Make, buy or partner
Should we build this ourselves, buy it in, or depend on a partner?
Vertical integration and outsourcing: owning a capability, licensing it, depending on a supplier or partner, or staying out of a customer’s business.
Fewer than ten resolved cases. Read this page as a set of examples, not as a base rate.
What the cases suggest
The cases favour owning what compounds. TSMC’s decision to develop its own copper process, Google’s decision to build its own map, and TSMC’s funding of ASML all kept learning inside the firm or close to it. Yahoo’s decision to rent Google’s search results, and Nokia’s decision to adopt Microsoft’s phone software, handed that learning to a partner who later became the rival or the bottleneck.
What separated the decisions that worked
- Decisions to own a capability paid off when the capability improved with use and when a partner could become a competitor.
- Decisions to depend on a partner worked when the partner credibly could not compete (TSMC’s promise never to make its own chips) and failed when it could (Yahoo and Google).
- Timing mattered: Apple was right to want its own maps and wrong about when it could ship them.
Where this evidence is weak
The group is small, and most cases come from the chip and mapping essays, so its lessons lean towards industries with steep learning curves.
By who decided
| Decision-maker | Cases | Paid off | Mixed | Backfired | Too early |
|---|---|---|---|---|---|
| Market leader | 6 | 3 | 1 | 2 | 0 |
| Challenger | 1 | 1 | 0 | 0 | 0 |
| Young company | 1 | 1 | 0 | 0 | 0 |
The cases
Each links to the essay, memo or road not taken where the decision is described and judged, with its sources.
- Never design or sell chips under its own name, so that it would never compete with its customers A credible promise to stay out of your customer’s business can be worth more than the business you give up.
- Decline IBM’s offer to share its 0.13-micron copper process and develop its own In a business that runs on learning, renting the knowledge can leave you permanently a step behind the owner.
- Build its own base map with Street View cars and human editors, and offer free voice-guided navigation on Android A product sold by others can become a free feature in the hands of a company that profits elsewhere.
- Commission original series without pilots and release whole seasons at once When your suppliers become your rivals, owning what you sell is the defence, and it changes what you sell.
- Invest €838 million for a 5 percent stake in ASML and commit €276 million to its research on extreme ultraviolet lithography When everyone depends on one supplier’s breakthrough, the customers who fund it get it first.
- Replace Google's maps on the iPhone with its own, assembled from licensed data, in iOS 6 Some products can be shipped and fixed; a map has to be right on the first day someone relies on it.
- Use Google’s results to power Yahoo!’s web search, with Google credited on the page Be careful about outsourcing the function your users come for, especially to a supplier whose brand appears on your page.
- Prepare Nokia’s employees to abandon its own smartphone platforms, an announcement that came days later as a partnership to build phones on Microsoft’s Windows Phone. A memo that tells everyone the current product is doomed will reach customers and retailers, not only employees; plan for that audience.
Other kinds of decision
- Opening or closing
- Business model and pricing
- Acquisitions and sales
- Technology bets
- Product design
- New categories and markets
- Distribution and positioning
- Focus, exit and investment
- Trust, safety and privacy
- Executing large change
- Organisation and governance
- Public rules
Shrikant Kumar. “Make, buy or partner.” The Telos Decision Record, Telos, version of 2026-11-03. https://shrikantk.com/record/make-or-buy/