Business Model Canvas Block #6: Key Resources

Allianse Writer

Key Resources building block lets you create value propositions, reach markets, and maintain customer relationships. More than that, they make it possible for you to generate revenues. Besides value creation, they are also indispensable components of finance, operations, and marketing.

On a Business Model Canvas, Key Resources is the sixth block. It comes after defining Revenue Streams and precedes Key Activities.

Table of Contents

What Are Business Model Key Resources?

Key Resources is one of the building blocks of a business model. It essentially describes the most important assets needed by the business. Without this component, a company cannot create, deliver, and capture value. 

Types of Key Resources

Companies can own, lease, or buy Key Resources from other entities. In general, there are four types:

  • Physical resources

  • Financial resources

  • Intellectual resources

  • Human resources

1. Physical Resouces

Physical resources refer to tangible assets used to create value propositions.

A physical resource, such as a building or manufacturing facility, is capital-intensive. Machines, tools, vehicles, and others needed in some business models are also expensive. But in some cases, a company does not have to own them all. Instead, they can rent, lease, or outsource.

Walmart, for example, has 4,743 stores in the USA and 11,443 stores worldwide. As of 2021, they have 11,847 properties all over the world. Their investment in properties [physical resources], as one can surmise, is quite staggering.

Apple is one of the leading manufacturers in the world. In 2020 alone, they sold more or less 200 million iPhones. But the company does not manufacture its products. Instead of investing heavily in physical (and human) resources, they outsource to one of their key partners – Foxconn.

2. Financial Resources

Businesses need financial resources, such as cash and lines of credit. It may also include the ability to offer employee stock option plans.

Some companies need much more access to funds than others. Financial institutions, as one might surmise, need cash. For example, an insurance company would need enough capital to cover claims.

A company needs to invest in products on some business models to generate sales. One example is the “Bait and Hook” (also called “Razor and Blade”) model used by telecom companies. AT&T or Verizon, for example, may offer cheap or even free mobile phones. While they have to pay for those units, they earn more from paid subscriptions.

At any rate, all companies do need capital. They need to invest in assets that help them create and deliver value. Not only that, but they also have to pay for other expenses – materials, utilities, salaries, and more.

3. Intellectual Resources

Unlike physical resources, intellectual resources are intangible. These include:

  • Brands

  • Intellectual properties

  • Patents and copyrights

  • Proprietary knowledge

  • Partnerships

  • Customer databases

  • Distribution networks

  • Point of sale systems

Usually, it takes many years for companies to develop their intangible resources. But once they do, they can leverage those resources to create and capture value. At the same time, they can also protect their interests.

For many companies, their most precious intellectual resource is brand. Ziploc, Kleenex, Quaker, Dawn, and Lysol, are recognizable brand names. Customers buy these products because of higher levels of brand awareness.

Some companies, meanwhile, protect their trade secrets. In particular, these are businesses that manufacture products like food, beverage, and supplements. They do not divulge the process or formulation used to create their products.

Intellectual property can earn a company substantial licensing fees. Walt Disney, for example, licenses their characters to toy manufacturers for a fee. Companies like Qualcomm also earn from licensing their microchip patents.

4. Human Resources

Among all types of resources, none are as valuable as humans. Yet, they are also often overlooked. Employees help operate and run the business. Not only that, but they also bring value propositions to customers.

Consider FedEx. The infrastructure they build includes warehouse facilities and vehicles. But for these physical resources to matter, they need human resources. They need, among others, truck drivers who deliver goods to customers.

More than regular employees, the most valuable human resources are those highly-skilled ones.

Software companies like Adobe and Microsoft need experts, such as software developers. Pharmaceutical companies need scientists to research and develop new medicines. Financial institutions need expert bankers and analysts.

What makes highly-skilled individuals valuable is their knowledge. Without talented human resources, companies cannot create value propositions nor deliver them.

Types of Businesses and Key Resources

Business models vary. Hence, a key resource needed by one company is not necessarily the same as others. But generally, they fall under these three types of businesses:

  • Product-driven

  • Scope-driven

  • Infrastructure-driven

1. Product-driven Businesses

Companies under this category engage in the creation and sales of products. Startups, in particular, would have unique selling propositions to penetrate a customer segment. Usually, they innovate on design, functionality, or others that give them a competitive edge.

Most of these companies rely on intellectual and human resources. They need employees who possess the knowledge to create the products. Rockstar Games, for example, published the widely popular mobile game Grand Theft Auto. They had to hire game developers, graphics and video artists, and more to create the app.

2. Scope-driven Businesses

The mainstream market is difficult for startups to penetrate. Instead of competing with established brands, some startups target a specific customer segment. After identifying an ideal group, they create a niche value proposition. In this case, the resources they need would be particular to the scope required.

Because people are among their most valued resources, these companies go beyond hiring key employees. They would also allocate funds and conduct training activities to hone knowledge and skills further.

3. Infrastructure-driven Businesses

Some businesses exist to generate income by providing infrastructure. Others may have started with different business models. But because they have the infrastructure, they could leverage by offering new products or services.

Amazon, for instance, started by selling books online. They have since expanded their product categories. Due to the scale of their operations, they have to build an extensive IT infrastructure. In 2006, the company created a new value proposition for businesses by offering cloud computing.

GoDaddy and NameCheap are among the most popular registrars in the world. While they began by offering domain names, they have since leveraged their developed and implemented infrastructure by providing hosting solutions.

Questions About Key Resources You Need to Know

Key Resources is one block you cannot identify without considering other blocks to create a strong business model. One reason is that its purpose is to support the different components.

These are the questions you need to ask when determining the key resources you need:

  • What key resources do you need to create a value proposition for each identified customer segment?

  • What key resources do you require for the marketing and distribution of your products or services?

  • Which key resources do you need to enhance customer relationships?

  • What key resources do you need for each of your revenue streams?

Once you have finished the task of identifying core resources, next up is identifying the key activities for your business model.

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