The Hedgehog Concept is the understanding that your company can’t be the best at everything. Rather, it’s knowing what you can be the best at, gaining clarity, and devising a focused strategy that ultimately leads to business success.
The Hedgehog Concept
The Hedgehog Concept is drawn from the essay written by Isaiah Berlin, titled “The Hedgehog and the Fox” in which a cunning fox tries and continually fails to capture the hedgehog. The Fox waits for the perfect time to pounce on the Hedgehog, but is outwitted by the prickly creature when he rolls into a ball at just the right moment.
Jim Collins explains that companies who are more like the hedgehog — that is, focusing on one thing and doing it well — need not be concerned with cunning competitors because they would not be a threat to success. The three circles that make up the Hedgehog Concept are passion, economic engine, and understanding what you can be the best at.
What You Are Deeply Passionate About
The good-to-great companies focused on those activities that ignited their passion. The idea here is not to stimulate passion but to discover what makes you passionate. You can’t manufacture passion or motivate people to be passionate about a product or service. You can only discover what ignites your fire.
What Drives Your Economic Engine
If you could pick one and only one ratio – profit per x, to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine? For example if you’re focused on profit per store, you might consider changing your ratio to profit per customer visit, profit per employee, or profit per local population.
Your economic engine is not driven by a complicated macroeconomic equation. Instead, this simple single denominator helps force a deeper understanding and focus on the key drivers of your business.
What You Can Be the Best At
In order to truly know what you can be the best at you have to look beyond what you’re good at. It’s not a goal, strategy, intention, or plan to be the best. It’s an understanding of what you can be the best at.
What you can be the best at might even be something that you’re not currently engaged in. Just because you can make money and generate growth, doesn’t mean you can become the best at it. You must focus on what you can do better than any other company. Then gather the competencies and capacity to do so.
An Iterative Process
Developing your Hedgehog Concept is an iterative process. Each of the three circles can take some time to complete. In fact, it took four years on average for the good-to-great companies to get a Hedgehog Concept. It may take you less time, but the effort will be worth it.
What is your Hedgehog Concept?