The Key Resources block presents the most important inputs, in other words, all that is essential for the Business Model being designed to work.
It will be these resources that will enable the success of all blocks previously studied. That is, they will enable the company to offer a Value Proposition, create a Relationship with defined Customer Segments, and make a profit through the Revenue Streams and Distribution Channels.
These are the main assets that 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 a bit more?
Types of Key Resources
Key Resources may be physical, financial, intellectual, or human, and the company may choose to purchase, lease, or acquire from partners:
- Physical: it is the tangible inputs and structures that the company needs to create its value proposition, such as buildings, vehicles, machinery, equipment, points of sale, distribution networks, among others.
- Intellectual: intangible assets, which include trademarks, patents, copyrights, proprietary knowledge, databases, etc. These are resources that require a lot of time and work to be developed. But, once completed, they offer substantial value to the organization – just think of the strength that some brands have in the market.
In the last twenty years, companies have realized the importance of intellectual resources, which is evidenced by the increase in the number of patents and registrations, for example.
- 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 the areas of service, science, advertising, or sales.
- Financial: financial resources or guarantees cover cash, credit lines, and stock plan for employees. Some companies will depend more on this type of resource and therefore, this will be the strongest in the organization, which is the case for banks, for example.
Key Resources and Value Propositions
The quality and nature of the key resources of a Business Model will determine how the value proposition will be met. In fact, nothing is a key resource itself until it is serving a particular aspect of its value proposition.
In general, business models separate businesses into three types: product-driven business, scope driven business, and infrastructure driven business. Take a look:
Product Driven Businesses: These focus all their functions on creating and selling a product, which needs to have unique features and a customer segment willing to buy it.
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. This is the case, for example, of 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. It is the case of the telecommunications industry, for example, that will need to make a heavy initial investment in infrastructure, after which it will get the rewards for years with only small investments to keep their systems up to date.
It is also the retail business model, which relies heavily on its established infrastructure to sustain its long-term profitability.
Many entrepreneurs, when assessing what should be the key resources for their business, cannot think strategically. Rather, they end up creating generic features that would be commonplace in any company in the industry in which they are operating.
Instead, it is imperative that you 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 block on which you will 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. And the quality of them will affect their profitability and the profitability of the entire organization.
For example, if the company doubles sales and starts to grow beyond expectations, you will only have the ability and capacity to deal with that situation if you are fully aware of the key resources involved in order to consistently increasing demand. This way, you can tell if your current resources meet the new scenario or there is a need for new investments.
The importance of the study on the Key Resources lies precisely in being prepared for the scenarios that the market presents. Having recognized which resources are directly linked to your Value Proposition and your Customers, then you can move on to the next block of the Business Model to understand what your organization’s Key Activities are.