Key Resources

Key Resources are the vital assets a business needs to function and succeed. They are crucial for delivering a company’s value propositions, serving its customers, and sustaining its operations. Key resources can be tangible or intangible, and are often unique to the company’s industry and specific business model.

In the context of the Business Model Canvas (BMC), Key Resources are the essential elements that support the execution of a business model. They are necessary for creating and delivering the value proposition, reaching and maintaining relationships with customer segments, and generating revenue streams.

These resources will enable the success of all BMC blocks previously studied. They will allow the company to offer a Value Proposition, create a Relationship with defined Customer Segments, and profit from Revenue Streams and Distribution Channels.

These are the main assets the company requires to deliver the final product to the customer and are generally different from those used by its competitors. They define, therefore, what kind of materials, equipment, and human resources you will need to bring your value proposition to life. Let’s dig deeper into it all, shall we?

Types of Key Resources

Key Resources may be physical, financial, intellectual, or human, and the company may choose to purchase, lease, or acquire them from partners:

• Physical: The tangible inputs and structures that the company needs to create its value proposition are such things as buildings, vehicles, machinery, equipment, points of sale, and distribution networks;
• Intellectual: intangible assets, which include trademarks, patents, copyrights, proprietary knowledge, databases, etc. These resources require a lot of time and work to be developed. But, once completed, they offer substantial value to the organization — just think of some brands’ strengths in the market. In the last twenty years, companies have realized the importance of intellectual resources, as evidenced by increased patents and registrations;
• Human: People are often the most important — and sometimes the most neglected — resources in an organization, especially in businesses that require extensive knowledge, creativity, or human contact, such as in service, science, advertising, or sales;
• Financial: Financial resources or guarantees cover cash, credit lines, and stock plans for employees. Some companies, such as banks, depend more on this type of resource, which is the strongest in the organization.

Key Resources and Value Propositions

The quality and nature of a Business Model’s key resources will determine how the value proposition will be met. In fact, nothing is a key resource until it serves a particular aspect of the model’s value proposition.

Business models generally separate businesses into three types: product-driven, scope-driven, and infrastructure-driven. Take a look:

Product-Driven Businesses

These businesses focus on creating and selling products with unique features and a willing customer segment. The key resources for these businesses are usually intellectual and human, since organizations need to have intellectual property and expertise in their specific niche.

Scope-Driven Businesses

They are dedicated to offering a value proposition to a particular customer segment. An example is a company that specializes in being the IT provider for all law firms within an area. 

Among the key resources required for such a venture are well-developed intelligence on the target customer segment, an established set of processes, and, in some cases, specialized infrastructure.

Infrastructure-Driven Businesses

Those that achieve their profit through the use of their infrastructure. The telecommunications industry, for example, will need to make a heavy initial investment in infrastructure, after which it will reap the rewards for years with only small investments to keep its systems up to date. The retail business model relies heavily on its established infrastructure to sustain long-term profitability.

Many entrepreneurs cannot think strategically when assessing their business’s key resources. Rather, they create generic features that would be commonplace in any company in the industry in which they operate.

Instead, you must assess each of the key resources available and see which are essential to the success of your business. For example, talented human resources are a necessity for most companies. But should they be the foundation on which you base your entire business?

In addition, Key Resources must be directly proportional to the number and type of key activities your business is involved with. The quality of these resources will affect their profitability and the profitability of the entire organization.

For example, suppose the company doubles sales and grows beyond expectations. You can only deal with that situation if you fully know the key resources involved in consistently increasing demand. This way, you can determine whether your current resources meet the new scenario or if new investments are needed.

The Key Resources study is vital because it prepares you for the market’s scenarios. Once you recognize which resources are directly linked to your Value Propositions and your Customers, you can move on to the next block of the Business Model to understand your organization’s Key Activities.