6.

Key Resources
 Key Resources
• What infrastructure and resources do you need to deliver
what you promise?
• Examples:
– Physical:
• tools, space, locations
• equipment (lease or buy)
• supplies (component, assemblies)
– Intellectual
• licenses, intellectual property (patents, copyrights, data)
– Human
• personnel (qualified, in-house or sub)
• Mentors, coaches, teachers
– Financial
7. Key Activities
 Key Activities
• What major activities (deliverables) must be
produced to deliver your value proposition,
when and by who?
– Dependencies
– Responsibilities
• Categories: Production, Problem-solving, etc
8. Key Partners
 Key Partners
• Partners
– Suppliers
– Developers
– Distributors
– Investors
– Collaborators
– Affiliates
• Competitors
• Alternatives

How does each partner help or hinder the business model?

• Motivations for partnerships:
– Optimization and economy (shared economics)
– Reduction of risk and uncertainty (mutual success
and failure)
– Acquisition of particular resources and activities (co-
invention, co-development, common customers)
• Risks with partnerships:
– Timing mismatch
– No clear ownership of customer
– Product vision problems
– Different underlying objectives
– Churn in partners strategy/personnel
– IP issues
9. Cost Structure
 Cost Structure
• What are the critical elements of the costs in your
business model?
– Fixed costs
– Variable costs
– Resource, activity, partner costs
– Infrastructure, operational, cost of sales
– Payroll costs, benefits, bonus structure, taxes
– What are the costs of each element of the business
model?
– Where are the economies of scale?
– What are the risks, the unknowns?
 Cost Structure
• What are the most expensive Key Resources?
• What are the most expensive Key Activities?
• Is your business more:
– Cost-driven (lean cost structure, low pricing value
proposition, maximum automation, extensive
outsourcing)
– Value-driven (focused on value-creation; premium
value proposition)
Business Model Canvas
 Additionally…
• Profit
– Are the revenue streams superseding the costs?
– Does the nature of cost structure match the revenue types?
– Can initial investment be paid back within acceptable time frame?

• Growth
– Is there growth potential in the business mode?
– How shall growth be achieved? (organic; mergers and acquisitions)
– What are the capital requirements for growth?
– How shall capital be raised?
– What’s the exit strategy?
Business Model Canvas visually shows
the following…

You sell your value proposition…

To a customer segment…
Who you reach through some channel…
You have an ongoing relationship to create
retention and lock-in (and growth)…
= That’s how you make money!
Business Model Canvas visually shows
the following…

To create the value proposition, you do certain

key activities…
Using your key resources…
Which costs you money
Anything you don’t do or have yourself, you get
from a partner
 The 4 Disrupts
• Offer (What)
– New products/services that did not exist up to now (invention)
• Process (How)
– New products or methods hat allow the offer to be produced
faster, cheaper, more durable, better quality (production)
• Market (Who)
– Opening a new market segment poorly served up till now, by
making minor modifications to one’s product or service
(marketing)
• Value (Why)
– Meeting a need that is valued by an existing market, but not
satisfactorily met by competing offers, and doing it better than the
competition (positioning)
 Validating the Canvas
• Everything you put on your canvas is a
hypothesis
• You must validate every element through
– Discovery (your own data)
– Research (other people’s data)
– Testing (simulation, MVP)
 To summarize…
• The Business Model Canvas is a visual
representation of the various elements of your
Business Model.
• It allows you to:
– See the relationship among the parts of your model
– Identify hypothesis, assumptions and risks
– Plan validation testing (market, channels, pricing)
– Find ways to add value and reduce cost
– Brainstorm market disruption strategies
 Internet Business Models
• Business to Business • Selling to commercial organizations
(B2B) directly
• Business to Customer • Selling to final users and consumers
(B2C) directly
• Business to Business • Selling to commercial organizations
to Customer (B2B2C) and then selling through directly to
final users and consumers
• Selling to a very specific customer
• Niches (vertical or
segment (vertically through the
horizontal)
supply chain) or selling a very
specific set of products (horizontally
to a variety of customers)
 Internet Business Models
• Clicks and Bricks • Selling through both the Internet and
traditional business location with a physical
presence
• Roll-ups • Buying many smaller firms using the same
business model (usually in fragmented
industries) and then achieving economies of
scale or scope
• Advertising Models• Selling advertising in a media (cyberspace,
newspapers, magazines, etc.) and giving
away the content
• Pay-for-content • Selling the content through information
rules type strategies
• Selling products on a second-party Web site
• Affiliate Models for a fee. Enables the affiliate to piggyback
on a more famous Websites like Amazon or
eBay
• Mash-ups • Selling a Web-based application that mixes
data from different online sources