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Our business model has a certain set of tasks that we must carry out and other organizations that we must work with to ensure our customers are happy. In this video, let's take a look at the role Key Activities and Key Partners play in our business model.
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[Pasan Premaratne] Aside from key resources, we have 2 other sections that look at the entirety of our business model
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and that's key activities and key partners
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where key resources are all the assets we needed for our business model.
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Key activities are all the important activities we must undertake as a business to ensure success.
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Like key resources, this is dependent on all other areas of the business model.
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So, again, we walk through each section and determine the key activity relevant.
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To use our previous example, if our company builds a web app, then software development is a key activity.
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Key activities are usually grouped under production, problem solving, or platform activities.
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Companies that manufacture and produce hardware or physical products, usually have production as its key activity.
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Consultants, hospitals, and some types of service organizations undertake problem solving activities.
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Networks, brands, and software are the kinds of products or services that fall under a platform category.
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Once you highlight your key activity, you can start to flash out the little details.
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Link each key activity to the resources required.
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Determine what resources you need to dedicate towards making these key activities a reality.
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Now, when you run a business, you won't be doing everything yourself.
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You can try but that's not a good idea--There are other companies out there that can do some of the tasks better than you
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and that's what we're going to focus on in our next section, Key partners.
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A key partners are the network of suppliers and partners that make your business model a reality.
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There are many reasons to work with partners. They reduce risks and lower the cost of carrying out a certain activity
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but it also means we're dependent on them for certain parts of our model.
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When exploring the business model, we should take a look at each activity and decide whether we can serve our customer
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segments better by undertaking the activity ourselves or whether it makes more sense to work with a partner.
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These are important questions to consider. Are there any key suppliers that our business model depends on?
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What resources that are key to our business model is acquired from a partner
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and what key activities are undertaken by a partner.
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Continuing with our web app example, I'm not going to buy server racks and host this app myself.
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It would make much more sense to just pay Amazon to manage the servers for me.
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In this way, I can undertake a key activity hosting my app at a much lower cost than if I do it myself.
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But, that also means I'm dependent on Amazon and have to be worried of downtime and issues on their end.
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Working with partners reduces the burden of managing that aspect of your business
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but it introduces risks and factors outside your control.
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If you're a hardware company that buys your raw materials from suppliers, you open up yourself to the risk of price changes.
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But, this far outweighs the cost of harvesting the wrong materials yourself.
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When going through your list of activities, consider which activities are better served by partners.
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You need one to undertake all the crucial activities that define your product or service yourself
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where you can easily form out some of your other activities to partners to lower costs and deliver a better and user experience.
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But, at the same time, carefully consider the risks that opens you up to.
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