8.8 Key Resources

Key Resources is the building block describing the most important assets needed to make a business model work. Every business model requires them, and it is only through them that companies generate Value Propositions and Revenues.

Key resources can be physical, financial, intellectual, or human. A microchip manufacturer needs capital-intensive production facilities, whereas a microchip designer depends more on human resources. Key resources can be owned or leased by the company, or acquired from key partners.

Key Resources can be categorized as follows:

Physical

Physical assets such as manufacturing facilities, buildings, vehicles, machines, systems, point-of-sales systems, and distribution networks come into this category. Large retailers like Wal-Mart and Amazon.com rely heavily on physical resources, which are often capital-intensive.

Intellectual

Under intellectual resources come brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases. All are increasingly important components of a strong business model. Intellectual resources take time to engender and develop. Consumer goods companies like Nike and Sony rely heavily on their brands. Microsoft and Adobe depend on software and related intellectual property that is continually being developed. Qualcomm, a supplier of chipsets for broadband mobile devices, built its business model around patented microchip designs that now earn the company substantial licensing fees.

Human

All enterprises need human resources, but those resources are particularly prominent in knowledge-intensive and creative industries. A pharmaceutical company relied heavily on human resources: its skilled scientists and aggressive sales force.

Financial

Some business models depend especially heavily on financial resources and/or guarantees: as cash, lines of credit, or a stock option pool for hiring key employees. Ericsson, the telecom manufacturer, will opt to borrow funds from banks and capital markets, for example, using those funds to provide vendor financing that in turn ensures orders are placed with Ericsson rather than with the competition.

Relevant Case Studies

Google used customer data collected from search engines and its Analytics program to develop its Ad service.

SIS Datenverarbeitung employed its programming expertise to re-engineer an ERP system.

GlaxoSmithKline monetized unused internal assets as a patents pool on neglected tropical diseases.

Amazon developed sophisticated technology which it then offered in cloud services.

Skype employed largely free resources to undercut telecom prices.

EasyDiagnosis employed its medical knowledge to create an online medical diagnosis expert system.

Aurora Health Care analyzed its medical records with business intelligence systems to offer a superior service.

Questions

1. What are key resources?
2. Name the four types of key resources.
3. Briefly describe three case studies illustrating the importance of key resources.
4. What happens when key resources are not properly matched?
5. What key resources are used in selling content?

Sources and Further Reading

1. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. by Alexander Osterwalder and Yves Pigneur. Wiley 2010.