CONCEPT
Make Yourself With AI
The third option that AI has added to Ronald Coase's make-or-buy decision: the architect, the lawyer, the marketer who describes what she wants to an AI system and produces it herself, eliminating both the coordination costs of internal production and the transaction costs of market procurement.
For most of the twentieth century, organizations faced a binary: make, by hiring specialists and coordinating their work inside the firm, or buy, by contracting with outside vendors and paying the transaction costs of the market.
Ronald Coase's framework explained the choice: the boundary between make and buy is set by the comparison of internal coordination costs against market transaction costs. AI has introduced a third option that the Coasian taxonomy did not contain: make yourself, with an AI assistant. The architect who previously had to choose between an in-house development team and a software vendor can now describe what she wants to the AI and produce it herself. This third option eliminates both the coordination costs of internal production and the transaction costs of external procurement, at the cost of accepting whatever limitations the AI introduces in quality, customization, and domain-specific sophistication. The limitations are real