June 10, 2021 | Ujjval Patel, Director of Solutions and Consulting, Hi Marley

Buy or Build? How Adapting and Evolving Through Partnerships May Be the Better Answer

Typically, when faced with environmental challenges – new competitors, innovations, changing customer climates – organizations react to face those challenges through a paradigm of “build or buy?” Do we build the capability ourselves or do we find and buy a solution? To answer this question, let’s take a detour and talk about tardigrades, cutely called water bears or moss piglets. Tardigrades are an example of how partnerships can be transformational. They are the toughest animals around, having adapted to live in the harshest climates from freezing outer space to boiling, deep-ocean volcanic vents. Extreme pressure – no problem. Radiation – just a small flesh wound. Starvation – no big deal. They can survive it all! Why are they so adaptable? One explanation comes from a study led by Thomas Boothby from the University of North Carolina at Chapel Hill [1].

The study found that approximately one-sixth of tardigrade’s DNA – much higher than any other species – comes from unrelated plants, bacteria, fungi and archaeans. These unrelated DNAs have a higher stress tolerance to challenging environments. Gene fragments from these other sources supplemented, expanded or replaced gene families within the tardigrade DNA composition, improving their ability for stress tolerance. Based on their research, the team extrapolates the findings to hypothesize that animals who can survive extremes may be “particularly prone to acquiring foreign genes.” This hypothesis helps us think about human survival, but it also relates to organizational survival.

The Build Path
When we think about building a capability internally, we are moving down what is called the “stepwise evolutionary path” which has four key steps:

  1. Learn about the environment: Observe what is happening with customers and competitors to try and understand what traits create favorable circumstances.

  2. Pilot the capability: Replicate those traits in controlled scenarios to figure out what drives favorable outcomes.

  3. Roll the dice: Fail or survive in the experiment and document learnings and shortcomings.

  4. Refine and retry: Refine the traits and repeat the pilot as many times as necessary until you adapt.

This build path will force evolution at some point, but it takes time, resources and focus to do well – which might not be an option in competitive climates.

The Buy Path
When speed becomes an imperative, organizations will move down the buy path, incorporating best-of-breed solutions to augment their capabilities. An organization may determine the purchase path through a few questions:

  1. Does the solution meet the needs of the customer? Are the bells and whistles in the solution true differentiated delighters or just ways for the vendor to make more money?

  2. Does the solution meet the needs of the organization? Will employees use it? Does it fit within our tech stack?

  3. Can we deploy the solution given competing organizational goals and objectives? Is there a stated value? Is that value capturable?

  4. Within the capability, what is core (activities an organization does that create true differentiated value for customers) vs. context (everything else an organization does to stay in business)? What is critical to incorporate into the organizational DNA for the long-term survival of the organization?

Most organizations take stock of the first three questions, but many do not explore the last one. Too often, organizations outsource strategic capabilities to survive in the short-term at the expense of real, long-term evolution. What organizations really need to do with capability enhancements is not to build or buy, but to partner.

The Partner Path
In the case of tardigrades, they liberally incorporate foreign genes, but the genome is sometimes supplemented or expanded, not just replaced to get the best traits for survival. Organizations can view of their DNA the same way. They should consider using vendors liberally to help them adapt quickly and stay ahead while understating what can be incorporated internally to create a sustainable competitive advantage and agility. Organizations need to ask themselves:

  • Is the vendor cross-training our employees? Are they showing them the how and why as much as they are showing the what and the where?

  • Is the vendor extending our horizon? Do they have a pulse on the competitive landscape to show the organization where the environment is moving and how we are doing compared to others?

  • Do we know what capabilities are strategic? Will the vendor partner with us to supplement and expand strategic capabilities as we build those internally while taking on non-strategic ones?

  • Lastly, does the business case and ROI model validate the strategic “must have” capabilities the organization is seeking to build through partnership around our critical to mission success?

If organizations can find true partners in their evolution path, then any extreme environment is conquerable. The organization can adapt, survive, evolve and ultimately, thrive.

[1] “Evidence for extensive horizontal gene transfer from the draft genome of a tardigrade” https://www.pnas.org/content/112/52/15976

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