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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.
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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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