Make or buy analysis is one of the oldest exercises in management. In practice, the framing is usually wrong. The real question is almost always make, buy, or partner, and the third option is the one that usually gets skipped. When a business skips the partner option, it quietly forces itself into a binary choice that does not fit the situation.
Why the partner option gets skipped
The partner option gets skipped for the same few reasons on almost every engagement. The corporate development team is not in the meeting where the decision is framed. The procurement team is in the meeting but is measured on unit cost rather than on the total economic result. The product team has a natural preference for building. The finance team has a natural preference for buying. No one in the room has a natural preference for partnering, so no one defends the option, and it slips off the table in the first half hour.
Five questions that put the third option back on the table
- Is there a firm that already has the capability the business is about to build and is open to a commercial relationship.
- What is the true cost to the business of waiting two years for a build to mature, including the revenue that does not happen in those two years.
- What is the real likelihood of a build achieving the standard the business actually needs, measured against the track record of other builds in the same space.
- What is the control cost of a partnership, and can that control cost be bought down with a well written contract and a named joint governance body.
- What is the exit cost of a partnership in a bad scenario, and is the business willing to carry that cost in exchange for the earlier time to market.
These five questions are not a decision rule. They are a discipline. If a leadership team works through the five questions in writing, the partner option gets a fair hearing even in a room where no one has a natural preference for it. The firm's experience is that the partner option wins more often than it is given credit for, and that the wins are quiet because they are not glamorous.