Business Model Canvas: a tool for defining Business Models (part 8)

In this series I have been explaining the use and importance of the Business Model Canvas, created by Alexander Osterwalder and Yves Pigneur. In this way I have explained how the first six building blocks are analyzed and filled out: customer segments, value proposition, channels, customer relationships, revenue streams and key resources. Also, on the introduction article I mentioned the importance of this tool for entrepreneurs and how important companies have used it in order to redefine their business model.

In this post I will write of the next building block of the tool: key activities. On my last article I mentioned the importance of determining the key resources of our business taking into account the nature of it. However we must also know which are going to be the most important activities, once again taking into account the nature of our business.

 

What are the most important actions a company must take?

The last question is the one we must answer in order to determine the activities our business must perform so that our business model works and we operate correctly. Generally we are going to need more than an activity, but this depends on the complexity of our model.

As we mentioned with the key resources we must think in every activity we require to operate correctly the right-side of our Business Model canvas. In other words we must think what activities we require in order to offer our value proposition to our customers, to reach markets, to establish and preserve relationships with the clients and also to generate revenues. We must also know that in the same way as with the key resources, the key activities we define depends on the nature of our business. For example a company that develops parts for technological devices will need a supply chain management as a key activity while a consultant company in technology – as my company- is not going to need these kind of activities.

 

Categorization of Key Activities

Osterwalder and Pigneur in their book “Business Model Generation” defined three classes in order to categorize the key activities. These classes are:

• Production: are all the activities that area related with design, production or distribution of a product. These kinds of activities are very important in manufacturing firms.
• Problem Solving: are activities that are related to determining new solutions for client’s problems. Here we can mention activities performed by consulting companies and other service organizations.
• Platforms: In this category we can mention activities related to business models that have as a key resource their platform. Examples of this are online stores such as EBay or Amazon. The key activities here are related with the platform management, providing the service and promoting the platform.

 

On the next posts I will describe the last two blocks of the model: Key Partners and Cost structure. Expect them in a few days.

Image taken from Flickr.com