According to the Business Model Canvas, the Key Activities building block details any activities the business is engaged in to make a profit. Key activities comprise any business actions directly or indirectly carried out with the intention of making a profit. These activities usually encompass marketing, operations, production, administration, problem-solving, and customer management.
Contents
Understanding key activities in the Business Model Canvas
When an organization defines its key activities, it should focus on the actions which strengthen its business model. Specifically, the actions that:
- Help the organization deliver its value proposition.
- Enable the organization to reach established customer segments.
- Maintain key customer relationships, and
- Create and sustain long-term revenue streams.
The exact mix of key activities will vary according to the industry or business. For Microsoft, its key activities revolve around software development. For Dell, supply chain management and customer relationship activities are more critical.
Common key activities
Key activities represent the link between value proposition and the needs of the customer segment. To understand how this link is created, consider some typical activities arranged by organizational department.
Research and development
- Product research – the research phase explores possible product designs and their associated costs and development timeframe. Research into the existing market also provides insight into whether that market is viable to enter.
- Quality checks – these are performed to evaluate whether a product meets predetermined standards or specifications.
- Product updates – innovative companies frequently update their products to maintain a competitive edge. In some cases, the presence of a new market entrant may also facilitate an update.
Marketing
- Communication – marketing teams tailor marketing messages according to the audience and choice of communication medium.
- Events – marketing teams also organize and run product launches, events, seminars, and exhibitions for prospective clients or customers.
- Product development – marketing also works closely with the product development team, serving as the critical link between unmet consumer needs and product design.
Production
- Production capacity – management must set the production capacity to avoid inventory surpluses and inefficiencies. Capacity is commonly predicted using the break-even analysis.
- Production planning – this involves routing, or the process of identifying the most economical flow of work. Production planning also incorporates process and task scheduling.
- Machine maintenance – machines used in operations must be maintained in good working order to maximize process efficiency and minimize potential injury risk to employees.
Determining key activities
What constitutes a key activity, exactly? Consider the following questions.
Does the business make or produce something?
For a business that produces something, the key activities are those that help it acquire raw materials and transform them into finished products that can be distributed to customers.
For example, SpaceX has a focus on acquiring the materials necessary to design, build, and retain reusable rockets.
What key activities are associated with the value proposition?
As we touched on earlier, these are non-negotiable activities that help develop or maintain a competitive advantage.
Small and relatively simple businesses will list actual tasks and processes as their key activities. For large enterprises consisting of many different companies, key activities are described with more abstraction.
What does the business have to do daily?
Listing the tasks performed daily is a good way to separate key activities from less important activities.
Restocking supermarket shelves is a key activity for a large retailer because shoppers expect to find items in stock.
Is the business based around solving customer problems?
Most organizations exist to solve customer problems, but some are built around this endeavor.
Lawyers, for example, engage in client consultation and case law review. But since this is something all lawyers do, key activities are any which give the lawyer a competitive advantage. Perhaps they become an expert in criminal law or develop a system to increase efficiency and reduce legal costs for the client.
Problem-solving business models tend to be knowledge-intensive. How this information is synthesized to better solve customer problems will determine the business’s key activities.
Key takeaways:
- According to the Business Model Canvas, the Key Activities building block details any activities the business is engaged in to make a profit. Ultimately, they should help the organization deliver its value proposition, enable it to reach customer segments, maintain customer relationships, and sustain long-term revenue streams.
- Key activities represent the link between value proposition and the needs of the customer segment. They are present in organizational departments such as marketing, production, and research and development.
- Key activities are perhaps easiest to define in companies that create products or are built around solving customer problems. Other companies may find evaluating their value proposition or what they do daily to be a more helpful approach.
Alternatives to the Business Model Canvas
FourWeekMBA Squared Triangle Business Model
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.
FourWeekMBA VTDF Framework For Tech Business Models
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.
Download The VTDF Framework Template Here
FourWeekMBA VBDE Framework For Blockchain Business Models
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.
Download The VBDE Framework Template Here
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