Understand Your Activities
Just like we did in the previous section with the customer segments and value proposition, we will now work through the rest of the BMC in more detail and complete it for The Founders Reading Guild together.
In the first two, we’ll look at describing how the business will work “behind the scenes” – the two main operational components that make the value proposition a reality.
You want to list all the vital ingredients and critical processes enabling your business to exist. It needs to start with a clear idea of what you must do to get this business going and run it. In other words, what is operationally involved in the process? For this, you must consider the key resources and key activities.
We’ll start with what you need to do: your key activities.
It might include the processes and tasks you must complete to serve customers.
For example, if you were to go on vacation, what would your replacement need to do for things to continue to run smoothly for your customers?
These might include sales calls, workshop delivery, meal preparation, or writing reports.
In particular, these are the activities that you do particularly well. So, you might not include the more mundane tasks like payroll. In other words, key activities might be processes or tasks fundamental to delivering your value as a business.
Your key activities will change depending on the type of business you operate. For example, research & development and dealership management will be key activities if you are a car manufacturer. However, if you are a retailer, store management and stock control are key activities.
Let’s look at our fledgling business, The Founders Reading Guild, and ask some questions about key activities that could help us complete it.
Your Turn! Look at The Founders Reading Guild Activities
Later in this chapter, you will have the opportunity to update the BMC for The Founders Reading Guild, but you probably need some helpful guiding questions.
So, let’s reflect on what The Founders Reading Guild needs to do to deliver on its value proposition for its customers. The following questions will help you:
What activities will we need to complete to deliver on our value proposition?
What will we do to ensure our customer segment is aware of (and interested in) purchasing/subscribing to our product?
What activities will we have to carry out to maintain our customer relationships?
What activities will be required to generate revenue streams?
Will we need partners: will there be any activities associated with managing them?
✅ How did you answer those questions? Let’s see if you agree with some of our ideas on this topic. You can find my answers here.
How did we compare? It’s important to remember that this is an iterative process. As you complete the BMC, you may discover new factors you wouldn’t have thought about before.
Recognizing these key activities early in the process helps identify the work that needs to be done. Here, you might identify specific things that are unique, valuable, or protectable in your business model. In our example, we may need to develop an algorithm to help with book recommendations. This would be something that would be valuable intellectual property. Of course, we would need to secure our IP on the algorithm, and doing so would add value to our business. It could potentially create a more positive experience (because of the accuracy of the model) and give us a competitive advantage (because any competitors would not have access to our algorithm).
Once you’ve identified what to do, you must consider the necessary resources to support these activities. These are the assets that are essential for your business model to work. You can’t do these activities without them. So, let’s look at key resources next.
Complete the Key Resources
As mentioned earlier, you can’t complete these activities without the essential resources that many of them will require, so you must think about what’s involved in the activities - how you do it - to identify the required key resources.
Strategyzer suggests thinking about key resources as being from four types of resources:
1. Physical Resources
Physical assets fall under this category and include things like distribution networks, point-of-sale systems, cars, buildings, and manufacturing facilities. If you’re manufacturing a product, you will need the constituent parts of those items. That could include either raw materials or components that have already been built by someone else.
2. Intellectual Property
Intellectual property assets include brands, confidential information, patents, copyrights, collaborations, and customer databases. They are becoming more and more crucial parts of a successful business strategy.
We discussed a proprietary algorithm in the previous section, which would be considered an intellectual property asset.
3. Financial Resources
Some business models demand financial resources or investments, such as cash, credit lines, or a pool of stock options for employing essential personnel. For example, suppose your business needs significant capital investment upfront (i.e., to build a warehouse and fill it with specific machinery). In that case, you will need to be able to access those funds early in your lifecycle. Some businesses might have to wait a long time to see a return on their investment, so they need financial capital to continue to operate.
4. Human Resources
Every business needs human resources, but specific business models emphasize people more than others. For instance, human resources are essential in creative and knowledge-intensive enterprises. A consulting business, law firm, or ad agency will rely enormously on the expertise or creativity of its human resources to provide value for its clients.
Your Turn! Identify Key Resources for Our Book Subscription Business
So, let’s return to our book subscription business. You’ll complete the BMC for key activities and key resources in a short while, but first, let’s reflect on what the key resources would be for The Founders Reading Guild. Here are some useful questions to help formulate your thoughts on this:
What key resources do our value propositions require?
What are our distribution channels?
How will we manage our customer relationships?
What revenue streams do we have, and how can we manage them?
Try it yourself and take some notes. Remembering the value proposition and key activities is a good idea because there is often a relationship between the blocks.
✅ How did it go? I’m sure you came up with some great answers and here you can look at the key resources I identified to compare.
Fill in the Key Activities and Key Resources Blocks
So, we’ve spent some good time thinking about these two critical areas for our business - key activities and key resources. Now it is time to populate these blocks in our BMC. As before, try completing these two fields on the canvas and then compare your work to the downloadable version we completed.
See if you can capture six to eight key activities followed by six to eight key resources for The Founders Reading Guild now.
✅ See how I completed the BMC here.
Let’s Recap!
Key activities are the things your business needs to do to deliver on your value proposition. These might include financial operations, marketing, delivery, manufacturing, research and development, etc.
Key resources are the people, places, machines, patents, and intangible assets your business uses.
Key resources can fall into four main categories: physical, human, financial, and intellectual property.
Key activities and key resources are closely related, so it can be helpful to consider them together.
You will incur costs along the way as you procure, manage, or create key resources and engage in key activities. So let’s look at the next BMC block - Cost Structures.
