Key Activities, Key Resources and Key Partners7:37 with Pasan Premaratne
There are certain activities that are crucial to the success of our business model. In this video we look at our key activities, the resources we need to make them happen and any partners we can work with to make our job easier.
Up until now, 0:00 we discussed all the things we need to do to make our business model a success. 0:01 The next session of our business model groups these important task into 0:06 a section called key activities. 0:10 Listing all our key activities highlights what we need to constantly focus on. 0:13 What are our key activities? 0:19 Let's list out high-level activities only so 0:21 that we don't get bogged down with the details. 0:23 Software development is certainly one of our most important activities. 0:26 We need to build a product that we can sell. 0:30 What else? 0:32 Well, we're launching from the unknown into a space with some 0:33 great companies with strong brands, so 0:36 marketing will be a very important activity right from the start. 0:38 Why do we list out our key activities? 0:43 Well, first, those are the activities that we think are crucial to making our 0:45 business model a success. 0:49 I say think because remember, at this stage, everything is just an assumption. 0:51 Without experiments and understanding, 0:56 we don't really know if some of our activities are actually crucial. 0:58 And I'm sure we're overlooking a lot of activities right now that could make or 1:01 break the company. 1:06 The other reason we list them out is because we need to figure out what it 1:07 will take for us to carry out these activities. 1:11 That brings us to our next section, key resources. 1:15 Key resources [SOUND] are the most important assets required to 1:19 make your business model a success. 1:22 Key [SOUND] resources aren't just the assets and 1:24 materials you need to make your product and service. 1:27 They also [SOUND] include everything you need to reach your customers, 1:29 keep them happy and [SOUND] make money. 1:33 Key resources can be broken down into four important sections. 1:35 Physical [SOUND] resources are both company facilities that are necessary to 1:39 run day-to-day business, as well as the product or 1:43 service resources that are essential to running our business model. 1:46 Running a web business a few years ago meant that we would have had to 1:49 invest a lot of physical resources, like server capacity, ourselves. 1:53 Nowadays, we can lower costs by handing this off to partners, 1:58 who we're gonna mention in a bit. 2:01 [SOUND] Financial resources are very important to a start-up. 2:03 Without money, you can't keep the company running. 2:06 The goals of a start-up are to generate as much revenue as possible within their 2:10 business model while being as cash efficient as possible in the process. 2:14 You'll still need money to start out and depending on how large your need for 2:18 financial resources are, you may need to raise this money. 2:22 Later on, we'll talk more about what our options are when it 2:26 comes to shoring up our financial resources. 2:29 Then, we [SOUND] have human resources. 2:33 These are very important to a company's success. 2:35 While you need all types of resources to survive, 2:38 human resources are probably of the highest priority. 2:41 Human resources include both employees and advisers. 2:45 Advisers help you steer your ship by offering experience and guidance. 2:49 Most consider advisers so 2:53 crucial that Steven Blank, an entrepreneur turned coach, 2:54 teaches that forming an advisory board is an essential part of starting a business. 2:58 Identify what human resources are essential to make your business model 3:04 succeed so that you won't be constrained later on. 3:08 Finally, [SOUND] we have intellectual property resources that protect your 3:12 company's know-how, customer information, product road maps, brand information, and 3:16 much more. 3:21 We won't get into this section too much, but intellectual property can be 3:22 protected by tools such as trademarks, copyrights, contracts, and patents. 3:26 Intellectual property is very important to your company and 3:31 if an innovation is key to the success of your business model, 3:34 securing the rights so that you have a competitive advantage is crucial. 3:37 When exploring our business model, 3:42 we need to make sure we ask ourselves what resources are needed at every step. 3:43 Since we listed our key activities first, 3:48 we can use them to derive our key resources. 3:51 Since building software is our top priority, 3:54 our most important resource is human capital. 3:57 That is, the designers and developers. 3:59 With the cost of software development talent nowadays and 4:02 the size of the team we will need to make this a reality, 4:05 seeking financial capital early on may be necessary. 4:08 Because it is, I'm going to go back and 4:12 put raising capital as one of our key activities. 4:15 Remember, I said that it's okay to backpedal and 4:18 change other sections once we uncovered new information. 4:20 We have other resources we need to make our business model happen, 4:24 like computers and stuff. 4:28 But those aren't anywhere near as important as the human capital. 4:29 In other industries, 4:32 these resources will be more evenly distributed across all categories. 4:34 Airline manufacturing companies need physical resources to build a plane. 4:38 They need human resources such as engineers to design, build, and 4:42 test the plane. 4:45 And finally, financial capital to support the two. 4:47 When you're evaluating what key resources you need, 4:50 think about the rest of the Business Model Canvas. 4:53 What key resources [SOUND] do your value propositions need? 4:56 What about our customer [SOUND] relationships? 4:59 Do we need anything in place to get, grow and keep our customers? 5:01 [SOUND] What about our distribution channels? 5:06 Since all of our value proposition is condensed into software and 5:08 distributed in our own channel, human capital covers all our bases. 5:12 In any business plan, we will carry out a majority of the activities ourselves, but 5:18 there is some activities where we are better off partnering with other services. 5:22 Key partners form an important part of our business model. 5:26 Who are the key partners you need to work with to make your 5:30 business model a success? 5:33 There are primarily four different types of partnerships. 5:35 [SOUND] Strategic alliances between non-competitors, [SOUND] strategic 5:38 partnerships between competitors, [SOUND] joint ventures to develop new businesses, 5:42 and buyer-supplier [SOUND] relationships to assure reliable supplies. 5:47 You should take into account how you can reduce costs, risk and 5:52 uncertainty when working with a partner. 5:55 What are some of the activities in my plan that would be 5:58 better served through a partner? 6:01 For starters, I don't need to dedicate a ton of resources to buying servers, 6:03 hosting the app, and scaling when I grow. 6:08 There are companies out there that can do this much better than I can. 6:10 I could host my app on Heroku or Amazon Web Services and 6:14 reduce a lot of complexity in my workflow. 6:18 Similarly, there're other services that I can use to monitor my analytics and 6:21 system performance, run my newsletter campaigns, and so on. 6:26 Now, these aren't partnerships like Apple and Google-level partnerships, but 6:30 they are in the sense that we utilize someone else's product or 6:34 service to reduce costs in our business model. 6:37 Handling all of those aspects on my own would require dedicated employees 6:40 and equipment. 6:44 Identify which of your activities you need to handle yourself, what resources you 6:46 need to make them happen, and which activities you can hand off to partners. 6:50 Let's recap. 6:55 To execute our business model, 6:56 we have a certain [SOUND] set of activities we need to complete. 6:58 Some of these activities are crucial to our business model. 7:02 These are our key activities. 7:05 Most of our efforts should be dedicated at making these key activities a reality, and 7:07 our [SOUND] key resources are the intellectual, human, financial and 7:13 physical capital that we harness to execute on it. 7:17 For the activities outside of our key activities list, 7:20 we don't necessarily need to handle all these activities ourselves. 7:23 We can [SOUND] work with key partners, who would help reduce the risk, uncertainty 7:27 and costs of executing our business model, allowing us to focus on our core product. 7:32
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