BMC Part Seven: Key Activities
(If you’re using the Canvas, you’ll love my free Business Modelling eBook, full of tips for inventing and testing ideas that will change the world)
We’ve made a lot of promises by this point:
“Oh we’ll acquire this many customers”
“We’ll deliver a top quality service”
“Our staff go the extra mile”
“We’re going to keep innovating”
“We’ll have the best possible team and grow quickly”
Yes, they’re all good things. The question is, what needs to get done in a typical week in order to keep the model running?
How will you and your team spend your time?
Manufacturing a product?
Delivering a service?
Managing a network of contractors?
Delivering stock to other stores?
Operating your own sales channels?
Recruiting new team members?
You’ll note that there are a lot of things to be done, and not a lot of space in the Key Activities box. That’s no accident.
David Ogilvy said “Strategy is sacrifice”. Our job as entrepreneurs is to decide which activities we won’t do, in order to really maximise the ones that are most important.
For example, IKEA focus relentlessly on minimising their production costs, and spend almost no time on assembly. This is also critical to the success of their value proposition.
Nespresso spend their time running their own sales channels, and no time growing coffee or manufacturing machines.
Netflix focus on creating original content, not on shipping DVDs to customers like they used to. This has been made possible by increased internet speeds.
Thank You don’t run their own shopfronts, instead partnering with 7-11 and major supermarkets. For Thank You, the most important activities are creating a great brand and developing new product lines that their customers will love. They also don’t manufacture anything themselves, with third parties handling the production of each bottle/box.
Airbnb spend their time coordinating two sides of the market – their renters and their hosts. That means prioritising their customer experience and their advertising, but they don’t maintain or refurbish any property themselves.
The question is, which activities can’t be easily substituted? Every company does some accounting, but accounting isn’t generally a key activity – unless you’re an accounting firm.
The same goes for recruitment, cleaning, advertising and running events. The things to list are the activities that must be done to a 5-star standard in order for your value proposition to be possible.
Four questions for your business
Which activities are most important?
What are we sacrificing in order to prioritise the most important activities?
What activities could be outsourced to a Key Partner?
What activities could we move in-house?
Next, we're looking at our Key Partners...
This is a multi-part series on the Business Model Canvas.
If you’d like to jump straight to a particular section, go to:
Overview: How To Use The Business Model Canvas
Desirability: Customer Segments, Value Proposition, Customer Relationships, Channels
Feasibility: Key Resources, Key Activities, Key Partners
Viability: Cost Structure, Revenue Streams
Then once you've made your first canvas:
Reviewing: After Your First Model, Alarm Bells
Reinventing: Testing, What If?
Improving: Metrics, The Business Model Environment
Extensions: Pitching, Social Impact, Making It Great, What Next?