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.
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 โ 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 โ these are performed to evaluate whether a product meets predetermined standards or specifications.
Product updates โ 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 โ marketing teams tailor marketing messages according to the audience and choice of communication medium.
Events โ marketing teams also organize and run product launches, events, seminars, and exhibitions for prospective clients or customers.
Product development โ marketing also works closely with the product development team, serving as the critical link between unmet consumer needs and product design.
Production
Production capacity โ management must set the production capacity to avoid inventory surpluses and inefficiencies. Capacity is commonly predicted using the break-even analysis.
Production planning โ this involves routing, or the process of identifying the most economical flow of work. Production planning also incorporates process and task scheduling.
Machine maintenance โ 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.
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.
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, itโs 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 โFrequencyโ of interaction with the key customer. As the second dimension, there is the โOwnershipโ 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 companyโs 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.
