Key Partners Business Model Canvas

A key partner can simply be defined as any entity a business needs to rely on to achieve its value proposition. In the Business Model Canvas, the Key Partners section lists external companies, suppliers, or parties an organization does business with to perform key activities and deliver customer value.

Understanding key partners in the Business Model Canvas 

If a corner store sells fresh bread but does not possess the ability to make it, the bakery down the street is one of its key partners.

A relationship between two or more key partners can be classified as:

  1. Strategic alliances – where two non-competitors come to a mutually beneficial arrangement.
  2. Joint-ventures – where key partners have a mutual interest in developing new business in an emerging market or geographical area. Here, each partner must contribute to business inputs.
  3. Co-opetition – a strategic partnership designed to minimize risk, which may be associated with bringing a new product to market or accessing raw materials, among other initiatives. Both parties work toward a common goal.
  4. Buyer-supplier – most key partners engage in buyer-supplier relationships, where one business exchanges money with another for products or services.

Why do key partnerships exist?

In truth, partnerships between companies exist for many reasons. We’ve outlined a few of them below:

  • Optimization and economies of scale – in the majority of cases, a partnership with another company is a financial decision designed to reduce costs. These arrangements occur via the optimization of resources or activities, the outsourcing of certain processes, or the sharing of infrastructure.
  • Risk and uncertainty reduction – amicable partnerships are inherently less risky since each entity tends to prioritize the needs of its partners over non-affiliated businesses. Some organizations also work together to share the risk of bringing a new product to market. When Blu-ray technology was first developed, rival consumer electronics and computing companies pooled their financial and knowledge-based resources to collaborate for mutual benefit.
  • Resource and activities acquisition – if a business requires something that would otherwise involve a significant investment, it can partner with entities that have the necessary technology, processes, or infrastructure already in place. Dutch beer company Heineken partners with new bars by meeting their equipment and décor costs. In return, the bar becomes an exclusive seller of Heineken beer.

Developing sustainable and mutually beneficial key partnerships

In addition to providing financial benefits, key partners need to enter into arrangements that are sustainable for both parties over the long term.

Here is how this might be achieved:

  1. Clarify expectations – before a partnership is agreed upon, the organizations involved should voice and address any major concerns. This helps avoid potentially costly conflicts in the future.
  2. Customer impact – a key partner helps the organization fill a critical gap in its value proposition. However, the partnership should always be evaluated in terms of how it will be construed by various customer segments. Lego and Shell had a strong partnership for over 50 years, but this came to an end when consumers questioned why an oil company with questionable practices was involved with children’s toys.
  3. Selecting and suspending partnerships – some arrangements start well but end up being to the detriment of both partners. To that end, each organization must develop the ability to exit any partnership it deems untenable. 
  4. Correct and sustainable partnership agreements – the terms of any agreement need to be clear, concise and benefit both parties. These agreements can be facilitated by the presence of legal representation.

Key takeaways:

  • In the Business Model Canvas, the Key Partners section lists external companies, suppliers, or parties an organization does business with to perform key activities and deliver customer value.
  • Companies enter into key partnerships for many reasons. These include optimization, economies of scale, risk and uncertainty reduction, and resource or activities acquisition.
  • For each key partner to benefit from a partnership, they should clarify expectations and define agreements in the presence of legal counsel. They must also evaluate the customer impact of such a partnership and terminate any partnership they consider detrimental to success.

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-business-model-framework
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.

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.

business-model-template
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational 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.
Business Model Template - FourWeekMBA

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.

vbde-framework
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.
VBDE Blockchain Business Model Template

Download The VBDE Framework Template Here

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Business Engineering

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Tech Business Model Template

business-model-template
A tech business model is made of four main components: value model (value propositions, missionvision), technological model (R&D management), distribution model (sales and marketing organizational 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.

Web3 Business Model Template

vbde-framework
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.

Asymmetric Business Models

asymmetric-business-models
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.

Business Competition

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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

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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.

Transitional Business Models

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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.

Minimum Viable Audience

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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

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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.

Market Expansion Theory

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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.

Speed-Reversibility

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Asymmetric Betting

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Growth Matrix

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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).

Revenue Streams Matrix

revenue-streams-model-matrix
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 Modeling

revenue-model-patterns
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.

Pricing Strategies

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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.

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