The New Innovation Dilemma

In the age of AI, innovation is no longer a solo sport. Enterprises face a new challenge: should they co-build solutions in-house or through strategic alliances—or co-buy them via vendor partnerships?

In a 2023 Deloitte survey of 500 global CIOs, 61% said choosing the right type of AI partnership was more important than choosing the right model architecture.

Co-Build: Deep Control, Long-Term Value

Advantages:

• IP Ownership: All models, data, and outputs remain yours.
• Customization: Every layer—data, logic, UI—can be tuned to your unique context.
• Moat Creation: Proprietary models based on proprietary data create lasting advantages.

Co-Buy: Speed, Scale, and Simplicity

Advantages:

• Speed: Go live in weeks, not months.
• Lower Initial Cost: No need to build teams from scratch.
• Battle-Tested: Solutions have already been validated across customers.

The Third Path: Co-Innovation

Co-innovation combines the best of both worlds—partnering with startups or accelerators to shape custom AI solutions without starting from scratch.

Strategic Decision Framework

Avoiding Common Pitfalls

• Overestimating internal talent – Fix: Start hybrid or with partners.
• Underestimating vendor lock-in – Fix: Ensure open architecture.
• Neglecting governance in co-innovation – Fix: Clarify KPIs and IP terms early.

Cost Comparison

Co-buy is cheaper upfront, but co-build creates long-term value and defensibility.

Key Takeaways

• Co-build = Control + IP + Time Investment
• Co-buy = Speed + Lower Upfront Cost
• Co-innovate = Shared upside, requires good structure

Choose your innovation model like you’d choose your strategic direction: with intention and long-term thinking.