The Hedgehog Concept

In his book, “Good to Great”, Jim Collins shares 6 big ideas that great companies have in common.

The unifying theme of the companies in his book is that they didn’t start out great, but became great when they acted on these big ideas.

One of the biggest is the “hedgehog concept”, which is a strategy of focusing hard on the thing you can do better than anyone else, and repeating it over and over.

The analogy goes like this: there are hedgehogs and foxes. Foxes have many tricks. They run around trying to find food. They can hunt, run, jump, steal, kill, chase, and even swim.

A hedgehog has one trick: to burrow.

But most hedgehogs outlast the foxes, because they are very, very good at one thing instead of pretty good at a lot of things. The story comes from the Greek parable: “The fox knows many things, but the hedgehog knows one big thing.” You can read the analogy in its full form within Collins’ book, Good to Great.

In my podcast this week, I share a story about debating the Hedgehog concept with my mentor, Todd Herman. Over time, the growth of my company has borne out the value of the Hedgehog concept; but he disagreed with me.

Here’s how good companies become GREAT with the Hedgehog concept.

To really be great, a company needs to be:

  • Passionate about its purpose, to the point the people on the team aren’t distracted by other opportunities or novelty.
  • Clear on its economic engine – usually defined as “profit per x”
  • Best in the world at one thing.

Each of these can be further broken down into its component parts.

Passion – you have the right people on the bus. They are motivated–they don’t need to BE motivated.

Economic engine – what really matters most in the business? Is it the number of clients you have, or the profit per customer? Is it the number of widgets you produce, or the profit per widget? Great companies know the answer and focus their service around maximizing their own economic engine.

Best in the world – what can you deliver better than anyone else? This isn’t a goal or an aspiration – it’s what you can actually do. Being the ‘best in the world’ is tough, and requires a culture of discipline to become great AND to stay great.

In the podcast this week, I share a story about how our mentorship practice, Two-Brain Business, became best in the world – and how we’re avoiding complacency by focusing on becoming great. It’s actually easier to become great than to stay great. Our plan is to compare our current level against our potential, because there aren’t any realistic competitors in our space.

The Hedgehog Concept is fairly simple to understand, but challenging to put into practice. Some companies take 3-4 years to really figure out their Hedgehog – their unique intersection of passion, economic engine and ‘best in the world’ opportunity. Along the way, they might have to make large changes: each of the three circles affects the others. Shifting the company’s focus from one service to another to become ‘best in the world’ might conflict with the passion of some staff. Defining and focusing on one economic driver might mean letting other things wither. The book is full of examples, but any entrepreneur working through this shift with their mentor should be prepared for some changes.

That’s why a Culture of Discipline is so important–and I’ll cover that next time.

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