The Starting Point Of The Build-borrow-buy Framework Is

The Starting Point of the Build-Borrow-Buy Framework Is… Strategic Assessment

The Build-Borrow-Buy (BBB) framework is a crucial strategic tool for businesses navigating the complexities of innovation and capability development. It provides a structured approach to deciding how to acquire necessary resources and capabilities – whether by building them in-house, borrowing them through partnerships or licensing, or buying them outright through acquisition. However, the starting point of this powerful framework isn't a blind leap into building, borrowing, or buying. Instead, it’s a thorough and meticulous strategic assessment. Without this foundational step, the entire BBB process risks becoming inefficient, costly, and ultimately unsuccessful.

Understanding the Three Pillars of the Build-Borrow-Buy Framework

Before diving into the crucial starting point, let's briefly recap the three core options:

• Build: This involves developing the necessary capabilities and resources internally, from scratch. This requires significant investment in time, resources, and expertise, but offers greater control and long-term ownership.

• Borrow: This entails collaborating with external partners, either through licensing agreements, joint ventures, or strategic alliances, to access needed capabilities. This option is often faster and less capital-intensive than building, but can compromise control and potentially limit long-term strategic flexibility.

• Buy: This involves acquiring another company or its assets to gain access to the desired capabilities. This is a rapid and potentially transformative approach, but requires substantial upfront investment and carries the risk of integration challenges and cultural clashes.

The Critical Starting Point: Strategic Assessment – A Deep Dive

The strategic assessment phase forms the bedrock of the Build-Borrow-Buy framework. It's not simply a quick checklist; it’s a comprehensive analysis that informs the decision-making process at every stage. A robust assessment should encompass the following key elements:

1. Defining the Strategic Need: What Capabilities Are We After?

The first and most crucial step is clearly articulating the strategic need. This requires a deep understanding of the business objectives and the specific capabilities needed to achieve them. Vague goals will lead to a muddled assessment and ultimately, a poor decision. Consider these questions:

• What specific problem are we trying to solve? Clearly defining the problem ensures that the chosen solution directly addresses the challenge.
• What capabilities are required to solve this problem? This should be a detailed breakdown of the technological, human capital, and infrastructural requirements.
• What are the critical success factors? Identifying these helps to prioritize the aspects that are absolutely essential for success.
• What are the potential risks and challenges associated with each capability? Proactive risk assessment is critical in making informed decisions.

2. Internal Capabilities Audit: What Do We Already Possess?

Once the strategic need is defined, the next step involves a thorough evaluation of existing internal capabilities. This audit should not just focus on tangible assets but also intangible assets like expertise, knowledge, and organizational culture. Questions to consider include:

• What existing capabilities align with the strategic need? Identifying these strengths allows for building upon existing foundations, potentially reducing development time and cost.
• What internal resources (personnel, technology, finance) are available to support building new capabilities? A realistic assessment of internal resources is crucial for determining feasibility.
• What are the strengths and weaknesses of our internal teams? Honest self-assessment is essential to avoid overestimating or underestimating internal capabilities.
• What is our learning curve for acquiring new skills? This is especially relevant when considering building capabilities internally.

3. External Environment Analysis: What's Available in the Market?

A comprehensive analysis of the external environment is equally important. This includes researching potential partners, competitors, and available technologies. Key aspects of this analysis include:

• Market analysis: Identifying potential partners or acquisition targets requires a deep understanding of the market landscape, including competitor strengths and weaknesses, market size, and growth potential.
• Technology landscape: Understanding the latest technological advancements and their potential impact on the strategic need is crucial in deciding whether to build, borrow, or buy. Is the technology readily available? Is it mature enough?
• Partner assessment: If borrowing is considered, a thorough assessment of potential partners is essential. This includes evaluating their capabilities, reputation, and compatibility with the company culture.
• Acquisition landscape: If buying is an option, a careful analysis of potential acquisition targets is necessary. This includes due diligence on financial health, legal compliance, and cultural fit.

4. Cost-Benefit Analysis: Comparing Build, Borrow, and Buy

After the internal and external analyses, a thorough cost-benefit analysis for each of the three options (build, borrow, buy) is essential. This should consider not just the upfront costs but also the long-term implications, including:

• Financial costs: Including upfront investment, ongoing operational costs, and potential risks.
• Time to market: How long will it take to acquire the necessary capabilities through each option?
• Risk assessment: What are the potential risks and uncertainties associated with each option?
• Control and ownership: To what extent will the company have control and ownership over the capabilities?
• Strategic flexibility: How flexible is each option in the long term? Will it hinder future strategic options?

5. Decision Making and Implementation: Choosing the Optimal Path

The culmination of the strategic assessment is the informed decision regarding the best approach – build, borrow, or buy. This decision should be based on the comprehensive analysis conducted in the previous steps and should be clearly documented and communicated across the organization. Implementation involves developing a detailed plan with clear timelines, responsibilities, and resource allocation.

The Consequences of Skipping the Strategic Assessment

Failing to conduct a thorough strategic assessment before deciding on the Build-Borrow-Buy approach can have serious repercussions:

• Wasted resources: Investing significant time and money in building capabilities that could have been acquired more efficiently through borrowing or buying.
• Missed opportunities: Failing to identify and capitalize on potential partnerships or acquisition opportunities.
• Delayed time to market: Prolonging the process of acquiring necessary capabilities, leading to lost market share and competitive disadvantage.
• Integration challenges: Difficulties integrating acquired capabilities or managing complex partnerships due to insufficient planning.
• Strategic misalignment: Acquiring capabilities that do not align with the overall business strategy, leading to wasted resources and diminished returns.

Conclusion: The Foundation for Strategic Success

The Build-Borrow-Buy framework is a powerful tool for strategic decision-making. However, its effectiveness hinges on a comprehensive and meticulous strategic assessment phase. By thoroughly evaluating internal capabilities, the external environment, and the costs and benefits of each option, businesses can make informed decisions that maximize efficiency, minimize risk, and ultimately drive sustainable growth. Skipping this crucial starting point is akin to building a house without a foundation – destined for eventual collapse. Prioritizing a robust strategic assessment ensures the foundation upon which a successful Build-Borrow-Buy strategy is built, paving the way for sustained competitive advantage and long-term success.