The Hedgehog Concept
This post is part of a series on useful business concepts to help build more resilient, innovative companies in the world.
The Hedgehog Concept comes from Jim Collins’ bestseller Good to Great: Why Some Companies Make the Leap and Others Don’t.
In the book, Collins shares insights that his team gathered across five years of research to try to understand what are the universal distinguishing characteristics that cause a company to go from good to great?
The research led him to 28 companies that outperformed the composite index of some of the world’s greatest companies including Coca-Cola, Intel, General Electric, and Merck.
The Hedgehog Concept comes from an ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.” Foxes pursue many ends at the same time and see the world in all its complexity while hedgehogs simplify a complex world into a single organizing idea.
The research suggests that great companies are hedgehogs. They’re the companies that can see what is essential, simplify the mission, and ignore the rest.
How do we apply The Hedgehog Concept in our business? Collins shares the diagram below to help companies find their sweet spot:
- What you can be the best in the world at (and, equally important, what you cannot be the best in the world at).
- What drives your economic engine.
- What are you deeply passionate about.
It’s crucial to note that becoming the best in the world is not about willing your way to the top. Just because you had years of success with your core business, doesn’t mean you can be the best in the world. If the market has shifted and the competition pivoted years before you have, it may mean it’s time to make the difficult decision to go down a different path. Great companies were able to realize this sooner than the good comparison companies that Collins studied.
Finding the sweet spot for The Hedgehog Concept isn’t easy. According to Collins, it took four years (!!!) for the good-to-great companies to clarify their Hedgehog Concept. It’s an iterative process and one that will require dialogue, debate, testing, and analysis on what’s working and what’s not with your team.
The Hedgehog Concept is not necessarily a new concept. There are other ideas out there that are similar ( The Blue Ocean Strategy, for example) but it’s an important one to bring to the table and have an honest conversation about in your organization.
Originally published at http://peternakamura.com on November 19, 2020.
