What is it?
The Hedgehog Concept, as introduced by Jim Collins in “Good to Great,” emphasizes the importance of a company aligning its core passion, unique expertise, and economic strategy to achieve exceptional and enduring success.
Where does it come from?
The concept is based on an ancient Greek parable that says, “The fox knows many things, but the hedgehog knows one big thing.”
Isaiah Berlin, a philosopher, wrote an essay called “The Hedgehog and the Fox” where he talked about two types of thinkers:.Foxes like to make things complicated and show off how smart they are, while hedgehogs believe in simplifying complex things to make them work better. In leadership, being a hedgehog, simplifying things, is usually more successful.
How does the model work?
The Hedgehog Concept is essentially about finding the intersection of three critical factors within an organization:
1. Passion: This represents what an organization is deeply passionate about. It’s not just about what the organization can do or what it’s good at, but what truly ignites its employees’ passion and commitment. This is often linked to a core purpose or mission that transcends profit and gets people excited about their work.
2. Expertise: Expertise is what an organization can be the best in the world at. This requires identifying a specific area or field where the organization has a unique competitive advantage. It’s about focusing on those activities or services where you have a deep understanding and can outperform your competition.
3. Economic Engine: This refers to what drives the organization’s profitability and financial sustainability. It’s about finding the economic model that allows the organization to achieve consistent and sustainable financial success. This could involve understanding your cost structure, pricing strategies, and revenue generation.
The Hedgehog Concept is about finding the sweet spot where these three circles intersect. It’s the place where an organization’s passion, expertise, and economic engine align. According to Collins, companies that make the leap from being merely good to truly great have a clear and unwavering focus on this intersection. They don’t try to be everything to everyone or chase after fleeting opportunities. Instead, they channel their resources and efforts into activities that align with their Hedgehog Concept, becoming highly specialized and effective in those areas.
In contrast, companies that fail to achieve greatness often spread themselves too thin, chasing after multiple opportunities without a clear sense of what they are passionate about, what they excel at, and what drives their economic success.
Companies should only do what they’re passionate about, what they can be great at, and what makes tons of money. Just as a hedgehog works slowly and carefully, so should corporations carefully consider where the three circles above intersect.