Okay, we mentioned key activities in talking about the left-hand side of the business model. I want to say a little bit more about key activities and talk about it in the context of the kind of business your starting and what kinds of activities are important to that business. It may be that you have key activities that you want to focus on in production. If you're like Apple Computer and you want to design a compelling gizmo that everybody in the world wants, you better be awfully good at product vision. This is a core competence of Apple, it's a key activity, it engages a lot of their cycles, uses a lot of their costs, and they're great at it. Can you build it cost effectively? That's a supply chain issue, how's your supply chain? Can you master the supply chain? Apple is a great example of that. Another company that's not so great at product vision perhaps but great at supply chain, is Dell. Dell knows how to shave every quarter of a cent. Out of the supply chain, and get the best price and the most timely delivery for everything that they build. Do you have to be that good to deliver the value that you at that. That's your supply chain. Fulfillment, how do you present your product or service to customers? How do you merchandise it? How do you get it to them? How do you get it back from them? That's all about fulfillment. A great master of this, though it's an old company, is Procter & Gamble. Procter & Gamble is sort of the master of, they talk about the first Product experience, I think it's called, where you meet the product on the shell. And they want that to be a wow experience and they're experts at producing that. Do you need to do that for your business? That might be a key activity for you in terms of production, and finally, quality. It may be the quality, quality is important to everyone, but it may be that quality is sort of the key value proposition that you're offering to your customers. A company like Toyota, that's sort of their key value proposition. So insuring and quality is a key activity for Toyota. They spend a lot of energy on it. They invented the quality movement. Or they reinvented it, they took it from a US guy, Edward Demming, and gave it back to us in terms of really very high quality products until recently. They kind of wrote the book on that. You need to do that in order to do your business effectively. In problem solving there's some potential kinds of key activities that's worth thinking a little bit about. Ideation is a great example. How do you come up with great ideas? Lots of people want to come up with great ideas but there are very few organizations that are systematically good at doing so. Ideo the design shop out of Silicon Valley's probably a good example of institutionalizing Ideation. They've got it wired into their culture, they got it wired into their processes. They just know how to do it. Knowledge Management another problem-solving activity. How do you promulgate best practices? So let's say there's someone who's really great at understanding strategy for manufacturing businesses. How do you get other people in the organization to share their knowledge? McKinsey's probably a great example of this. McKinsey understands very well how to promulgate knowledge, how to make sure that the experts share it properly and make sure there's a kind of level set that the best practices get out to everyone. Continuous training, interesting example. How do you make sure that your organization delivers lifelong learning? AAMC, the American Association of Medical Colleges, is a great example of this. They've given a lot of thought to how to get doctors to not stop learning when they leave medical school. To go from continuing medical education to maintenance of certification, they thought through this, they've made it a key activity of theirs. And they're very successful at it. Agile development, a very trendy one, especially if you're making software. But any business has to worry about agile development. How do you make something that's fast and good? Facebook is a recent example of a company that's gotten pretty good at this. Their motto is, break it fast and they don't mean that you should break it often, but they mean that if something's going to break or something's going to fail, find out about it quickly, and correct it. So, they stay in motion, they're agile, and they fix as they go. Some people talk about this as changing the landing gear while the plane is coming down to land. If you're good at that you're good at the key activity of agile development. There's even platform/network that have key activities. If you're setting up a platform business where everyone's going to receive some capability from you and you're going to build a big network of people that use that capability you need skills and platform management in customer satisfaction and in platform innovation. Platform management is keeping the platform running. How's your uptime, how's the reliability of your network? I gotta tell you, I think the gold standard here is still Bell Telephone. Before the breakup of all the Baby Bells, that was a network that just didn't break. You could pick up the phone, you're sure you'd have dial tone, which is almost an ancient concept anyhow. They made it a key activity, and they were great at it. Customer satisfaction is maximizing the lifetime value and also the net promoter score and minimizing churn. Net promoter score I think we've talked about is the percentage of people who recommend your product highly to other people, that's the net promoter score. Their site helps you measure this online, it's a good thing to know about in your business. But in any, case if customer satisfaction is important to you, you better make this a key activity. A great example of this is Zappos. Zappos through through their whole sales model, their whole deliver model, their whole business model in a way to maximize customer satisfaction, and they have some extremely satisfied customers. To the point where they will take free returns whenever, they don't care that they're good at it. And then finally, there's platform innovation. Though was great at platform management, they were not so great at platform innovation. And the ability to run your platform reliably, keep customers satisfied, while introducing new cool stuff all the time. Is a key activity of platform network. Probably a good example, here's Amazon web services. They are constantly bringing in new web services to give to people starting out with simplified storage and now they have, I think, a catalog of 20 or 30 different services that you can buy. And they're constantly innovating and constantly running what they got. How do you discover what the key activities are? Well get out of the building. But the key activities are driven by all the other elements of the Business Model Canvas. So when you have a Product-Market fit, you're a long ways toward understanding what key activities you're going to have to engage in. If your product is something that's going to build a platform of satisfied users across the web using a new kind of social network, then you're interested in the platform activities and you're interested in the ideation activity. If your product is a new fitness band that's going to be cheap and great, then you need to measure supply chain, you need to master product vision, etc. The activities are driven by the elements in the business model canvass, and you gotta look at some examples to see how people play this. Apple sort of took a look at. The existing MP3 player ecosystem at the time they were making the iPod. And they said to themselves you know, what people really want here is not just the player, they want an end to end system for getting songs. And so they said a key activity here has to be the store. Where people buy it. The downloading process. The network, by which, people tell each other, what's good. All of the above. It's not just the player. And they built, of course, a very successful business on that. Another example is Southwest Air. Southwest Air, sort of, took a look at all the other airlines and said, you know, the thing that these airlines don't deliver is timely service for cheap. There's all kinds of things that most of the other airlines basically build their business model around pleasing their most frequent travelers. Southwest said let's make sure we can do. Profitable air travel for everyone at low cost and that's what they're focused on and their whole model's built around that's why they fly only one kind of aircraft, it's why they have the simple boarding scheme, they don't have assigned seats. All the stuff they do is geared toward the idea of having a value airline, and that's where their key activities come from. So the main takeaways here are the different business models have different key activities. We have talked about a few of them. You need one or two activities where you are best or you're not going to have a successful business. You can't do everything at once and you find out about it by building a business model that's geared toward the needs of your customer thanks.
