The Build or Partner Dilemma. How Catalytic Customers Can Help

The question of whether to build internally or partner externally is one of the most pivotal decisions a product team will make. It’s not just a matter of immediate cost savings or time-to-market considerations. This decision shapes the company’s long-term strategic capabilities, influences competitive positioning, and defines future growth opportunities.

Yet, too often, the conversation around building versus partnering feels surface-level. We hear clichés like, “If you want control, build; if you want speed, partner.” In reality, the decision is far more complex, requiring nuanced thinking that balances immediate gains with future-proofing the business.

Here, we take a deeper dive into advanced frameworks for the build-or-partner decision and posit how companies might bring Catalytic Customer insights into the conversation in unexpected and valuable ways.

The Build-or-Partner Decision: It’s Not a Binary Choice

When product teams evaluate whether to build a capability in-house or partner with an external player, the choice isn’t as simple as control versus speed. The best decisions come from understanding the full spectrum of strategic considerations:

1. Isolate What Matters from What Doesn’t

Not every capability needs to be built in-house, but critical, differentiating capabilities often should be. The key is identifying which aspects of your offering create lasting competitive advantage and which can be commoditized.

Example: A fintech company we worked with built its core risk engine in-house to maintain an edge in fraud prevention while partnering for customer support tools that don't differentiate the business.

2. Balance Scarcity with Ecosystem Leverage

Some capabilities are scarce and provide a competitive edge if built internally. Others are widely available through partnerships, making it more efficient to leverage the ecosystem.

Example: If machine learning expertise is a rare differentiator in your market, building in-house could be crucial. On the other hand, integrating widely adopted APIs from partners might accelerate time-to-market without compromising uniqueness.

3. Ensure Strategic and Cultural Alignment with Partners

Partnerships aren’t just about technology; they involve people and processes. A partner’s culture and strategic priorities should align with yours to avoid friction that can slow down innovation.

Example: A healthcare provider may seek a partner for patient engagement tools. If the partner doesn’t share the provider’s focus on data privacy and regulatory compliance, the partnership could create long-term risks.

These are not one-off questions. They require continuous evaluation as market dynamics shift and as the company’s own internal capabilities evolve.

Some Ways to Leverage Catalytic Customer Insights

At CoinJar Insights, we advocate for the power of Catalytic Customers—highly engaged, knowledgeable users who push companies to innovate and improve. They aren't (nor should they be) the primary decision-makers in your build-or-partner decisions, but they can play a contributing and potentially valuable role.

Here are four ways you might tap into Catalytic Customer insights during this process.

1. Spotting Ecosystem Shifts Early

Catalytic Customers don’t just use your product. They are deeply embedded in the broader ecosystem and often adopt new solutions before the wider market catches on. Their behavior can offer early indicators of shifts that could impact your decision to build or partner.

Our Suggestion: Don’t just ask Catalytic Customers what they want from your product. Ask them about the other products and services they are adopting. This can uncover emerging ecosystem trends that may make partnering a more urgent or viable option.

2. Evaluating Partner Compatibility

One common pitfall in partnerships is overestimating a partner’s fit. Traditional due diligence processes often focus on financials and operational metrics, but partner compatibility at the product level is equally important.

Our Suggestion: Involve Catalytic Customers in partner evaluation exercises. Let them test the partner’s offering and assess how well it aligns with their needs and expectations. Their feedback can highlight whether the partnership will add long-term value or create friction.

3. Discovering Hidden Build Opportunities

Sometimes, companies choose to partner because they believe a capability is beyond their internal reach. But Catalytic Customers can help identify hidden build opportunities—areas where a small investment in internal capability could yield outsized returns.

Our Suggestion: Engage Catalytic Customers in co-creation workshops. Ask them to envision the ideal solution if your company were to build it in-house. Their insights may reveal that you already have untapped strengths that could be leveraged to build rather than partner.

4. Using Catalytic Customers as Scenario Planners

Management teams often rely on internal modeling to forecast the implications of build-or-partner decisions. But these models can be blind to long-term customer impacts.

Our Suggestion: Turn your Catalytic Customers into scenario planners. Present them with hypothetical build-or-partner scenarios and ask them to project how each choice would affect their experience over the next three to five years. Their long-term view can reveal risks and opportunities that internal teams might overlook.

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The build-or-partner decision isn’t a one-and-done choice. It’s a continuum of strategic options that evolves as your company grows and market conditions change. The best companies are those that:

• Balance short-term speed with long-term autonomy

• Combine internal development with external ecosystem leverage

Catalytic Customers provide a unique lens to view this decision. They’re not just here to validate what you already know. Their role is to challenge assumptions, anticipate future shifts and, hopefully, reveal hidden opportunities.

By involving Catalytic Customers in creative and engaging ways, product teams can gain a competitive edge in their decision-making process. The result? Build-or-partner choices that are proactive, future-proof, and deeply aligned with evolving customer needs and market dynamics.