HedgeHog Concept – The Three Circles Signal Greatness

HEDGEHOG CONCEPT –  The Three Circles Signal Greatness

Would you like to find a predictor for your business achieving greatness?

We’ve been working with several of my customers to develop a Strategic Advisory Council.  The council is a strategic recommendation Jim Collins to help your business become great.

Why is this so critical?

In Good to Great, Jim Collins notes:  “The Hedgehog Concept is a turning point in the journey from good to great. In most cases, the transition date follows within a few years of the Hedgehog Concept. Furthermore, everything from here on out in the book hinges upon having the Hedgehog Concept. As will become abundantly clear in the following chapters, disciplined action—the third big chunk in the framework after disciplined people and disciplined thought—only makes sense in the context of the Hedgehog Concept”

Let’s review exactly what the Hedgehog Concept is. A simple, crystalline concept flowing from deep understanding about the intersection of the following three circles:

  1. What you can be the best in the world at? (It should be noted that equally important, you should know what you cannot be the best in the world at). This discerning standard goes far beyond core competence. Just because you possess a core competence doesn’t necessarily mean you can be the best in the world at it. Conversely, what you can be the best at might not even be something in which you are currently engaged.
  2. What drives your economic engine? All the good-to-great companies attained piercing insight into how to most effectively generate sustained and robust cash flow and profitability. In particular, they discovered the single denominator—profit per x—that had the greatest impact on their economics. If you’re using an industry standard for this, chances are you’ve not explored this deeply enough. The Good to Great companies had a much deeper and more specific understanding of what drives their economics.
  3. 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.

For our customers it’s helpful to understand each of these corresponds to a section or entry on the One Page Strategic Plan.

  1. What you can be the best in the world at? (Brand Promise).
  2. What drives your economic engine? (Profit Per X)
  3. What you are deeply passionate about? (Core Purpose)

Isiah Berlin’s essay on the Fox and the Hedgehog contains this simple message, “a fox knows many things, but a hedgehog one important thing” 

ARE YOU A FOX OR A HEDGEHOG?

HEDGEHOG: Focused on a single Idea, Not distracted, Easily defends self as a single position in marketplace.

FOX: Unfocused, Easily distracted, Spends a lot of energy running about defending a lot of (possible unjoined) territory.

Note this key distinction that Collins offers in Good to Great: “Those who built the good-to-great companies were, to one degree or another, hedgehogs. They used their hedgehog nature to drive toward what we came to call a Hedgehog Concept for their companies. Those who led the comparison companies tended to be foxes, never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent.”

Isaiah Berlin, the author of The Hedgehog and the Fox went so far as to divide the world into hedgehogs and foxes.  Which are you, a hedgehog or a fox?

My good friend, Doug Wick – Gazelles Coach in Cedar Rapids Iowa is the author of this insightful article.

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