February 10, 2016

Good to Great: The Hedgehog Concept

Good to Great: The Hedgehog Concept

In continuing with the current theme of Good to Great, I would now like to explore the idea that Jim Collin's put forth which he dubbed the Hedgehog Concept.

What Is The Hedgehog Concept?

The Hedgehog Concept comes for the old Greek parable about a hedgehog and a fox which states the following:

The fox knows many things, but the hedgehog knows one big thing

In the story, the fox tries all the possible tricks he knows in order to try catch the hedgehog. He plays dead, chases it, sneaks up on it etc. but every time he fails. The reason for this is that the hedgehog knows how to do one thing very very well: curl up in a ball to protect himself.

If you project this into a modern context, the fox could be seen as a company that pursues many goals at the same time. As a result, their strategies and thoughts are scattered about and they struggle to focus, usually resulting in semi-baked achievements.

However, if a company were to act like a hedgehog it would operate at a slow and steady pace that simplifies the world into a single vision, which they focus on. If there is something that isn't essential to their vision, they discard it completely.

Recently, I was looking at the the changes that Satya Nadella had been making, since he took over Microsoft. He has set a focus of being a software & services company first and foremost and any business units that don't relate to this he has either sold off or diminished significantly. To me, it seems like Microsoft are no longer trying to imitate Apple or Google and are finding their Hedgehog Concept.

The Three Circles

The Hedgehog Concept is comprised of three main concepts which are as follows:

The Three Circles

  1. What can you be the best in the world at?
    In addition to finding out what you can be the best in the world at, it is equally important that you understand what you cannot be the best in the world at and if you aren't the best in the world at what you are doing then why are you doing it at all? Having a goal, or strategy, to be the best is not the same as understanding what you can be the best in.

This also goes well beyond your core business, as just because you are highly proficient at something, or have been doing it for years, doesn't mean that you can be the best in the world at it. In addition, if you aren't the best in the world at it then your core business cannot be the foundation for your Hedgehog Concept.

Interestingly, what you can be the best in the world at could be something that the company doesn't do today.

  1. What drives your economic engine?
    It is vitally important that the company knows how to most effectively generate a continuous flow of income and profit.

  2. What you are deeply passionate about?
    In order to find your hedgehog concept, you need to find that you are passionate about. If you don't find yourself motivated and inspired by your work, or you have to simulate the passion, it will not make you great. You should be saying "Let's do the work that makes up passionate" instead of "Let's find some passion in what we do"

One thing to remember is that when you are hiring people, only get the people who want to be on the bus, or in other words, people who are passionate about the company or the area in which it operates.

For example, if you were to apply the concepts above into a more personal context, you could say something along the following lines:

  • You feel you were born to develop software and are one of the best in the world.
  • You also get paid quite well for your talents
  • You wake up early and go to bed late cause you love your work

By stating something similar to the above, you are hitting on all the right notes and have found your Hedgehog Concept.

Parting Words

In order to be consistently great you need to continuously apply the principles listed above. If you stop doing them, you will slip back into just being a good company, and possibly even worse off.

In the book, they also mention that company growth and expansion is not a Hedgehog Concept, but if you have the right Hedgehog Concept and you stick to it, you will gain enough momentum that growing will not be an issue.

Another interesting fact that I found was that it takes a long time for a company to achieve their Hedgehog Concept, usually around four years. The reason for this is that the process is iterative and although identifying the Hedgehog Concept maybe easy, getting there can be deceivingly difficult.

Until next time...keep learning!