Good to Great Chapter 5 Review: The Hedgehog Concept (Simplicity within the Three Circles)

This chapter begins with a quaint story about the fox vs. the hedgehog.  The fox, always quickly bounding forward to attack the hedgehog, is consistently met with the hedgehog’s simple defense of rolling into a ball of spikes.  Hedgehogs are not exciting, just very consistent.

Jim Collins compares the Good to Great companies to that little hedgehog – always focused on their consistent method of success.  Out of this little story, Jim Collins developed what he calls The Hedgehog Concept.

During interviews with the executives of these extraordinary companies, they consistently found them to be deliberate in their simple, consistent policy of doing great business.  No surprises, no magic, no rocket science.  Just simple consistent excellence in following their researched methodologies – methodologies that work.

Here is Jim Collins’ explanation of the simplicity of The Hedgehog Concept and how it relates to three focused dimensions that should be considered when doing business (with excerpts from the book):

1.  What can you be the best in the world at (and what you cannot be the best in the world at).  You may have a core competence in something, but you may not be the best in the world at it.  Do only what you can be the best in the world at.

A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best.  It is an understanding of what you can be the best at.  The distinction is absolutely crucial.

2.  What drives your economic engine.  The good to great companies attained piercing insight into what generates robust cash flow and profitability.  These companies discovered their single denominator – profit per x – that had the greatest impact on their economics.

The denominator can be quite subtle, sometimes even unobvious.  The key is to use the question of the denominator to gain understanding and insight into your economic model.

3.  What are you deeply passionate about.  The good to great companies focused only on those activities that ignited their passions.

You can’t manufacture passion or “motivate” people to feel passionate.  You can only discover what ignites your passion and the passions of those around you.

These three core concepts coupled with a fanatical consistency (the Hedgehog Concept) drove the Good to Great companies to consistently create great results without circus fanfare.

But finding your Hedgehog Concept isn’t easy (on average, it took 4 years for the great companies to clarify their Hedgehog Concept).  Thus, Collins suggests implementing a team of counselors to help you clarify your passionate mission.  The Council, as Collins calls them, helps the owners/executives debate and struggle through the principles that make a great company… helping to discover what they are passionate about, what drives their economic engine and what they can be the best in the world at.

My Council is my wife, my business coach, and my staff.  They keep me on track to make sure our business is all about what we are passionate about, and what we love.

What are you the best in the world at?  What drives your economic engine?  What are you passionate about?

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