Ben McConnell made a post on his blog about Intuit rewarding failure as a mean of encouraging experimentation. Graham Hill responded, and thanks to his efforts we now have a new term to toss around.
Intuit’s approach is a brave example of what is known as “Patching”.
Patching breaks down the business into a quilt of smaller patches, each of which looks for improvements in its own area, and at the knock-on effects of improvements in neighbouring areas. As some of the areas find improvements that make the business more effective, neighbouring areas adjust to the changes. The next iteration of the business emerges improved and more effective through a process of many small, inter-linked improvements.
That doesn’t mean that a business needs hundreds of patches at the same time. Companies like HP, Compaq, Dell and British Petroleum have all used patching to tackle business problems like divisional realignment, product development and restructuring, often with a relatively few patches.
Take a look at Stuart Kaufmann’s McKinsey Quarterly article “Escaping the Red Queen Effect” and Kathleen Eisenhardt’s HBR article “Patching: Restitching Business Portfolios in Dynamic Markets” to learn more about how patching improves business performance.