Buy or DIY

TitleBuy or DIY
Publication TypeMagazine Article
Year of Publication2011
Corporate AuthorsAnthony Sibillin
MagazineBusiness Review Weekly
KeywordsInnovation, insourcing, outsourcing

Businesses can choose between developing their own innovation and acquiring it from others. While in the past, the preferred option was to do it themselves, faster product cycles have made it difficult for larger incumbent companies to do so. Cisco, which became the world’s most valuable company briefly in 2000, was one of the first to move to the acquisition model. Now, such “open” innovation has moved beyond just acquisitions, as companies will fund external ideas if there is a benefit, says marketing professor Ashish Sinha of the Australian School of Business at the University of NSW. During the 90s, companies like Amazon and eBay beat their rivals by being nimbler. Incumbent companies today have accepted their limits as they cannot compete on innovation while committing their resources to maintain existing customers, according to the Harvard Business School’s Clayton Christensen in “The Innovator’s Dilemma”. The University of Western Australia’s Tim Mazzarol says companies such as Proctor & Gamble have paid notice to Christensen’s message and now outsource large amounts of their research and development.