The Seven Domains Model
From Entrepedia: The Entrepreneurship Wiki
The Seven-domains framework has many advantages for both new and established ventures. It helps identify the deal-breakers, and raises key questions to be answered. It also provides avenues for reshaping the opportunity, identifies key strengths, and is a crucial tool in telling your story to resource providers.
But keep in mind, the scores are not additive, so summing the scores across the seven domains is meaningless; in addition, strong scores at the micro-level can mitigate poor macro-level scores. You have to be honest with yourself! Are you really up for this?
Understanding the Seven Domains
- Macro Market - Market Attractiveness:
How attractive is the overall potential market for your product/service? How attractive will it be in the future, judging by macro trends?
- Macro Industry - Industry Attractiveness:
Judging by the level of competition, the threat of new entrants and substitutes, and buyer and supplier power, is this an industry you’d like to play in?
- Micro Market - Target Segment Benefits and Attractiveness:
Does your idea offer clear, compelling benefits - which are superior to what’s already available - to a big enough, specific market segment at an acceptable price?
- Micro Industry - Sustainable Advantage:
Can you defend your position through IP or particular organizational processes? Can you make enough money out of your idea to cover start-up and ongoing operating costs well into the future?
- Team - Ability to Execute on CSFs (Critical Success Factors)
- Team - Connectedness up and down Value Chain
Putting the Seven Domains to Work
Analyse or score (out of 12) every domain separately. Remember, no opportunity is perfect – each will have question marks or negatives at the outset; thus, the opportunity development challenge is to:
Reshape: Turn question marks or minuses into pluses (different market, industry, or team)
- Mitigate: Offset any weaknesses with compensating strengths
- But: Identify absolute deal-breakers!
Macro Market Weaknesses - What if your overall market is too small or stagnant?
- Reshape the opportunity:
- Alter your aspirations (You may have to accept that this will be a lifestyle business)
- Mitigate:
- Compelling customer benefits can offset this if these benefits cause the market to grow
Macro Industry Weaknesses - What if your industry is unattractive?
- Reshape the opportunity
- Move up or down the value chain into a different industry
- Mitigate
- Compelling customer benefits and sustainable advantage can trump an unfavorable industry structure
Micro Market Weaknesses - What if customers won’t buy?
- Reshape the opportunity
- Change your target market or your market offering
- Mitigate
- You cannot. A deal-breaker!
Micro Industry Weaknesses - What if there’s no basis for sustainable competitive advantage?
- Reshape the opportunity:
- Develop resources that are inimitable
- Mitigate:
- Get in and get out fast, or stay so small that a few strong relationships protect you
Weaknesses in the team - What if the team cannot execute on the CSFs?
- Reshape the opportunity:
- Strengthen the team
- Move up or down the value chain into a different industry where the CSFs differ and the team’s abilities count
- Mitigate:
- Get a day job and learn!
Weaknesses in the team - What if the team lacks connections up/down/across the value chain?
- Reshape the opportunity:
- Strengthen the team
- Mitigate:
- Prove you have them: win a customer! Sign up suppliers!
Further Reading
- John Mullins (London Business School): New Business Road Test: What Entrepreneurs and Executives Should Do Before Writing a Business Plan published by the Financial Times Press (order here)
