By Todd Zenger
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Make it or buy it? This strategic decision remains notoriously difficult for businesses. Sustained value creation requires the constant expansion and modification of a firm, and many of the assets and activities connected to its corporate theory belong to others. So to compose the value that your theory reveals demands you make sound decisions about when to acquire, configure, and own these assets (make) versus when to contract for their outputs (buy).
Vocal advocates, both in and out of a firm, will argue for both paths. Open innovation gurus and outsourcing firms preach the near-universal virtue of outsourcing. Many voices within firms call for integration. All too often, our own intuition regarding make or buy decisions is terribly misguided.