Having worked side-by-side with some of New Zealand’s top mid-market firms, I have encountered many business leaders in need of expert advice and support. When we start working together, one of the first things we tackle is the Hedgehog Concept – even before setting a Big Hairy Audacious Goal (BHAG).
You must understand the Hedgehog Concept and how it applies to your organisation before determining other strategic elements of your plan, including long-term strategy, initiatives, and goals.
What is The Hedgehog Concept?
Renowned business author, Jim Collins, first introduced the world to The Hedgehog Concept in his must-read book “Good to Great.” Based on an ancient Greek parable, “The fox knows many things, but the hedgehog knows one big thing”, the concept suggests that those companies who achieve lasting greatness do so by having a “hedgehog” mindset.
By focusing on what they can be the best at and what they are passionate about, companies can create a sustainable competitive advantage and achieve long-term success.
Your Hedgehog is found by answering three key questions:
- What are you most passionate about as a company?
- What drives your economic engine?
- What can you be the best in your world at?
Over the years, I have used the Hedgehog Concept to help many mid-market business leaders understand what they can potentially be the best in the world at. Armed with this knowledge, these organisations can better understand and align their people, other elements of company strategy, resources, and efforts to their primary area of focus.
What do you mean by “passionate about”?
For a company to be truly great, the people within the company must be fully committed and engaged in their work. Jim Collins found that good-to-great companies tend to focus on activities that ignite their existing passions.
“If you become the best at something, you’ll never remain on top, if you don’t have an intrinsic passion for what you are doing” – Jim Collins.
What do you mean by “What you can be the best in the world at”?
When Jim Collins speaks of “What you can be the best in the world at,” he means identifying and understanding the specific area of expertise that your company has the potential to excel in.
It’s not necessarily about being the best in the world today but having the potential to be the best in the world in that area. By focusing on the area where they can be the best in the world, companies can create a sustainable competitive advantage and achieve long-term success.
“Every company would like to be the best at something, but few actually understand—with piercing insight and egoless clarity—what they actually have the potential to be the best at and, just as important, what they cannot be the best at” – Jim Collins.
What do you mean by “economic engine”?
Jim Collins refers to “economic engine” as the business model a company uses to generate economic profit. It is the set of activities and processes that drives its revenue and profitability. It’s the way the company generates value for its customers and captures that value for itself.
A strong economic engine is essential for a company to achieve long-term success, as it ensures that the company can generate enough profit to fund growth and reinvestment.
Find Out More
With support from fellow Gravitas Impact coach, Hans Schulte, my monograph Radical Alignment to a Core Strategy: Increased Net Income and Team Alignment is now available to purchase on Amazon.
You can learn more about The Hedgehog Concept in the first chapter of my monograph, which you can download for free.
Remember, the key is to find the intersection of what the company is passionate about, what drives its economic engine, and what it can be the best in the world at, that is the sweet spot where the company will achieve its greatest success.
