In this section of the business model canvas building blocks, you’ll learn how to combine your key activities to be unique. Discover what are key activities and how to decide which activities provide the best solution.
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Not every activity in the business delivers value even though it may be important. The key activities section focuses on the tasks that need to be done to deliver the value proposition and achieve the overall purpose of the business.
As Simon Sinek lays out in his book Start with Why, a company needs to define its overall long term value and purpose. Key activities depend on the overall business model of the company, its market, customer segments and value proposition.
When looking at different companies it is often easy to understand the core activities that help to sustain and grow their business model. As an example, when analysing Microsoft it is easy to see that they are in the software business and therefore software development is a core activity. Likewise, a car company like BMW needs to be excellent at engineering and production.
Overall, key activities are those processes, tasks and activities that clients will identify with your product or service. They will ideally be hard to imitate and for competitors to replicate.
When assessing your business through the Key Activities building block it is important to take an overall view of the business and link to other building blocks such as Key Partners. It might be a good choice at times to use Key Partners to do some of the activities rather than your business. As an example, some activities might take need a heavy investment in infrastructure if they were key activities and therefore would ideally be better as partners.
Some of the considerations for key activities are:
If your value proposition is to deliver a high-quality service then a key activity will be the support services you put in place to deliver that promise of value.
If on the other hand you you offered value for money and positioned yourself as no-frills, then you would need to eliminate all activities that were not essential and just focus on those that help to keep costs low. As an example, Aldi has a no-frills retail environment and offers alternatives to branded products.
If you are Apple then design, engineering and branding form the core activities.
Imagine that your core business will be to produce naturally sourced non-leather shoes that are produced from organic materials and you are eco-friendly and carbon neutral. You could sell your shoes through Amazon, on your own website or potentially through retail stores.
If you only sell online then a core activity will be the activities related to online marketing and eCommerce. If you sell through physical stores then you need to have activities related to running stores, training staff…
The key activities that relate to customer relationships involve activities such as sales, marketing and of course customer service. You need to evaluate what are the activities that you need to deliver against the customer relationships you defined earlier. Of course, any activities you define will have associated costs to them.
A consultancy needs to generate customers and therefore requires business development, lead generation activities.
If within your business model you offer subscription services then you need to be able to bill customers on a regular basis and provide the necessary support.
The Value Proposition determines the types of key activities that will be critical to the business. At the early stages of developing a business, it is important to remember that the business model needs to reach a point where it can be tested. In other words, if the value proposition fits the market. If in designing the process too many activities are added to this block it can delay the overall testing of the value proposition and run the risk of the key activities not necessarily all being needed. This is often referred to as bloat.
These are some of the key activities that fit different types of business models:
Production consists of many different activities.
As an example, Fashion companies like Zara have specialized in spotting trends and being able to be first to market with them. This is because they have a highly efficient process for moving from design to production to then merchandising the products in-store.
Here are a few for you to consider as you develop your business model:
Marketing is a core activity for many businesses. In fact, some business outsources production and many other parts of the business leaving sales and marketing as sales and marketing. Some of the activities associated with are:
In the business model three types of activities are highlighted:
These activities are generally a characteristic of manufacturing firms and entail the design, creation and delivery of products. However, with the development of sensors and also digital systems products are becoming entwined with services. Car manufacturers, consumer electronics and drug companies are just a few examples of companies that rely on production as a key activity.
Consultancies, hospitals, wellness clinics, spas and many other service companies typically aim to solve customer problems uniquely. These organizations are characterized by knowledge management, continuous learning and reliance on people with the necessary talent. In the digital era systems are learning to capture knowledge and use it to diagnose problems and present solutions. Though far from perfect this is an ongoing era of development with AI.
Have you noticed how many of the top valued businesses rely on a platform business model? Facebook, Alibaba, eBay and many other billion-dollar companies are platforms. But platforms also offer Software as a Service such as Salesforce.
Essentially, platforms and networks are easy to scale because of low or zero marginal costs.
Auction house D.Art (“platform business”) organises its yearly modern art-painting auction in Zürich. The auction (“infrastructure”) is a well-known event that will help to make the paintings of young talented artists (“producers”) and art collectors (“consumers”) more accessible to each on an as-need basis. Experts (“agents”) are present to advise groups of collectors on relevant artists (“trust”).
As D.Art does not own the paintings, it simply lays out the rules of interactions (“eliminate friction”) to enable the information exchanges (“value creation”) between the artists and collectors followed by compensation through money, goods and/or services, and fees for D.Art (“monetising strategy”).