Innovation in Motion: why make-or-buy decisions are becoming more strategic
As expert in secure, smart & connected devices Vention has conducted a benchmark survey to better understandwhat the key strategic choices in innovation are. One of these is Make or Buy.
Innovation is currently shaped by a high degree of turbulence. Complexity is increasing, pressure on time to market continues to grow, and geopolitical tensions are adding new uncertainty.
Labor shortages, growing technological complexity, and rapid technological developments are just a few of the forces driving this dynamic environment. Innovation is always a balancing act between budget, time, quality and risk.
In our benchmark research, Vention looked closely at these developments and, more specifically, at how they affect the way companies think about execution. How are companies approaching the make-or-buy decision in today’s innovation landscape?
A changing innovation environment
Before looking at make-or-buy choices directly, it is worth understanding the broader trends that are increasing pressure on innovation processes. One of the most obvious factors is the labor market shortage. This was mentioned by almost all respondents as an important factor affecting project planning.
When skilled people are difficult to find and retain, organisations are forced to think more carefully about where they invest their internal capacity. That naturally raises an important question: what are companies actually spending their time on?
"what are companies actually spending their time on?"
The research shows that more than 50% of respondents believe they systematically spend too much time on non-distinguishing, non-core functionality. In other words, valuable engineering and innovation capacity is often absorbed by activities that do not create competitive differentiation.
This is a striking insight, especially when viewed alongside another result: 95% of respondents indicate that they do not see it as a problem if they do not own intellectual property related to non-core technology. This suggests a clear shift in mindset. Companies are increasingly willing to accept that not every part of a product needs to be developed in-house, especially when that part does not contribute directly to strategic differentiation.One of the expected barriers is the shortage of skilled employees. Talent constraints continue to affect the ability to develop and deliver products efficiently.
Why companies collaborate with innovation partners
The research also shows that the primary reason for collaborating with external innovation partners is access to specialist knowledge. That finding is hardly surprising. Elsewhere in the benchmark, companies clearly indicate that product and system complexity continues to increase. As products become more connected, more software-driven, and more integrated into larger ecosystems, it becomes harder for organisations to maintain all the required specialist knowledge internally.
At the same time, the constant need to accelerate development is another important reason to work with external partners. Collaboration is not only about filling knowledge gaps. It is also about increasing speed and flexibility. This is reinforced by another strong result from the study: 87% of respondents agree that innovation can be structurally accelerated through collaboration with external parties. But the research also points to another major factor: the volatility of market demand. In fact, this was identified as the most important external factor influencing time to market.
When customer needs keep shifting, it becomes much harder to make stable development choices and maintain project focus. One of the expected barriers is the shortage of skilled employees. Talent constraints continue to affect the ability to develop and deliver products efficiently.
The growing importance of focus
Taken together, these findings point toward a clear strategic principle: companies need to focus their own efforts on what truly matters. If non-core technology does not need to be owned, and if external collaboration can accelerate innovation, then it becomes increasingly important to distinguish between core and non-core activities.
That does not only apply to complete subsystems or specialist engineering disciplines. It also applies to the way products are built. Standardization, modularity and the use of fixed building blocks are frequently mentioned in the research as important themes. This leads to an interesting and highly relevant strategic question: should organisations develop these capabilities themselves, or should they buy themfrom parties that have already mastered this way of working?
This question becomes especially relevant for standard functionality. If proven solutions, reusable modules, or established development methods are already available in the market, it may not make sense to reinvent them internally. In many cases, buying this capability may be faster, more cost-effective, and less risky than building it from scratch.
From self-reliance to ecosystem thinking
What emerges from the research is a broader shift in how innovation is organized. Companies increasingly recognize that they cannot and should not do everything alone. The complexity of modern product development, combined with labor shortages and market pressure, is pushing organisations toward ecosystem-based collaboration. Instead of trying to own every capability, companies are becoming more selective. They want to retain control over the technology that defines their value, while relying on partners for non-core elements that can be sourced more efficiently elsewhere.
This does not mean companies are giving up control. On the contrary, it means they are becoming more strategic in where they apply their internal resources, where they want to build intellectual property, and where partnership creates more value.
New insights
The benchmark shows that innovation is becoming more dynamic, more complex, and more demanding. As a result, make-or-buy decisions are becoming more strategic than ever. Companies are increasingly aware that too much time is still spent on non-corefunctionality.
They are also increasingly comfortable with the idea that non-core technology does not need to be owned internally. Specialist knowledge, speed, and flexibility are driving more collaboration with external partners and a large majority of respondents believe such collaboration can structurally accelerate innovation.
The conclusion is clear: there is a strong need to innovate through ecosystems. Non-core technology is particularly suitable for outsourcing, and market players should respond to that demand by offering strong, reusable, and well-integrated capabilities. The companies that make the right make-or-buy choices will be better positioned to focus, accelerate, and compete in an innovation landscape that is only becoming more dynamic.
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