Patching. Restitching business portfolios in dynamic markets.

Abstract

In turbulent markets, businesses and opportunities are constantly falling out of alignment. New technologies and emerging markets create fresh opportunities. Converging markets produce more. And of course, some markets fade. In this landscape of continuous flux, it's more important to build corporate-level strategic processes that enable dynamic repositioning than it is to build any particular defensible position. That's why smart corporate strategists use patching, a process of mapping and remapping business units to create a shifting mix of highly focused, tightly aligned businesses that can respond to changing market opportunities. Patching is not just another name for reorganizing; patchers have a distinctive mindset. Traditional managers see structure as stable; patching managers believe structure is inherently temporary. Traditional managers set corporate strategy first, but patching managers keep the organization focused on the right set of business opportunities and let strategy emerge from individual businesses. Although the focus of patching is flexibility, the process itself follows a pattern. Patching changes are usually small in scale and made frequently. Patching should be done quickly; the emphasis is on getting the patch about right and fixing problems later. Patches should have a test drive before they're formalized but then be tightly scripted after they've been announced. And patching won't work without the right infrastructure: modular business units, fine-grained and complete unit-level metrics, and companywide compensation parity. The authors illustrate how patching works and point out some common stumbling blocks.