organic growth: the technical challenge

June 10, 2008 at 5:07 pm | Posted in Business, Technology Trends | 8 Comments

Ever checked the prices on organic groceries? Pretty pricey. Turns out that to grow stuff organically isn’t nearly as cost effective as using non-organic means. To me, a non-farmer, that initially didn’t sound right. I thought what could be more cost effective, than taking the bare minimal approach to growing stuff. Turns out I was wrong for lots of reasons and the bottom line is that mass producing food organically can be quite expensive, indeed.

Technology isn’t all that different, especially for an established company. As I discussed earlier, I used to wonder why anyone would go through the cost of an acquisition when you could develop the same product organically for what seemed to be a fraction of the cost. And nobody fortifies that thinking like developers! Ask your development teams about an acquisition and they will typically tell you they can do it for 10x less the cost, with a team of dedicated developers internally, and deliver within an extremely reasonable time frame!

Trouble is, they are almost always wrong, and they typically greatly underestimate the effort. Costs rise, delivery dates are pushed, features dropped, over-engineering ensues, scope-creep dominates, and a year and a half into the six-month project, everyone is wondering if the thing should just be canceled. I know that’s being a bit harsh on developers, but remember, I WAS ONE! It’s not necessarily that the developers are incompetent but there are many other factors at play. Here are a few that top the list that I see over and over when it comes to trying to develop a product similar to one that exists in the market instead of acquiring it:

1) A single, zealot, charismatic developer (or manager) over commits on behalf of the whole dev team

2) Poor due diligence on what’s really there that they are going to try and build

3) Not understanding the “heart and soul” of the product that made it successful in the market

4) Not accounting for the breath of the product, usually in terms of platform support

5) Over-engineering a product in an attempt to better the one already in the market, and spending an inordinate amount of time on features that the masses do not want or need

The amount of work required to make the decision to build something organically is often an order of magnitude more than folks realize. There are many trap doors waiting for you, any one of which can absolutely derail the effort. Make sure your eyes are as wide open as possible and push your discernment to its limit before deciding to organically build something that’s already in the market as opposed to acquiring. It can be done successfully, but that usually only happens when a company completely understands the entire strategy and then plans and implements accordingly.

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