A review of Build, Borrow, or Buy, by Laurence Capron and Will Mitchell.
by Ken Favaro
Build, Borrow, or Buy: Solving the Growth Dilemma
by Laurence Capron and Will Mitchell
Harvard Business Review Press, 2012
We have found the major reason growth initiatives tend to whither and eventually fail is the inability of a business to resource them to win. This offers an interesting thought process to address this very important issue
In our current environment, companies must field the right resources — the know-how, technology, processes, and people — in the right way if they are to have any chance of generating consistent, healthy levels of growth.
The book is a highly structured examination of the three fundamental modes — or “pathways” — for obtaining the resources needed to grow. They are: developing the needed resources internally, or “building” them; contracting or partnering to obtain resources, or “borrowing” them; and acquiring, or “buying” them. According to the authors, companies should be adept at all three….
….What is most striking about Build, Borrow, or Buy is its finding that most companies use only one or two of the pathways. Perhaps that is because it is hard to use all three effectively and to smoothly switch between them. The authors offer a litany of obstacles, including internal conflicts of interest, organizational biases, entrenched habits, and past mistakes. Given these barriers to obtaining the right resources in the right way for any particular strategy, it’s surprising that any company can sustain growth beyond its initial market success…
….Capron and Mitchell provide a simple decision tree for navigating the build, borrow, and buy choice. It requires answering four sequential questions:
1. Do you have internal resources that “are similar to those you need to develop and superior to those of competitors”? If so, build.
2. Can you easily trade for the necessary resources? If so, borrow via contract.
3. Do you need to collaborate closely with the resource supplier? If so, borrow via alliance.
4. Can you successfully acquire and integrate the resource supplier? If so, buy.