Monday, August 29, 2005

“Not Invented Here” vs. “If You Want it Done Right, You Have to Do it Yourself”

Companies are often criticized for a “Not Invented Here” attitude. But what’s wrong with that attitude? Aren’t there just as many people out there advocating that “if you want a job to be done right, you have to do it yourself”? Having been there, I can see some legitimate reasons why some companies would have a “Not Invented Here” bias.

In some cases, there isn’t much to be gained from going with an outside vendor rather than building something yourself. It usually takes time and resources to search for and then evaluate a set of vendors’ offerings. And then what if you evaluate and find the solution doesn’t meet your needs? Worse yet, what if you can’t adequately anticipate your needs and get locked-in to a vendor that’s inadequate?

There is a strong chance that a vendor will not be able to meet your needs. Vendors look at the range of possible customers they can serve and they look for common requirements. But in doing so, they explicitly decide not to satisfy portions of the market. If you’re going to make a commitment to go with a vendor, make sure that you are well within their target market.

If it takes a lot of time and the chance of finding a good match are low and it’s a crucial piece of whatever you’re building, you’d really have to look at the option of externally sourcing and say it’s too risky.

In the innovation literature, I see two opposing views on this subject. From Eric von Hippel’s Democratizing Innovation, we learn “that when one or a few users want something special they will often get the best result by innovating for themselves.” (Democratizing Innovation, Eric von Hippel, p.g. 5)

But from Henry Chesbrough’s Open Innovation, it would seem that successful firms will need to look to the outside for innovation because of the decreased expenditure in corporate research.

If companies aren’t willing to take the risk on externally sourcing innovation but lack the budget to do-it-themselves, buyers of technology are going to need more efficient ways to evaluate vendors. Furthermore, suppliers are going to need to satisfy more of the fringe needs of their customer bases, perhaps by increasing the availability of toolkits for adapting their products to the needs of their customers.


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