Business Model Canvas: What are your Key Resources?
In our last post, we discussed the Revenue Streams portion of a Business Model Canvas. The Business Model Canvas allows you to describe and think through the business model of your small business, your competitors, or any other company. This concept has been applied and tested around the world and used in large organizations, as well as hundreds of thousands of small businesses.
Today, let’s talk about Key Resources.
What are Key Resources in the Business Model Canvas?
The Key Resources Building Block of the Business Model Canvas describes the most important assets required to make a business model work.
Every business model requires Key Resources. They allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Different Key Resources are needed depending on the type of business model. A microchip manufacturer requires capital-intensive production facilities, whereas a microchip designer focuses more on human resources.
Key resources can be physical, financial, intellectual, or human. Key resources can be owned or leased by the company or acquired from key partners.
Ask yourself these questions:
- What Key Resources do our Value Propositions require?
- Our Distribution Channels?
- Customer Relationships?
- Revenue Streams?
The different types of Key Resources
Key Resources can be categorized as follows:
Physical
This category includes physical assets such as manufacturing facilities, buildings, vehicles, machines, systems, point-of-sales systems, and distribution networks. Large retailers rely heavily on physical resources, which are often capital-intensive. Some have an enormous network of stores and related logistics infrastructure. Others have an extensive IT, warehouse, and logistics infrastructure.
Intellectual
Intellectual resources such as brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases are increasingly important components of a strong business model. Intellectual resources are difficult to develop but when successfully created, they offer substantial value. Consumer goods companies like Nike and Sony rely heavily on
brand as a Key Resource. Microsoft and SAP depend on software and related intellectual property developed over many years. Qualcomm, a designer and supplier of chipsets for broadband mobile devices, built its business model around patented microchip designs that earn the company substantial licensing fees.
Human
Every enterprise requires human resources, but people are particularly prominent in certain business models. For example, human resources are crucial in knowledge-intensive and creative industries. A pharmaceutical company, for example, relies heavily on human resources. Its business model is predicated on an army of experienced scientists and a large and skilled sales force.
Financial
Some business models call for financial resources and/or financial guarantees, such as cash, lines of credit, or a stock option pool for hiring key employees. Ericsson, the telecom manufacturer, provides an example of financial resource leverage within a business model. Ericsson may opt to borrow funds from banks and capital markets, then use a portion of the proceeds to provide vendor financing to equipment customers, thus ensuring that orders are placed with Ericsson rather than competitors.