4.1.3 Infrastructure area

The infrastructure area is shown in Figure 4.

Figure 4 The infrastructure area of the Business Model Canvas

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There is a heading in the top left-hand corner of the figure which says: ‘The Business Model Canvas’. Figure 4 is also divided up into nine separate blocks. The two blocks at the base of the figure are labelled ‘Cost structure’ (on the left-hand side) and ‘Revenue streams (on the right-hand side). There are two icons, one symbolising a graph next to the ‘Cost structure’ label and a second icon symbolising a bag of money next to the ‘Revenue streams’ label.

Above the ‘Cost Structure’ and ‘Revenue Streams’ blocks, there are seven more blocks. These are labelled (from left-to-right) as ‘Key partners’, ‘Key activities and ‘Key resources’. Each one is symbolised by an icon such as a hand shake for ‘Key partners’, a tick box for ‘Key activities’ and a factory for ‘Key resources’. These three blocks are labelled as ‘Infrastructure’ and shaded in orange.

There is also the ‘Value proposition’ block with a gift icon as its symbol. At the far top right of the Business Model Canvas there is a cluster of three blocks labelled ‘Customer relationships’, ‘Channels’ and ‘Customer segments’. These are symbolised using a heart icon for ‘Customer relationships’, a lorry symbolising ‘Channels’ and a people icon symbolising ‘Customer segments’.

Figure 4 The infrastructure area of the Business Model Canvas

The infrastructure area focuses on three elements needed to deliver the value proposition: resources and capabilities, core activities, and key partners.

• Resources and capabilities

  The resources are assets an organisation can use in its activities. These may include buildings, financial, human resources, customer bases, and partner networks. A capability is an organisation’s ability to use resources. Examples include a capability to develop and maintain partner networks, and a capability of managing customers and their experiences. For instance, the business model infrastructure of a British Media and Telecommunications Conglomerate, Sky Group Limited, benefits from its customer management capability. Today the company has more than 24 million customers, which it manages by researching their preferences, offering subscriptions and developing new products such as Sky TV bundles (e.g. Sky TV and Netflix, Big Screen at Home, Family Fun and Film, and Build Your Own Bundle).

  

• Core activities

  The core activities are key activities performed by the organisation to make the business model work. They depend strictly on the type of business model offered by the organisation. If it is a product business model, some production or operational activities would take place in order to deliver a product or a service. In the case of matchmaking or multi-sided business models, activities are concentrated on running a platform, promoting its diffusion and providing customer service and support to clients. For instance, the core activity in Airbnb, an internet based service offering short-term home rentals, is running a platform linking lodgers and guests.

  

• Key partners

  Key partners are fundamental for every business model. Which activities are delivered by partners? This is a fundamental question that this building block tries to answer. For instance, partners can help in reaching customers through particular indirect channels: this is the case of wholesalers of kitchen appliances who create promotional offers to local customers according to their knowledge of the market.

  Another question that this building block aims to answer is: which resources are provided by our supply partners? This means, for instance, understanding what suppliers are able to mobilise: some retailers work with logistics providers to deliver their products to customers. These providers may control a fleet of vehicles and also warehouse facilities.

  Finally, there is a question as to who delivers our products and/or services to customers? For example, retailers can select the logistics providers most suitable for their purpose: for instance, they may employ flight couriers for urgent deliveries. Also, they may partner with a national courier service for national deliveries. For instance, the infrastructure of the UK-wide online sales of Waterstones, a British book sales chain, relies on its partnership with Royal Mail, a British postal service and courier company.

  

Now you have learned about Area 3 of the business model canvas, infrastructure, you will move on to look at the final area—the financial viability.