Within the Business Model Canvas, the Key Resources Building Block plays an important role in understanding what we have available to fuel our innovation, as well as understanding where a key resource is missing.
What are Key Resources?
Identify and list your Key Resources, which can be categorized into physical, financial, intellectual property, and unique people skillsets. Particularly focus on the core and differentiating strengths or capabilities that you may be able to leverage.
Every business model succeeds or fails on how key resources are found and used. In short, we can use our Key Resources to build our value proposition by best utilizing our talented human resources and other assets.
Different Types of Key Resources
Every model template includes Key Resources. Key Resources can look differently depending on the focus of each specific template, to make conceptualizing your Key Resources easier, however, we usually think about them as falling into one of four categories.
The types of Key Resources include Human, Financial, Physical, and Intellectual. They are each outlined below.
These are your people. Someone has to enact innovation. Ultimately, your human resources do the work of transformation. You’ll need to ensure that your workforce has the skills necessary to move the business forward. Don’t ignore your key partners at this stage; outside organizations may have human resources that you can use with only minor investments.
As you complete a Business Model Canvas, you reflect on the people you’ll ask to do your work. Simply, do you have the bodies in place necessary to put your innovation plans in motion?
Managers can influence the performance of their human resources in a number of ways. An incentive system rewards performance, though it can be controversial in how they’re applied, be sure to completely think through the incentives you offer, and how employees can obtain them because a poorly-applied incentive system can ruin morale and negatively impact performance.
Human resources can also be influenced through organizational schemes. Innovation teams, specifically formed, can have a tremendous effect on the direction a company takes. Other types of organizational designs can funnel talent toward specific tasks or challenges. Good managers know how to best leverage the human resources they have, encouraging the creativity and insight it takes to be truly innovative, they also recognize when an organization would benefit from hiring key employees who will help plans move forward productively.
The numbers are the numbers. The funds you have available, either on hand or at reasonable interest, are your Financial Resources.
When considering your Financial Resources, don’t neglect your access to capital markets. Can you borrow funds? Does it make sense to go into debt? Properly applying credit might give you the opportunity to begin innovation that promotes lasting growth.
These are your tangible resources, including capital-intensive production facilities, materials, supplies, property, and equipment. Maybe you have storage areas full of raw materials, or pallets loaded with products. Or maybe you have a point of sales system shared across distribution networks. Consumer goods companies are likely to have vast physical resources, while creative industries might rely heavily on their human resources and less on manufacturing facilities or warehouses.
Infrastructure-driven businesses are likely to have materials other businesses lack by the time they’re considering innovation. While that sort of investment can be a signal of a successful business model, it can also have the effect of paralyzing management decisions. “We have all this stuff,” decision-makers think, “and so much capital wrapped up in it, all our solutions have to justify those prior purchases.”
Clearly, that’s not a path toward innovation. It takes a brave visionary to change directions sometimes. Your physical resources don’t have functional value if they are holding you back.
This is a good place to consider some common intangible resources, also. Software, for example, would often not be thought of as a “physical resource” but purchased computer applications in the business world behave like material objects more than truly intangible resources. Related intellectual property often behaves more like a physical resource than an intangible one. Potentially substantial licensing fees for software and other technology must also be evaluated to see if it works in your business model to add value.
Your business is smart, and within its material and its people rests a vast collection of proprietary knowledge acquired through years of hard work and investment. How can you leverage what you know? In other words, what are your Intellectual Resources?
Your business model no doubt relies on what your human resources know. It’s important, then, to have a clear view of the members of your organization’s specialties, education, and experience. They are potentially untapped key resources that can add to your value proposition.
Knowledge management must be part of your overall innovation strategy. Your customer databases must be properly protected and utilized. What kind of information do you keep in those customer databases, and are you properly taking advantage of what you know about your customers? Are you similarly tracking other key partners so you can work with them in the most productive ways?
You should also consider how you’re developing your Intellectual Resources. Many successful business enterprises install a corporate university to educate and train their human resources in-house. That’s a cost-effective way of growing from within that isn’t necessarily capital intensive.
The Link Between Key Resources and The Value Proposition
Your Key Resources make your business what it is: only you have that particular collection of people, customer knowledge, and key abilities. Taken together, they encircle how you build your value propositions and conduct your key activities.
Key Resources play an important role in expanding business and value, and so are a big element of The UNITE Exponential Growth Canvas. Consider each particular customer segment and connect them to their most important key resource. You’ll have a better understanding of what is really important within your business model.
Identifying Your Key Resources
Building a strong business model requires attention to all available resources. We find it useful to brainstorm lists of resources with a variety of team members. Human resources employees will recognize opportunities that a warehouse employee won’t know about, but the warehouse worker will be really smart about logistical matters. Your IT specialist has insights into your telecommunications infrastructure while your accountant can identify vendor financing opportunities. Each resource mentioned by your team is analyzed and evaluated for its importance in your overall value proposition.
Reflect on the key resources listed in your brainstorming. How do they contribute to your overall business model, and what is missing? Innovation isn’t just a dream; most businesses can identify increasingly important components to their growth efforts as their plans progress.