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The options are clear. Do it yourself (DIY) in house if it’s a sustainable competitive advantage. Outsource if it’s not. Unfortunately, in making that simple choice, some miss the Goldilocks approach; the winning middle way blend of the two.

The essence of the Goldilocks approach is breaking apart outsourcing decisions into their components. Of course, you will sometimes want to keep everything in house. Sometimes you will want to outsource entire processes. But other times you can cut costs and create value by outsourcing parts of a process, and keeping the value-creating pieces in house.

Those value-creating pieces may not be value-creating on their own. Instead, they may be integrally linked to other things you do that require them to create value. If, for example, you were franchising restaurants, you might have to research locations and negotiate real estate deals. On the one hand, you might decide to outsource the real estate negotiating to real estate specialists. But, you might not if you didn’t want to share your locational research. Even though you’re not specialists in real estate negotiating, the interdependencies might make this something you choose to keep doing.