Q - What do you build yourself and what do you buy in from a third party?
A – You build the things that give your company value and outsource the things that don’t.
I set up a business that offered instant cleaning services in London. Customers could go onto an app and book a cleaner, who would arrive within an hour. Our developers built the website and app, and the backend system that matched customers with cleaners, which had quite a complicated algorithm. The cleaners were timed, so when they arrived, they pressed Go on the app, and then Stop when they’d finished – and the customer was charged for the time.
We built the website, app and backend ourselves because that was where the value was. A future buyer of the business would likely want that algorithm, so it had value. But we outsourced our finance, IT and HR systems to apps where we could add no value.
Airbus outsources the wings for their planes. The value in their business is the design of the product and putting it all together, not in manufacturing every single component.
Look at where you’re creating value, and do that yourself well. Let someone else shoulder the investment and capital & business risk for the rest.
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