To build or to buy, that’s the question
One of the toughest decisions any company has to revisit time and again is whether it should build a product internally or if it should buy out/from a vendor who has already done the same thing. In simple, practical terms, the choice is between buying a pre-built wheel and building one from scratch all by yourself.
The greatest example of a botched opportunity on the same lines is the story of Yahoo! and Google. Long time ago, Yahoo! had actually funded the growth of a little-known company called Google — a decision that they must regret every day now. They could, probably, have bought out the company then (and could have done a huge favour to Microsoft by doing that and effectively killing it) and never looked back. They did not, and are now struggling to catch up with them in both search and advertising, which are Google’s core competencies.
It is very easy to kick Yahoo!’s ass for not having bought Google, but the fact of the matter is that it is a very tough decision to make when you are dealing with wheels. There is not much else than instinct to guide you in making that decision and sometimes it works out well, other times it just does not. But in general, it is not the best of ideas to be dependent on an external vendor on whom your business’s core value proposition has a critical dependency.
There are workarounds to the problem, like investing in the long term in developing the technical expertise in-house and contractual clauses that protect you against sometimes unavoidable circumstances, but there is no real proven method to pull this off each and every time. That, of course, is the reason why there are only a limited and small number of smart people in the world who can get it right. You just have to make sure that you are either one of them or, for lesser mortals like us, you work for one of them.