Page 73 - HBR Leader's Handbook: Make an Impact, Inspire Your Organization, and Get to the Next Level

Developing a Strategy 63

Exploring make-or-buy and acquisition options

A potential choice in the process is whether to make or buy the new
products, services, or other sources of revenue on which the strategy
will depend. Leaders will often look outside to do an acquisition or to
develop a solution they think will be more cost-effective, faster, or more
innovative than what they can develop in their own company.
Acquiring another entity, whatever the reason, can be a large and
fraught undertaking, and if you are not a CEO, it’s not likely something
you’d pursue without a lot of support from more senior leaders. That
said, if you still think such a move has value for your strategy, under-
stand a few implications before you get started.
First, know that the shorthand phrase—“make versus buy”—sets up
what might be a false binary choice. There is always a spectrum of other
corporate options for developing new skills or assets to consider, in-
cluding contracting for new services, forging product or market-specific
partnerships, forming more extensive joint ventures, and the like (for
more, see Laurence Capron and Will Mitchell’s book Build, Borrow, or
Buy).
Second, make sure you’ve also really given the internal option a fair
shake. You may have too quickly assumed that the knowledge, skills, or
assets needed for your strategy don’t exist in your company. Sometimes
the resources required do exist internally, but they’re not in your spe-
cific part of the organization, or they’re not currently accessible because
of how your company is structured. You can create new efficiencies or
spark corporate innovation when separate units start collaborating
across boundaries (as in the PBS case with the children’s media and dig-
ital units). If you’re developing new strategies for your unit, consider if
you have colleagues elsewhere in the company with whom you can part-
ner to achieve what’s needed and that could benefit both of your units.
(continued)