I was chatting with a colleague and he was telling me about his job at a new company. The company was building a product that required video conferencing, and they were way behind schedule because they were building their own video conferencing software component from scratch. They had not even considered a build vs buy vs partnering decision. They just went straight into build. And it was costing them dearly, as the market opportunity was quickly passing them by.
As a product manager, one of the biggest decisions you'll face is whether to build, buy, or partner for a particular component of your product. Each approach has its own advantages and disadvantages, and the decision isn't always an easy one. However, it's important to prioritize your differentiation and focus on building the components that set your product apart.
In this article, we'll explore the three approaches - build, buy, and partner - and the factors to consider when making a decision.
Build Approach
The "build" approach involves developing a product component in-house from scratch. This approach provides maximum control over the development process and the final product, as well as the potential for customization to fit specific needs. Additionally, building a component in-house can provide a greater potential for competitive advantage.
However, the "build" approach is also time and resource-intensive. It may require specialized expertise or additional hiring, and there is a risk of development delays or technical difficulties.
Buy Approach
The "buy" approach involves purchasing an existing solution or product component from a vendor or supplier. This approach can be faster than building a component from scratch and can reduce development costs. Additionally, it can provide access to pre-existing expertise and technology. However, the "buy" approach also has its own set of challenges. There may be limited customization options, and the purchased solution may not integrate well with existing software. There is also a risk of vendor lock-in or lack of ongoing support. You will also need to run the numbers to ensure the cost is worth the opportunity cost of building a solution in house.
Partner Approach
The "partner" approach involves collaborating with another company or vendor to develop a product component. This approach can provide the opportunity to leverage complementary expertise and technology, share development costs and resources, and create potential new revenue streams or customer bases.
However, the "partner" approach also carries some risks. There is a potential for misaligned goals or conflicts, limited control over the final product, and a risk of partner instability or inability to deliver on promises.
Choosing the Best Path
So, how do you choose the best approach for your product? There are many factors to consider, such as:
The urgency of the need for the component
The complexity and criticality of the component
The availability of resources and expertise
The potential for competitive advantage or differentiation
The risks associated with each approach
Ultimately, the decision comes down to the unique needs and goals of your product and company. However, it's important to always prioritize your differentiation and focus on building the components that set your product apart.
As for my colleague - his first action was to stop all development on the video conferencing capabilities and reallocate those resources to building out the differentiating components of the offering. He purchased a leading video conferencing provider's whitelabel offering, taking advantage of a commodity product and embedding into his own offering. (They even launched their product close to their revised schedule!)
If you have any questions or would like more information about this topic, feel free to reach out. We're always here to help.
Comentarios