In a Business Model Canvas, the building block associated with Key Resources describes the resources necessary to carry out business activities. Key resources describe any resource the organization requires for its business model to work.
Table of Contents
Understanding key resources in the Business Model Canvas
These resources allow the organization to create a value proposition for consumers, release products to the market, maintain customer segment relationships, and earn revenue.
Before developing its key resources, the business must consider these other blocks first. In other words, can the available resources meet key operational needs? If there aren’t the means to provide value, then no value exists.
Key resources may be tangible or intangible and represent assets that differ from company to company. In most cases, however, key resources will be defined by materials, equipment, and people. The business may own these resources, lease them out, or acquire them by other means.
Types of key resources
Broadly speaking, key resources can be categorized into four types:
Physical – or tangible assets such as equipment, manufacturing facilities, distribution networks, inventory, and other buildings. Chip manufacturer Intel relies on semiconductor plants as a key resource.
Intellectual – or intangible assets such as intellectual property, patents, and partnerships. Knowledge about customers is also a key intellectual resource. While these resources take time and money to develop, they are a major driver of innovation and growth. For example, the brand equity of Microsoft and Adobe has been crafted by years of research and development in software.
Human – employee-related resources are utilized by organizations in the service, software, finance, science, and technology industries. These resources are important to any organization where creativity and a diverse knowledge pool drives growth. Pharmaceutical giant Novartis is dependent on a team of highly qualified scientists and sales representatives to sell its products to doctors.
Financial – this includes cash, credit, and stock options for publicly listed companies. While all organizations rely on financial resources to some degree, they are particularly important in the banking and insurance industries. For example, an insurance company with insufficient capital to pay out insurance claims is unlikely to be viable.
How to determine key resources
Businesses requiring assistance with identifying key resources must consider the following questions:
What key resources does the value proposition require? For example, a company selling sustainable and reliable electric vehicles must have access to the necessary raw materials, patents, and intellectual property concerning battery technology.
What key activities does the value proposition require? Some businesses choose to work backward from the key activities of their business model. This can be achieved by evaluating the actions of other companies in the same industry.
How do key resources support existing revenue streams?
Key takeaways:
In a Business Model Canvas, the building block associated with Key Resources describes the resources necessary to carry out business activities. The business may own these resources, lease them out, or acquire them by other means.
Key resources are broadly categorized into four types: physical, intellectual, human, and financial. Resources may be tangible or intangible.
Key resources can be determined by the business evaluating its value proposition. Some businesses also choose to work backward and determine the activities that will support the value proposition. This can be done by analyzing the actions of companies in the same industry.
Key Highlights
Key Resources Definition: In the Business Model Canvas, the “Key Resources” building block outlines the resources required for a business to carry out its activities and deliver value to customers. These resources are essential for creating a value proposition, producing and releasing products, maintaining customer relationships, and generating revenue.
Resource Importance: Key resources are crucial for the business model’s viability. Without adequate resources to provide value, the entire business model could be compromised.
Resource Types: Key resources can be categorized into four main types:
Physical Resources: Tangible assets such as equipment, manufacturing facilities, inventory, and distribution networks. For instance, chip manufacturer Intel relies on semiconductor plants as a key physical resource.
Intellectual Resources: Intangible assets like patents, intellectual property, and partnerships. These resources require investment but drive innovation and growth. Companies like Microsoft and Adobe have built brand equity through years of software research and development.
Human Resources: Employee-related assets, especially in industries driven by creativity and diverse knowledge, such as technology and science. Companies like Novartis depend on highly qualified scientists and sales representatives.
Financial Resources: Financial assets like cash, credit, and stock options. These are crucial for viability, especially in industries like banking and insurance where capital adequacy is vital.
Determining Key Resources: Businesses can identify key resources by asking several critical questions:
What resources does the value proposition necessitate? For example, an electric vehicle company needs access to raw materials, patents, and battery technology IP.
What activities support the value proposition? Some companies work backward by evaluating industry peers’ actions to determine their key resources.
This framework has been thought for any type of business model, be it digital or not. It’s a framework to start mind mapping the key components of your business or how it might look as it grows. Here, as usual, what matters is not the framework itself (let’s prevent to fall trap of the Maslow’s Hammer), what matters is to have a framework that enables you to hold the key components of your business in your mind, and execute fast to prevent running the business on too many untested assumptions, especially about what customers really want. Any framework that helps us test fast, it’s welcomed in our business strategy.
An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.
This framework is well suited for all these cases where technology plays a key role in enhancing the value proposition for the users and customers. In short, when the company you’re building, analyzing, or looking at is a tech or platform business model, the template below is perfect for the job.
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distributionmodel (sales and marketingorganizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
This framework is well suited to analyze and understand blockchain-based business models. Here, the underlying blockchain protocol, and the token economics behind it play a key role in aligning incentives and also in creating disincentives for the community of developers, individual contributors, entrepreneurs, and investors that enable the whole business model. The blockchain-based model is similar to a platform-based business model, but with an important twist, decentralization should be the key element enabling both decision-making and how incentives are distributed across the network.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
