Today, technology/product choices and development partners are everywhere. This, coupled with collaborative development tools, makes it possible to have a workforce worldwide. Or, you can Google your technical requirements, and probably find a handful of vendors that already built something close to what you want. So, how do you decide when to build or when to buy?

The answer should be simple, right? You do a cost/benefit analysis of buy vs. build, and you follow its recommendation. Yet, there are many variables that affect our decision, and some of these are myths that need to be recognized and dealt with appropriately.

Myth #1 — We have a fact-based decision making process

We like to believe our decisions are driven by logic and data. Yet, our emotions and instincts play into our decision making process more than we care to admit. Just think back to your personal experiences of buying a car. I remember walking out of a dealer because of the lack of chemistry and trust I felt towards the sales-person. This doesn’t mean you should ignore your intuition and your gut feelings. Quite the contrary, you need to incorporate that into the process and use it to further investigate areas that seem too good to be true.

Myth #2 — We can find exactly what we need

We live in a world where the choices are limitless, right? Unfortunately, the buying process is all about making compromises: price, scalability, maintainability, dependency, flexibility, control, support, functionality, time-to-market, availability, usability, integration, … Just look at iPhone customers and what drives them to unlock their phones regardless of the risk: instant messaging, GPS, voice recorder, eBook reader, cheap roaming, … These are all valid features that one would want on their smart phone. ☺

Myth #3 — Our organization’s culture is irrelevant to our decision making process

Quite the contrary! Your organization’s culture and your leadership is everything when it comes to build vs. buy decisions. NIH (Not Invented Here) syndrome is a classic influencer, which usually is followed by the we will loose control argument. Again, these all are valid concerns that need careful consideration. To be successful, you need to bring the team along, consider their concerns and put an action plan in place to deal with the risks. Oh the other hand, if your team is already feeling overwhelmed, asking them to take on another development effort will likely to backfire.

Myth #4 — Buying is not creative/innovative

This is another take on the Myth #3 and the organization’s culture. You need different strengths and competencies to be good at buying. Your customers expect you to deliver a unified solution that clearly solves their business problems. Your marketing team expects you to continue to deliver on your brand image. Your support team needs a supportable and maintainable product. So, obviously buying is more than just throwing things together and expecting them to work well, there is considerable effort involved.

Myth #5 — Building is cheaper than buying

After all, you are already paying for the engineering hours, right? But, what about the opportunity cost? Or, how about the peanut butter approach of spreading your resources too thin? We tend to think about building as a one-time event, without considering the cost of deployment, support, maintenance or scalability. In my experience, obsolescing anything is an emotional process that takes precious time. So, make sure you consider the full picture and not just the one-time engineering costs.

Myth #6 — We can build it faster/better than integrating

This may be a valid argument. But again, just because you can do something doesn’t mean you should. On the surface, the technology might seem straight forward, but have you considered all other vectors? I once had a discussion about whether or not it makes sense to build our own worldwide labor time tracking solution. Again, it was not just the technology, but the cost (and risk) of becoming an expert at understanding all government and labor policies around the world, which constantly changes.

Myth #7 — Buying is not strategic for us

Proponents of this myth perhaps did not hear about the fast-follower strategy. Fast followers recognize the challenges of entering into a new market and/or technology: unknown customer reactions, cost of educating the market, unforeseen technology glitches, … So, fast followers wait on the sidelines until the new market/technology is sufficiently mature before entry. By building and integrating on others’ technologies, fast followers can further compress their product lifecycle and get to market even faster. Later on, as the value drivers for the new market become clear, the fast follower can decide to re-implement previously bought technologies by building their own.

So, here is a quick summary of different factors to consider when making build vs. buy decisions.

• If your culture is not open to buying and you don’t have the leadership strength to manage the change, then this is a wrong time to buy. However, if the scope is limited, it could also be a precious learning process for your organization.
• Focus on your core value drivers: what really matters to your business and your customers. Make sure your effort and energy is spent in these areas.
• If the technology/product in question is not a strategic value to your customers or to your firm, ask yourself if it is worth developing the competency in-house.
• Time-to-market for extending into new markets and customer segments is an important competitive advantage. In this case, it might make sense to buy first and then build second.
• Consider if this product/technology is a one-time use, or a core building block for your product portfolio.
• Quick prototypes (using off-the-shelf technologies) are invaluable to firms for test-driving new ideas. This quickly (and with low cost) enables the firm to understanding potential risks, opportunities and customer behaviors.
• Consider how well the technology/product to be purchased would be integrated into your product line and to your value-chain (sales, customer support, marketing, …). You need to manage the complete value-chain to be successful.
• Though on the surface buying a technology might reduce your development risks, it might increase risks along another dimension, such as integration and dependency management. Make sure you build these into your plans.

Finally, with apologies to The Clash ☺

Should I build or should I buy now?
If I buy there will be trouble
An if I build it will be double
So come on and let me know
Should I build or should I buy?

Technorati Tags: buy vs. build decision factors, myths of make vs. buy, fast follower strategy

I love the turning of the leaves in Fall. The colors are always gorgeous and fiery. And eventually, they all fall down and become a play ground for kids. Then, it starts….. The loud noise immediately followed by dust… All for pushing the leaves off ones yard to where??…

I never understood the purpose of leaf blowers… It has a rich product line offering, too. You can buy gas, electric or cordless in variety of sizes, including as a backpack. Recently, they have been trying to address the noise and air pollution problems. Again, all this effort for what?? To blow leaves from point A to point B?!.

With that, I dedicate today’s Dilbert to leaf blowers. Cheers!

Technorati Tags: technology gone wild, leaf blowers

It must be WSJ week… Here is an interesting article from WSJ about the differences in brain activity between a visionary leader and a non-visionary leader. Pierre Balthazard, Arizona State University management professor, indicates that the visionary leaders use their brains differently than others.

The brain-wave analysis highlights differences in the patterns for visionary leaders: more efficient left brain (logic and reasoning) and better connected right brains (social skills). Professor Balthazard hopes to use this information to promote brain-training for leadership-development.

This certainly takes the argument of effective leaders are made not born a step further. What do you think, will we see assessments of EEG brain activity levels as a requirement for promotions? Maybe they should be given to current CEOs, board members, … It could go hand in hand with the study that links success of firms to the personal lives of their CEOs.

It is too early to say… But, it would be interesting to see the metrics and of course the conclusions of this study. In the meantime, I could certainly enjoy the process of getting my brain’s EEG mapped

Technorati Tags: WSJ.com, mind of a leader, leadership

Today’s WSJ published an article on IBM and virtual teams: How Teams Can Work Well Together From Far Apart (you might need a subscription). By using their global team, IBM has been able to cut down the development time of WebSphere from 18-24 months to 4 months. Based on the article, here is what makes the team productive:

• Have a common understanding of the task
• Clarify roles and responsibilities
• Set firm ground rules
• Get to know other team members
• Communicate often

Aside from wikis and instant-messaging software, the team breaks down the deliverables into small, well-defined chunks (these tasks are shared with everyone, globally and around the clock.) This, combined with the discipline to continuously update the wikis, helps to keep the miscommunication down. They also highlight the importance of communicating (even if it means interrupting someone) and being open with ideas and information.

It is nice to see a truly virtual development team environment that is also successful. If you know of any others, please share.

Technorati Tags: virtual teams, WSJ.com

You might have read various customer reactions to Apple’s iPhone price and product line adjustments. Overall, I would bucketize the comments into 5 general categories:

• It is only a fad and you get what you deserve;
• I am extremely angry at Apple for doing this to me;
• They didn’t deliver any of the updated functionality they promised;
• You are an early adopter, you can’t complain about the price;
• Anything & everything else;

So, what does that mean about iPhone customers? Everett Rogers, early researcher on the topic of diffusion of innovations, highlighted the fact that not everyone adopts innovations at the same time or the same rate. In his book, Diffusion of Innovations, 5th Edition, he described the adoption process as a sociological activity where everyone proceeds at her own pace based on her perception of cost/benefit analysis and emotions. Rogers identified 5 categories of adopters, and he observed that if you look at the cumulative number of adopters over time they follow an S-shaped curve.

• Visionaries/innovators have a high level of risk tolerance and the ability to deal with uncertainty. They love new ideas, new technologies, and are willing to deal with setbacks, even if it will cost time and money. In this fashion, they are crucial to the innovation process as they bring new ideas and innovations into society and seed the diffusion process. The first 2.5% of the adopters.
• Early adopters (the next group) are looked upon by society as opinion leaders as they take more time to determine whether to invest or not. Their acceptance of new technologies and innovations increases others’ confidence, and as change agents they speed the diffusion process. Studies have shown that early adoption entails the ability to comprehend and handle complex and ill-defined technologies, and that these individuals tend to be well-educated and well-financed. They represent 13.5% of the category.
• Early majority follows the lead of the early adopters. They are cautions towards change and new ideas. However, once the early adopters’ experiences indicate success, they follow. They represent 34% of adopters.
• Late majority exhibits skepticism and caution, especially if there are unanswered questions about the innovation. However, they respond well to peer pressure and eventually adopt the new technology. They represent 34% of adopters.
• Laggards, as the word indicates, lag behind everyone in the adoption curve. So much so that by the time they adopt a technology, something newer has already been introduced. They represent the final 16% of adopters.

(In case you are wondering… I am an “early adopter” who is offset by a “laggard” hubby (self-proclaimed Luddite). In the end, it is a nice balance for our relationship.)

Apple is expected to have 10% of smartphone sales by the end of 2007, and just after a few months of release they reached their first million handset sales. Considering this, and reading through customer comments, I can’t help but wonder if I am looking at three generations of adopters mixed into one: inventors, early adapters and early majority.

It is evident that we live in a world where the development cycles are continuously shrinking and firms are looking to introduce new products at faster rates. Steve Jobs is pushing it further by readjusting iPhone’s price to be more competitive with the market. However, as our ancestors said, there is time and place for everything and nothing is without consequences.

Previously I looked at the innovation lifecycle and how one can define success goals for each phase in the model . Do you think acceleration of the adoption curve interferes with innovation’s natural progression, as the firm needs to manage the conflicting interests early in the technology’s lifecycle?

Technorati Tags: iPhone, diffusion of innovations, implications of increased adoption rate

The lack of white space management is one of the leading causes of project failures and delays, especially in siloed organizations. As frustrating as white space can be, its successful management and analysis can bring fruitful innovations and sustain competitive advantage to the firm.

So, what is white space? It is basically the gap, the fuzzy space and separation between what is known and understood. It is vague and ill-defined as to the ownership, the strategy, the process, the opportunity, … Yet, when it is analyzed and utilized well, it gives clarity, structure and emphasis to an opportunity or to a specific issue.

Our traditional project management processes are quite task oriented, where the focus is the successful execution of each individual task. No doubt you need to focus on execution. Unfortunately, constructing the forest one tree at a time works only if you have built the forest before and now working on an update. In this case, your main challenge is the hand off process, where your well-defined inputs/outputs and ownership, along with critical metrics will help reduce the size of your white space. If you are swimming in uncharted waters, you need to manage things differently and here are some ideas for your toolbox.

• Clearly understand what your customers value. In many cases, the cross-functional areas are in need of white space management, such as product installation, upgrades or 3rd party solution integration. Define the problem and key performance vectors from the perspective of the customer. Favor simple over complex and adopt the KISS principle as your motto.
• Setup a virtual war room to improve communication and coordination among teams. Make sure to include the updated versions of key project information, team member’s names/roles, competitive intelligence knowledge, project status, risks, milestones, … Leverage this to establish a sense of urgency that is shared by all.
• Use the staged-freeze process to group and manage critical tasks (Building a Project-Driven Enterprise: How to Slash Waste and Boost Profits Through Lean Project Management). As Ronald Mascitelli describes, this is very similar to building a house. You work with your builder to determine how best to schedule key decision points that support important building stages while accelerating work and reducing waste. After all, deciding to install in floor heating after the concrete floors are poured is an expensive proposition. You can extend this process to manage risk areas, resource constraints/schedules and key marketing events.
• Know, monitor and manage your critical path. These should be identified and regularly reviewed as the project progresses. Critical path is any activity that puts the complete project schedule at risk. Not only identify the risk, but also determine objective metrics to monitor their status.
• Utilize dedicated teams and task forces where possible. Many studies have already shown the impact of multitasking to productivity. If you can’t ensure dedicated teams, establish small task forces with clear charter, objectives, milestones, and metrics, where they are guaranteed to spend some of their time on these specific issues. Just remember not to go task force happy. It is contagious, and too much of a good thing can loose its value.

Remember, innovation is a system and new ideas come to fruition in the cracks: cross-functional areas, in between business units and products as well as shifts that occur within the value chain with partners and customers and market analysis. Middle managers play a crucial role as integrators and white space managers. This is especially true in siloed organizations where there is no one person that is assigned to managing the project end-to-end. Here are some of the characteristics of successful white space managers.

• They see their firm, partners and customers as part of the larger ecosystem. It is not about each individual group’s performance or ownership rights, but how the collective community operates together as a system.
• They recognize it is about the customer and creating that compelling customer experience. They continuously look for ways to go beyond traditional methods to create new value for the customer.
• They focus on the idea and the problem at hand and how it should best be handled as part of this system. They set performance goals that reflect the total system rather than separate parts.
• They recognize the glue that connects the dots is temporary, and look for ways to ensure the organization learns to self-sustain. This can be through coaching/mentoring, recommendation for structural changes and/or processes as well as influencing the organization’s culture and values.

Innovating in white space can represent quite a challenge for established firms. It is one thing to fund an idea, but another to push to full-scale implementation and commercialization while answering the strategic questions of who, what, where, how as Jeffrey Phillips points out. Here are key success factors to innovate in this space.

• Your innovation culture is key to success. It needs to have tolerance for risk-taking and failure, but also encourage experimentation, learning and recognition to challenge the status quo .
• Recognize that ideas need a platform for testing and validation. As a manager, not only support this process but also help ensure its success by providing the needed expertise, information and knowledge, ground cover during the attack, …
• Be creative and persistent as you look for ways to bootstrap resources. Focus on demonstrating value quickly while working with what you can gather up. Remember, it is about negotiations and making people realize they are getting more than giving.
• Engage your entire organization by “extracting resources from context to repurpose for core“, where core is your competitive differentiation (Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution). Include as part of your strategic planning processes the reapplication of critical resources to drive innovative projects.
• Ensure the support of a senior executive for your venture. This executive plays the role of a champion, sponsor, financial supporter, coach and mentor during your commercialization process.

In summary, in your projects remember to focus on both sides of the coin. Analyze and assess the opportunities embedded in the white space. Find those gems and polish them to improve your competitive standing. But, also don’t neglect the operational side of the white space. Focus on your execution to improve your efficiency, effectiveness and overall performance.

Technorati Tags: white space management, innovation management, middle managers, project management