportunities created through scientific
research
! Opportunities proven elsewhere that you can
pursue here.
Opportunities created by macro trends
We live in a changing world. Trends of all
kinds are swirling around us each and every day.
Studying these trends and anticipating their
impact on the lives we live, on the industries
where we work and on the markets we serve is a
rich source of opportunities. The business world
abounds with successful companies built on the
back of such trends:
In India, in the early 1980s, Brijmohan Lall
Munjal saw the growing but still modest buying
power a demographic trend that would fuel a
growing need for motorised two-wheeled
transportation in India. His company, Hero-
Honda, now sells more than one million
motorcycles each year.
In the US at about the same time, John Mackey
identified the sociocultural trend toward health
and nutrition that would spur rising demand
for natural and organic foods. The result: Whole
Foods, his rapidly growing chain of natural
foods supermarkets.
In Californias Silicon Valley, Jeff Hawkins of
Palm Computing saw what pen-based computing
technology might bring about. His response to this
technological trend led to the development of the
PDA thats probably in your pocket right now.
Whether the trends are demographic,
sociocultural, economic, technological, regulatory
or natural such as global warming theres
nothing more prolific for the creation of
opportunities just waiting to be discovered by
entrepreneurs.
In management guru Peter Druckers words: The
overwhelming majority of successful innovations
exploit change. According to Drucker,
identifying opportunities is about a systematic
examination of the areas of change that typically
offer opportunities. And its aspiring
entrepreneurs who often spot them. If you want
to find a good opportunity, systematically study
todays trends, as Drucker suggests, and ask
yourself how those trends will influence the life
you and others lead, the markets you serve or the
industry where you work.
Living and experiencing the customers pain
Phil Knight and Bill Bowerman, founders of
Nike, now the global leader in athletic footwear,
had lived the customer problem and felt the pain
literally. As distance runners themselves, they
had subjected their bodies to mile after mile of
feet meeting ground, suffering shin splints and
sprained ankles that better shoes might have
eliminated. Equally important, they had
sometimes been edged out at the finish line,
wondering whether lighter shoes might have
given them a competitive edge.
Entrepreneurial gold mines Spring 2004 ! Volume 15 Issue 1 Business Strategy Review 3
The overwhelming
majority of successful
innovations exploit
change
Knight and Bowerman knew first hand of these
customer problems and were well placed to solve
them. Their now legendary invention of the waffle
sole created initially with some latex and the
Bowerman familys waffle iron ultimately
revolutionised the athletic footwear industry.
If we think about it, most of us can also recognise
opportunities where something can be improved
products, services, processes or whatever in
the lives we lead or the work we do. Thus, fixing
whats inadequate or broken is another rich source
of opportunities for watchful entrepreneurs.
The fertile ground of scientific research
In many institutional settings university
research labs, industrial R&D groups and so on
extensive efforts are underway to create new
knowledge that can, intentionally or otherwise,
spawn commercially viable new products.
That was the case for EMI, the UK company
(better known today for recording the Beatles and
the Rolling Stones than for its technological
prowess) where Godfrey Hounsfields research in
the 1970s led to the medical technology
breakthrough that made CAT scanning possible
and won a Nobel prize in 1979.
The key that can unlock the challenge of turning
basic scientific research into viable new ventures
is linking the promise of scientific discovery with
genuine customer needs sometimes latent ones
so that real customer problems are solved.
Unfortunately for consumers, research scientists
often lack the market and industry
understanding to identify the commercial
applications that may be present in their science
and their principal interests sometimes lie more
in the knowledge itself than in its commercial
application. If you are or have access to a
cutting-edge scientific researcher, give some
attention to how this research might solve some
customers problem.
It works in Italy: lets try it here
Starbucks Howard Schultz didnt invent the
espresso machine or the coffee bar. The Italians
did more than a century ago. Schultz was,
however, alert enough to see the coffee bar
culture in Italy and its social role and insightful
enough to believe that it might translate well to
American shores. Many opportunities, especially
those of the niche variety, arise because an
entrepreneur sees something new in one place
and brings it home. Italian coffee bars were
replicated in Seattle. European fashions found
their way to Los Angeles. Cable television crossed
the Atlantic from the US to Europe. QXL
mimicked Americas eBay in online auctions.
In a study of the fastest-growing companies in
the US, Amar Bhide found that most of the
founders simply replicated or modified an idea
they encountered through previous employment
or by accident. Looking for opportunities in one
place and bringing them home can be a great
source of opportunities that are already market
tested. And theyre a great excuse for taking a
holiday away!
Its simply not possible to pursue your
entrepreneurial dream without finding an
attractive opportunity to ride. Whether your
search begins at home by observing macro
trends or feeling the customers pain or grows
out of an idea you find in someones research lab
or on holiday, you now have a road map to where
to look for that golden opportunity thats right for
you. While no one can guarantee that the
opportunity you identify will enable you to strike
it rich, the search as youll soon find is half
the fun. "
Business Strategy Review Spring 2004 ! Volume 15 Issue 1 Entrepreneurial gold mines 4
John Mullins
(jmullins@london.edu)
is associate professor
of management
practice at London
Business School and
chairs the schools
entrepreneurship
faculty. This article is
adapted from his
book, The New
Business Road Test:
What Entrepreneurs
and Executives
Should Do Before
Writing a Business
Plan (FT/Prentice-
Hall, 2003).
Its simply not
possible to pursue
your entrepreneurial
dream without
finding an attractive
opportunity to ride
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