When I say “NIH,” I am not referring to the National Institute of Health. Rather, to a common problem in business: “Not Invented Here”!
In the mid 60’s before there were Chick-Fil-A locations, the sandwiches were sold under license to various locations. One of them was Waffle House. The sandwiches sold so well they outsold the core Waffle House menu and as a result, the leadership decided to discontinue sales. This is when Chick-Fil-A was born as a standalone restaurant to sell the sandwiches. You can drive by both restaurants today and judge for yourself what could have been different if there wasn’t a case of NIH in the mix.
Does your business have a resistance to using something best in breed and believe you can create something better yourself? The answer may be yes, you could. The question is really should you. Let’s consider three factors to help you decided when you should consider leveraging a “NIH” solution:
1) Time to Market – How long would it take and what is the investment to develop a competing product or service? Will the market demand still be strong by the time you develop capabilities. If you entered the market for Y2K services in October 1999, what would have been the potential for sustained success? What is the opportunity cost to your business of not having the product or capabilities now vs 6 to 12 months or even much longer?
2) Better or Good Enough – How much better would what you create need to be to take market share? Would it be “me too” or very similar? If so – is there a strategic reason you would want to invest in that? If it is much better – would customers be willing to pay a premium and is there a need for “better” vs “good enough”.
3) Cost – In the traditional “built or buy” exercise, the true cost of building your own needs to include several factors. Let’s use software development as an example. Is there an off the shelf products that with minimal customization can handle your needs? Think Microsoft Office or Google Docs. What would it cost you to develop and maintain a similar product?
Think through
Put pride aside and use your business logic on the decision. I’ve worked for several technology companies. Some were stubborn and had to create nearly 100% of what they sold. Others purchased companies for “technology” that had a revenue stream and rather than continue selling that product, spent years reverse engineering it. By the time that was done the acquired products became irrelevant. Their innovation came to a standstill as hungry agile competitors leapfrogged them. Others realized they had a gap in their portfolio and OEM’d the products having them branded to look like their own speeding time to market and reducing risks for them and their customers.
Would be interested in your thoughts about examples NIH. I always welcome feedback. Feel free to post comments or email them to me. Small Business, Big Lessons ® Don’t be a stubborn NIH business leader!
Small Business
About the Author:
Gregory Woloszczuk is an entrepreneur and experienced tech executive that helps small business owners grow their top and bottom line. Gregory believes in straight talk and helping others see things they need to see but may not want to with a focus on taking responsibly for one’s own business. He and his wife, Maureen, started GMW Carolina in 2006.
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