Build or Buy

Build or Buy

Build Or Buy
Source: Microsoft Office Clip Art

Entrepreneurship starts with a desire to solve a problem but just a desire is not sufficient. Depending on the nature of business & product, a myriad of skills/expertise are required in the fields of legal, Information Technology (IT), business management, supply chain, operations, marketing, Human Resources (HR) etc. For an entrepreneur, gaining competency on all these fields could be overwhelming and is probably not the right expectation either. Their primary focus should be to bring their product/service to the market sooner.

Below is the 2 step approach I used to address this issue as an entrepreneur:

  • Step1: Identification and categorization of your business value stream components – The components of the value stream totally dependent on the nature of the business and the product. Every aspect of the business should be thoroughly analyzed to identify & categorize the components into core competencies and necessary components.

This step is particularly important as it lays the foundation for your business model (at least till you change it) which will be explained in step 2.

In a typical software consulting firm, software engineering expertise and business development are considered as core competency. Usually the employees are located at client site with minimum cultural interaction with the consulting firm. But in my company, along with software engineering expertise and business development, people development is also identified as core competency components while legal, IT, accounting, payroll, etc as necessary components.

  • Step2: Business model based on build or buy of competency components – Core competencies that provide strategic advantages by differentiating your product/services in the marketplace, should be built within the company. Other components that enable delivery of core competencies could be outsourced or built in house if it provides effective, efficient functioning of the business and/or saves money.

Thus, in my company, by identifying people development as core competency component, in addition to software engineering expertise and business development, we were able to strategize our business model to build a culture of empowerment amongst employees – through periodic training (to improve their technical and soft skills), mentoring and team building fun activities, even when if they worked remotely at client site. Necessary components of value stream like legal, accounts, etc., were outsourced to provide maximum bandwidth needed to build core competencies inhouse. Thus, differentiating our firm in the marketplace to success.

Hope you will find this approach to build or buy competencies in building the business model helpful. Do share your thoughts!

Related posts of interest: Discover your Purpose, Preparation is Key, Red Ocean Dilemma, Butterflies in the Stomach, It takes a village to raise a child

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