The Hedgehog Concept

A main problem often witnessed in the business environment is when companies lose focus by taking up too many things at a time. By doing this, businesses often lose their identity and their performance starts to decline towards the bottom.  Jim Collins has digged down into this problem and has discussed the solution to the problem in his book ‘Good to Great’ published in 2001with the Hedgehog concept. In his book Collins argues that success is all about simplicity and solid principles. The author claims that businesses can only succeed only if they focus at one thing at a time, without overcomplicating business operations.

 The story behind: The fox and the hedgehog

It goes without saying that foxes are agile, dynamic animals that are capable of concentrating in multiple things at a time. They are aware of their environment and what is going on around them, while also focusing on their prey; the hedgehog. On the contrary, the hedgehog can only do one thing at a time; curl up into a ball and protect itself with its spikes. This paradigm illustrates companies that pursue many ends at a single time versus companies that simplify complexity and pursue only a single basic principle.

The three circles

According to Collins, the Hedgehog concept is principles on the understating of three overlapping circle:

Circle 1: What are you deeply passionate about?

The first question is all about looking into and identifying what the organization is passionate about. You need to uncover what ignites your employees and understand in what area their passion lies. At this stage you need to ask:

  • What really matters to your employees? What do they enjoy doing?
  • What does your organization aspire?
  • What are the values that describe your organization best?

Circle 2: What can you be the best in the world at?

The second question looks into another topic and sees to uncover what your company is best at. At this step, you need to understand where your current and potential core capabilities and competencies lie.

  • What makes you differ from your competition?
  • What are your core competencies? Are they fully utilized?
  • What are your weaknesses?

Circle 3: What drives your economic engine?

The last question that needs to be asked is what drives your revenue and profit up. This insight will identify where the potential for competitive advantage lies. You need to consider:

  • What is the primary source of revenue and profit?
  • What area of the business drives economic progress?

Overlap

Having examined all three questions above you will then need to identify where the three circles overlap. The point they overlap is where the Hedgehog concept is and once identified you can become aware where the central vision of your organizational strategy is. The Hedgehog concept is very beneficial for reviewing and assessing their current strategy against where the organization’s passion and economic opportunities. After identifying the gaps, businesses can then proceed to revise their strategy accordingly.

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