What are the best practices for deciding whether to build, buy, or partner in product R&D?

In product R&D, you must decide either to build a new in-house or buy and use the existing one or else you can partner with another entity. From my experience developing an OTT platform from scratch, I have found that "building" is time and cost-consuming but can result in tailored and customized solutions. On the other hand, "buying" ensures quick integration of proven solutions but customization may be minimal. "Partnering" integrates two entities' competencies, thereby promoting creativity as well as sharing possible risks. Your project's uniqueness, the degree of urgency to enter the market and available resources are some of factors that influence this decision.

From a manufacturing perspective, there are several things that need to be considered while making the decision to build, buy, or partner. Development costs: How much investment is needed produce a sellable product? If these costs are relatively small it may make sense to build your own. If there are existing products on the market it may make sense to buy the product and if possible customize it then resell. Finally if development costs are significant then partnering with a supplier may make sense to mitigate some of these costs. A good supplier can assist in R&D activities, evaluate market potential, provide leads, provide exclusivity with regards to the product.

Innovation is shaped by strategic decisions. The necessity for control and personalization led us to make the crucial decision to develop our platform internally. Additionally, collaborating gave us access to specialized technology that we did not have. Every decision was made strategically, weighing competitive advantage, time, and expense. Insight: Before deciding whether to develop, purchase, or collaborate, consider your key capabilities, market urgency, and strategic fit. This decision framework optimizes resource utilization and the innovation effect by ensuring that your R&D efforts are in line with company objectives and market demands.

What IP can be generated is one of the decision influencers. Every business needs a secret sauce. You're unlikely to get that from 3rd party solutions. If the technology you need is the core of your overall solution, then think seriously about developing it yourself, otherwise outsourcing can save time and money.

Best practices for deciding whether to build, buy, or partner in product R&D include evaluating core competencies: if a feature is central to your product's value proposition, consider building it to maintain control and integration. Assess the cost and time implications of building versus buying or partnering. Buying or partnering can accelerate time-to-market and access to expertise but consider long-term dependencies and costs. Evaluate the market for potential partners or acquisition targets, ensuring they align with your product's vision and quality standards. Lastly, consider scalability, support, and integration challenges with bought or partnered solutions to ensure they meet long-term business objectives.

Building fosters innovation. Our willingness to innovate and create solutions that are exactly fitted to our vision and our clients' needs has repeatedly driven us to build internally. This was a difficult road, but it ensured that we maintained control over the direction and quality of our product—an important distinction in a competitive market. Insight? When your idea requires creativity and you're willing to make a long-term commitment, go for it. It is a commitment to utilize your core abilities to carve out a distinct market niche, in addition to creation.

Opting to 'Build' in product R&D is best when your company seeks to maintain full control over innovation, ensure strategic alignment, and capitalize on existing capabilities. Apply the 'Core Competency Framework' to determine if your team has the unique skills, knowledge, and resources necessary to develop the technology in-house. This approach is also favorable when the solution closely aligns with your company's long-term vision and competitive differentiation. Building in-house is most effective when it leverages your strengths and offers a clear path to creating proprietary value that cannot be easily replicated.

Choosing to go the in-house route is a strategic decision that depends on your ability to tap into what makes you unique and keep it protected (fostering Innovation and Maintaining IP). In my experience, we built stuff when we figured our internal capabilities could give us a leg up on our competitors and when adding the new features to our core product was a unique added value for our users. This path doesn't just require putting in time at the start — but also after with ongoing innovation and support.

- Building is preferable when you have a clear product vision and control over quality. - For instance, one time at work, we built our AI-powered nutrition tracking feature in-house to maintain control over data privacy and accuracy.

Deciding when to build involves - Capability to Build: Assess internal expertise, technological infrastructure, and R&D capabilities to determine if the company has the necessary resources and skills to develop the product in-house effectively. Ability to Market: Evaluate the company's marketing prowess, brand recognition, and distribution channels to gauge its capacity to effectively promote and sell the product to the target audience. Ability to Scale: Consider scalability requirements, future growth projections, and resource scalability to determine if building the product internally allows for flexibility and scalability to meet evolving market demands.

- Buying is suitable to accelerate time to market or fill gaps in your product portfolio. - For example, at work we acquired a competitor's technology to enhance our expense management features and expand our market reach.

Purchasing drives expansion. Our turning point came when we acquired a smaller tech startup, propelling us years ahead of schedule. The strategic decision was made with the goal of rapidly increasing market share by adding cutting-edge technologies that we lacked. Lesson: When immediacy is of the essence and the solution aligns with your long-term aims, make the purchase. If you are prepared to face the challenges of integration, it is a considerable investment that can significantly accelerate your path to innovation.

- Speed to Market: When speed to market is critical, and buying can significantly shorten the development timeline. - Access to Technology: When the technology is complex, and developing it in-house is not feasible in the desired timeframe. - Market Consolidation: When acquiring a company can help consolidate the market or eliminate a competitor.

Opt for buying when the technology is readily available, cost-effective, and not central to your unique value proposition. For example, if your business needs a standard CRM system, purchasing a well-established solution can be more efficient and economical than building one from scratch. This route allows you to quickly implement and benefit from the technology without diverting significant resources from core product development areas where your business can truly differentiate and add unique value.

Wenn ein Produkt oder Service zeitnah ben?tigt wird und die eigene Entwicklung nicht im Verh?ltnis zum Nutzen steht, sollte man lieber zum Kauf optieren. Ich selber k?nnte zB. schnell ein Time-Tracking-Tool entwickeln. Der Aufwand und Nutzen sowie Wiederverkaufswert stehen hier allerdings nicht im Verh?ltnis. Die Zeit nutze ich dann lieber für produktivere Dinge, die einen h?heren Verkaufswert haben.

In my experience, it’s always better to partner with suppliers, customers and other friendlier and trustworthy companies especially if you have a previous positive experience even if have sufficient financial backing.

Collaboration increases inventiveness. Forming a relationship involved taking a calculated risk by integrating our technology with another party's distribution system. This partnership improved our R&D efforts by broadening our market reach and providing new insights into client needs. Lesson: When partnering amplifies your skills and reduces your deficiencies, think about doing so. It's about working together toward a common objective while making sure each person contributes something worthwhile. Your navigational signals should be clear communication with linked objectives.

- And then Partnering is beneficial for sharing risks, accessing expertise, and creating synergies. - At my previous firm, we partnered with a leading agricultural research institute to develop innovative farming technologies tailored to our customers' needs.

Nos casos, em que uma solu??o n?o é o Core da empresa e existe um player de mercado, que se destaca frente aos demais. é uma ótima oportunidade de se criar parcerias, em quem ambos os lados se beneficiam pelo aumento do publico alvo que podem atingir e que possuirá um tempo de implementa??o mais curto do que se fosse desenvolver do zero. Neste caso, ambas as empresas acabam se beneficiando, pois poder?o aprender com a parceria e num futuro desenvolver suas próprias solu??es com o conhecimento adquirido.

To evaluate a partnership, I think about areas where we would not invest but the market category and specific partner has complimentary strengths that would augment our strategy or drive differentiation. I may also evaluate what we would need to invest in the partnership and any Go-to-Market advantages it would bring (brand, revenue, customer acquisition, etc.).

Building is always sexy because it looks like you can absolutely tailor it to your every need. But that perspective overlooks two key aspects: - you ignore industry experiences (they already failed for you a few times) - once it's there it stays: and it wants care! So ask yourself: is this part of my core competency? If not find and buy a solution! (if really nothing exists: partner!) If it is: am I prepared to build, try, rebuild, maintain & improve it? Still yes? Check if someone has already done it anyways in a really smart way! And then go ahead and have fun building!!! If it is part of your core but you don't want the continuous product development process: find a strong partner!

One-way to quickly decide is to identify if a product/capability is core or context for your business. + Build core products. + Buy/Partner for context products. An HRMS for a Fintech business is a context product - Buy it. A catalog page for an e-commerce marketplace is a core product - Build it. A fraud and risk management system for an e-commerce marketplace, depending on scale, falls in-between - Partner for it initially and then Build it in-house.

Rule of thumb: build the thing that is your competitive advantage and unique piece of the solution working towards the value proposition your product sells. Let the experts supply the other aspects of your solution, chances are that is their competitive advantage!

Based on years of experience looking at Build, Buy or Partner. I have seen failures in each and successes in each. I would say it comes down to five key aspects 1. C-suite support of whichever decision is made. 2. Time to market for a key feature or product 3. Cost analysis of each but accounting for total cost not just up front cost 4. Architecture if you need to integrate the product, standalone products you can be more flexible. 5. Aligned interests of partners or acquisition targets, you cannot force a marriage if it is not a fit.

- Evaluate factors like product strategy, resource capabilities, and market opportunities. - For instance, at one of my previous orgs., we analyzed customer demand and market trends before deciding to build our automated billing feature in-house.

Execution involves thorough analysis and strategic alignment. Conducting a detailed market review to choose the most compatible solution is the key. In forming partnerships, finding a partner whose vision matches yours is very crucial. It involves negotiations to establish a win-win collaboration. Regardless of the path chosen, regular evaluation of market trends as well as progressions is essential for ensuring that strategies do not deviate from business goals at large while responding to new ideas.

- For Building: Allocate resources, including a skilled team and budget. Establish clear timelines, milestones, and success criteria. - For Buying: Perform due diligence on potential acquisition targets. Negotiate terms that align with your strategic goals. - For Partnering: Identify and approach potential partners. Negotiate a partnership agreement that defines roles, contributions, and revenue-sharing models.

Communicate your decision to your team, outlining the rationale and expected benefits and addressing concerns to garner support. Develop a comprehensive project plan detailing scope, timeline, budget, and responsibilities, with a process to track progress and manage risks. Foster collaboration with all stakeholders, ensuring clear communication and alignment on roles and expectations. Iterate your product based on customer and market feedback, adapting to meet evolving needs. Update your roadmap with new insights to keep strategies aligned with company goals. Best practices: forming a cross-functional team, setting measurable objectives, maintaining open communication to ensure alignment, and applying agile principles throughout.

When companies decide to buy or partner in the pursuit of growth, overlooking cultural fit can lead to significant challenges. A mismatch in company cultures can create integration hurdles, negatively impact employee morale, and ultimately hinder product success. To address this, ensure cultural assessments are a core part of your due diligence process. Understand the values, working styles, and practices of potential partners or acquisition targets. Aligning these cultural elements early on can smooth integration, boost morale, and pave the way for a successful collaboration or merger.

Analyze competitors to spot differentiation opportunities. Consider regulatory requirements to ensure compliance. Evaluate scalability and alignment with future growth, ensuring options adapt to new markets and demands. Align choices with your organization's culture and values for team satisfaction and a strong reputation. Speed to market is crucial; buying or partnering might offer quicker results without compromising quality. Assess your risk tolerance, balancing development, integration, and financial risks. Verify vendor or partner reliability for quality and support. Plan exit strategies for bought or partnered options, preparing for potential shifts in priorities or unsuccessful outcomes.

Best Practices- 1. Assess your Core Competencies: if your company specializes in software development but lacks expertise in hardware manufacturing, it may be more sensible to partner with a hardware manufacturer for a new IoT device rather than attempting to build the hardware in-house. 2. Cost-Benefit Analysis: If your company needs a CRM system, compare costs between building a custom solution, purchasing off-the-shelf software, or subscribing to a cloud-based CRM. 3. Time to Market: A pharmaceutical company aiming to quickly expand its product line might choose to partner with a biotech startup to license a promising drug candidate rather than starting from scratch with internal R&D efforts.