Building versus buying capabilities in-house or deciding whether to outsource them is a strategic decision. And it’s not a decision all executives think about the same way. So much depends on your company’s goals and strengths. It’s important to have a structured way to think about this decision, though, so when you need to incorporate a capability, you know how to make the decision. We asked our Fast Company Impact Council members how they decide when to build capabilities in-house versus outsourcing or partnering. It was a popular question, and we had to limit the responses—to just 27! There is wisdom in these words that you can apply to your situations.
1. PARTNER FOR COMPLEX CAPABILITIES
AI has shifted the equation—there are now far more things you can use easily, rather than build in-house. For many companies, that means partnering for complex capabilities instead of trying to recreate them internally. The challenge isn’t access; it’s prioritization. With so many nice-to-have services now available, the key is identifying which ones become true need-to-have capabilities that drive real outcomes. — Kevin Laymoun, Constructor
2. DEPENDS ON COMPETITIVE ADVANTAGES
I decide based on where real competitive advantage comes from. If a capability is strategically differentiating and tied to proprietary data, judgment, or know-how, I want it in-house. If it is more commodity and a partner can deliver it faster or better, I will partner. I tend to think about AI as two races: one to adopt what is becoming broadly available, and another to build what will actually set you apart. — Todd James, Aurora Insights
3. ONLY BUILD WITH EXPERTISE
Never build something you don’t properly understand. You need to be able to judge the work, and to understand the craft and process behind it. Without that, you’re slightly kidding yourself. So the choice is fairly simple: Either hire someone you trust implicitly to lead it, or work with people who already know what they’re doing. — James Greenfield, Koto
4. BUILD CRITICAL CAPABILITIES IN-HOUSE
We are leaning more toward building critical capabilities in-house, especially where they touch core workflows, professional judgment, and client relationships. Much of the startup world is trying to build around expertise firms like ours, which have developed over decades, so we have to be careful not to give away part of our value system. We will still partner where it accelerates us, but we want to build internally where the capability shapes delivery, strengthens our people, and directly supports the value we create for clients. — Mike Sewell, Gresham Smith
5. UNDERSTAND YOUR VALUE PROPOSITION
When thinking about AI capabilities, for instance, the decision depends on both the company’s situation and the daily evolution of AI knowledge. Right now, it’s a bit of a fast-moving Wild West, with few standards, so building in-house requires sustained investment in talent that can keep up. To make this decision, leaders need to first understand their value proposition. If AI is central, building internally may make sense. If not, seeking a partner is often the smarter path. Many companies benefit from AI operationally without needing to own the capability, making partnerships more efficient and adaptable. — Andrea Montecchi, Oliver Wight
6. PARTNERSHIP IS USUALLY BEST
I have always outsourced and partnered unless something was our sustainable competitive advantage—so few things actually are. I wrote six books on partnering and taught executive education on strategic partnering at Caltech for 24 years, so I am a huge advocate of partnering. It is a low-capital-investment way to leverage the talents and assets of other companies, while making sure your company carefully protects transferring any of your non-contracted IP to your partners. — Larraine Segil, Exceptional Women Alliance Foundation
7. OWN WHAT MATTERS MOST
If a capability is central to our brand, requires deep institutional context, or needs to compound over time, I want it built in-house. If it is specialized, episodic, or something an outside partner can do faster or better without sacrificing quality or control, partnering usually makes more sense. The goal is not to own everything. It is to own what matters most. — R. Ethan Braden, Texas A&M University
8. BUILD IN-HOUSE WHEN IT WILL BE REUSED
We build capabilities in-house for those things that will be needed repeatedly across projects and digital products we create, and those things that will be a competitive advantage. We outsource for very specialized skills and things that aren’t aligned with our core business. We partner when there are clear mutual benefits, like teaming up with subject matter experts to bring an innovative new mobile app to market. — Brad Weber, InspiringApps
9. STAGE AND ECONOMICS
It comes down to stage and economics. Early-stage companies often rely on external partners for speed and flexibility; as they scale, bringing capabilities in-house can improve efficiency and control. But the goal isn’t binary, it’s balance. The best setups maintain healthy tension between internal teams and external partners to avoid “marking your own homework.” That outside perspective is often what pushes teams to be braver. The model may evolve over time, but the need for constructive friction to produce great work remains constant. — Emily Kortlang, Yerba Madre
10. ASK 3 QUESTIONS
When deciding whether to build capabilities in-house versus outsourcing or partnering, we ask ourselves several questions: Is this something we will be able to make money on? Will this distract us from what we do best? Is this something we can be famous for? If the answer is “yes” to all three, then we investigate building it. If not, we would rather partner. — Oscar Yuan, Material
11. BE CLEAR ON WHERE YOU EXCEL
We have become very clear on what we excel at and what we don’t. For the things we excel at we have built the capability in-house and avoid outsourcing any part of it. For things we are not good at but need, we look for best-in-class partners to work alongside us. I am a huge believer in being great at a few things and not trying to deliver on things where you don’t excel. — Phillip Haid, Public Inc.
12. START WITH USE CASE AND RISK PROFILE
We start with the use case and the risk profile. If a capability directly affects how we operate, serve customers, or differentiate as an integrated logistics company, we build it. This way, we maintain accountability, data stewardship, and speed of learning. When a need is specialized or evolving quickly, partnerships can help us move with speed, paired with clear goals, shared ownership, and governance from the start. — Dennis Anderson, ArcBest
13. IN-HOUSE: WORKFLOW AND USER EXPERIENCE
We build in-house when it’s core to our differentiation, especially where context, data, and iteration speed matter. For everything else, we partner or buy to move faster. In government, nuance and security really matters, so anything tied to workflows or user experience is hard to outsource well. The goal is to stay focused on what actually makes your product uniquely valuable and drives usage. — Madeleine Smith, Civic Roundtable
14. QUALITY IS HARD TO OUTSOURCE
Our default is to build in-house. We have a very high bar for quality, and the hard part is making it reliable, coherent, and seamless for the customer. That level of quality is hard to outsource, especially for anything core to the product experience. We’ll partner where it makes sense around the edges, but the capabilities that define the product have to be built by us. — Avery Pennarun, Tailscale
15. CORE TO YOUR DIFFERENTIATION
The most useful question in any build-versus-buy decision isn’t about cost or speed, it’s “Is this capability core to how we differentiate?” If yes, you build. If not, outsourcing or partnering lets you move forward while keeping your team focused on what actually sets you apart. In my experience advising growth-stage companies, the leaders who scale most effectively are as intentional about what they won’t build as what they will. — Randi Lee, Lucas Advisory
16. BUY FOR SPEED
We don’t build for the sake of building. We buy for speed where it’s a commodity and build where it really matters. The line is simple: What creates our differentiated, competitive advantage, we want to own. — Steve Holdridge, Dayforce
17. ACCOUNTABILITY AND DIFFERENTIATION
It’s about accountability and differentiation. We build capabilities in-house when they are core to strategy, and we have access to data, expertise, and resources—areas where ownership can be measured and accounted for. We partner when speed, scale, or specialized expertise can accelerate outcomes without diluting strategic control. And we outsource work that is transactional, repeatable, or optimized for cost and efficiency, where differentiation is low and standardization is acceptable. AI has made these decisions sharper. It quickly exposes which capabilities compound value and demand ownership, versus those that can be leveraged externally. — Felicity Carson, onsemi
18. ITERATE AND PROBLEM SOLVE IN REAL TIME
Building our AI processes in-house has allowed us to scale and deploy technology quickly, with a lean team, and on an incredibly lean budget. As a startup, every single dollar we spend on data and data processing matters; our decision to build in-house has allowed us to be on an even playing field compared to bigger companies in the industry who have secured far more capital than we have. Building in-house also allows us to iterate and problem solve in real time, preventing unnecessary lag times to fix issues that arise during deployment. — Xiaodi Hou, PhD, Bot Auto
19. OUTSOURCE IF NOT CORE
Our strategy is to build anything in-house that we believe, or aspire, to be a distinctive competency. Namely, something that is core to our business and our commercial or operational differentiation. Anything we want to execute with efficiency but only provides average market capability, are the things we seek to outsource. — Scott Brighton, Bonterra
20. DEPENDS ON YOUR SITUATION
What really matters is the situation you’re in. When the outcome quality depends on the people doing the work having deep experience with the problem, keep it in-house. These days, our industry is moving towards smaller teams with more experienced people who are still actively involved in the work. This makes it easier for everyone to be on the same page. We partner when someone else has genuine domain expertise we lack. The key question is always whether a layer between the maker and the outcome will cost you something you cannot afford to lose. — Peter Smart, Fantasy
21. BUILD WHEN IT MAKES LONG-TERM BUSINESS SENSE
When we consider building in-house capabilities, we take the long view—how the investment complements our existing offerings, whether it’s a natural extension or a net-new function, and what it truly takes to stand up. Ultimately, it has to make long-term business sense for us. — Chris Bailey, Bailey Brand Consulting
22. BUILD IF IT’S AN ONGOING CAPABILITY
Math. If it is a core component or ongoing capability, I build in-house or partner because I like control, visibility, and sustainability. However, I may outsource as I ramp, with the intention to bring or develop in-house once it is a proven model. — Effie Carlson, Watershed Health
23. PARTNER WHEN OUTSIDE EXPERTISE IS ADDITIVE
I usually begin by asking whether the capability is something that should become part of who we are long term. If it directly shapes how we want to operate or grow, there is real value in building that internally. At the same time, partnership can be just as important when outside expertise helps you move further or think differently than you would on your own. The strongest partnerships are the ones that solve an immediate need while also strengthening internal understanding over time. — Chadwin Sandifer, EdD, Fairleigh Dickinson University
24. DECIDE BASED ON BEST POSSIBLE CLIENT OUTCOME
We build in-house when it’s core to how we differentiate. Our design practice, PR capability, and our complex business unit are all examples of specialisms that sharpen our disruption model. But we’re equally intentional about partnership. When scale, speed, or a new frontier is required, we tap into best-in-class collaborators or bespoke partners who bring something we don’t own. The goal isn’t to do everything, it’s to orchestrate the right combination of talent to deliver the best possible outcome for our client partners. — Emily Wilcox, TBWA\Chiat\Day NY
25. PARTNER WHERE IT ACCELERATES
I decide based on where capability creates the most strategic value. If it differentiates how we operate—compliance, worker engagement, sustainability—we build it in-house. That’s where control, standards, and long-term capability matter. Where speed, scale, or specialist expertise is critical, we partner—often to build capability quickly and accelerate impact. It’s a dynamic model. Build where it differentiates, partner where it accelerates. — Clare Woodford, Alpine Group—Paradise Textiles and Alpine Creations
26. SPEED AND COST OF DISTRACTION
It comes down to speed and cost of distraction. If building internally pulls top talent away from core priorities, you’re creating hidden risk. I build when it creates durable IP; I partner when it accelerates execution without slowing the main business. — Logan Mulvey, GoDigital Music
27. USE DESIGN SPRINTS
Design sprints aren’t just for new product development. We use design sprints to make critical decisions, including the building of in-house versus outsourcing. Empathy interviews with our internal stakeholders and clearly defining the problem allows us to design experiments to test products or services against our expectations and real-world needs resulting in better decision-making and alignment. Time spent on the front end of innovation results in future savings. — Garret Westlake, Virginia Commonwealth University
