The Patching Approach
Another approach that focuses on the role and ability of corporate managers to create value in the management of multibusiness companies is called “patching.”12Patching is the process by which corporate executives routinely remap businesses to match rapidly changing 277278market opportunities. It can take the form of adding, splitting, transferring, exiting, or combining chunks of businesses. Patching is not seen as critical in stable, unchanging markets. When markets are turbulent and rapidly changing, patching is seen as critical to the creation of economic value in a multibusiness company.
The process by which corporate executives routinely “remap” their businesses to match rapidly changing market opportunities—adding, splitting, transferring, exiting, or combining chunks of businesses.
Proponents of this perspective on the strategic decision-making function of corporate executives say it is the critical, and arguably only, way corporate executives can add value beyond the sum of the businesses within the company. They view traditional corporate strategy as creating defensible strategic positions for business units by acquiring or building valuable assets, wisely allocating resources to them, and weaving synergies among them. In volatile markets, they argue, this traditional approach results in business units with strategies that are quickly outdated and competitive advantages rarely sustained beyond a few years.13 As a result, they say, strategic analysis should center on strategic processes more than strategic positioning. In these volatile markets, patchers’ strategic analysis focuses on making quick, small, frequent changes in parts of businesses and organizational processes that enable dynamic strategic repositioning rather than building long-term defensible positions. Exhibit 9.9 compares differences between traditional approaches to shaping corporate strategy with the patching approach.
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businesses to match rapidly was first posted on November 13, 2019 at 3:48 pm.
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