Key Resources
A Key Resource is one that drives business performance over time—it’s strategic relative to the business model being pursued. Key Resources are essential for delivering on the promise of your value proposition.
Resources are accumulations or levels. Access to resources—either directly through ownership or indirectly through a partner—enable you to do something. Resources come in a variety of forms:
- Physical resources include inventory, real estate, productive capacity, and other assets that might be reflected on your balance sheet.
- Intellectual resources such as patents, trademarks, and trade secrets give you preferred or exclusive rights to do something (e.g. manufacture Coca-Cola®).
- Human resources include skills, morale, motivation, and adaptability.
- Financial resources include, for example, a bank’s deposits that enable the bank to make loans.
We view the number of active clients or customers as a universal resource for businesses. You don’t own them, but you must have access to customers to engage in the act of selling.
When asked what they need, it’s not uncommon to hear a business person respond, “I need capital.” It’s an honest and often true answer, but it’s not very helpful. What would they buy with the money? Would they invest in inventory, employee hiring, and training, a new point-of-sale system? Cash is useful because it can be readily converted into something else. It’s the “something else” that we’re focused on here.
- Web design and digital marketing skills are probably Key Resources for an e-commerce store.
- Specialized construction tools and equipment are Key Resources for a contractor.
- Regulatory compliance software might be a Key Resource for a financial advisor.
- Trained and experienced employees might be a Key Resource for a retail store that emphasizes a high degree of personal service.
- Vehicles and reliable, detail-oriented employees might be essential for a home concierge company.
Key Activities
There are only two ways to increase the level of a Key Resource:
- You must increase the rate of accumulation—the inflow, or
- You must decrease the rate of depletion—the outflow.
For example, if the growth of your restaurant is dependent on having sufficient employees, you must hire more people per time period (increase the inflow) and/or you must slow the rate of outflow—that is, reduce your employee churn rate measured in people per time period.
Key Activities are those actions that influence the level of a Key Resource over time. For example, consider a fly fishing guide:
- Having preferred access to selected spring creeks might be a Key Resource.
- Associated Key Activities might include identifying “undiscovered” creeks and cultivating relationships with landowners.
Connecting Key Resources and Key Activities
Key Resources and Key Activities are inextricably linked. The level of a Key Resource over time—by definition—is determined by Key Activities. So, if you’ve identified a resource that you believe is essential to delivering on the promise of your value proposition, ask, “What are the Key Activities that drive the level of this resource over time.” Conversely, if you believe an activity to be crucially important, ask, “What Key Resource does this activity influence?”
These questions sound simple—pedantic, even. Even so, it’s surprising how often we ignore these inter-relationships. By slowing down and thinking about them, we can cut through the clutter and prioritize our business-building efforts.
Key Ideas
- A resource is an accumulation or level.
- A resource can be physical, intellectual, human, or financial.
- A Key Resource is one that drives business performance over time—it’s strategic.
- A Key Activity drives the level of a Key Resource.
- For every Key Resource, ask, “What are the Key Activities that drive the level of this resource?”
- For every Key Activity, ask, “What Key Resource does this activity influence?”
- Prioritize Key Activities.
