In Build, Borrow, or Buy, Laurence Capron and Will Mitchell a highly structured examination of the three fundamental modes — or “pathways” — for obtaining the resources needed to grow. They are: developing the needed resources internally, or “building” them; contracting or partnering to obtain resources, or “borrowing” them; and acquiring, or “buying” them. According to the authors, companies should be adept at all three. The authors provide a simple decision tree for navigating the build, borrow, and buy choice. It requires answering four sequential questions:
- Do you have internal resources that “are similar to those you need to develop and superior to those of competitors”? If so, build.
- Can you easily trade for the necessary resources? If so, borrow via contract.
- Do you need to collaborate closely with the resource supplier? If so, borrow via alliance.
- Can you successfully acquire and integrate the resource supplier? If so, buy.
Although these questions are straightforward, the authors make it clear that answering them in an honest, open-eyed way is not so easy. A key message of the book is that whatever pathway a leader chooses in a particular situation, it will be a means to the same end: obtaining the resources needed to pull off a strategy. This distinction between how you obtain the resources to execute a strategy and the strategy itself is useful in that it helps companies avoid the trap of reducing their strategy to sourcing decisions. When that happens, borrowing and buying growth can become a dangerous — and ultimately unsustainable — crutch for companies that are unable to grow organically.
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