HEDGEHOG CONCEPT Three Circles Signal Greatness

Would you like to find a predictor for your business achieving greatness?

We’ve been working with several of my customers to develop a Strategic Advisory Council.  The council is a strategic recommendation Jim Collins to help your business become great.

Why is this so critical?                               

In Good to Great, Jim Collins notes:  “The Hedgehog Concept is a turning point in the journey from good to great. In most cases, the transition date follows within a few years of the Hedgehog Concept. Furthermore, everything from here on out in the book hinges upon having the Hedgehog Concept. As will become abundantly clear in the following chapters, disciplined action—the third big chunk in the framework after disciplined people and disciplined thought—only makes sense in the context of the Hedgehog Concept”

Let’s review exactly what the Hedgehog Concept is. A simple, crystalline concept flowing from deep understanding about the intersection of the following three circles:

1. What you can be the best in the world at? (It should be noted that equally important, you should know what you cannot be the best in the world at). This discerning standard goes far beyond core competence. Just because you possess a core competence doesn’t necessarily mean you can be the best in the world at it. Conversely, what you can be the best at might not even be something in which you are currently engaged.
2. What drives your economic engine? All the good-to-great companies attained piercing insight into how to most effectively generate sustained and robust cash flow and profitability. In particular, they discovered the single denominator—profit per x—that had the greatest impact on their economics. If you’re using an industry standard for this, chances are you’ve not explored this deeply enough. The Good to Great companies had a much deeper and more specific understanding of what drives their economics.
3. What you are deeply passionate about? The good-to-great companies focused on those activities that ignited their passion. The idea here is not to stimulate passion but to discover what makes you passionate.

For our customers it’s helpful to understand each of these corresponds to a section or entry on the One Page Strategic Plan.

1. What you can be the best in the world at? (Brand Promise).
2. What drives your economic engine? (Profit Per X)
3. What are you deeply passionate about? (Core Purpose)

Isiah Berlin’s essay on the Fox and the Hedgehog contains this simple message, "a fox knows many things, but a hedgehog one important thing"  

It’s not unlike the essence of The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results by Gary Keller, Jay Papasan.

A PERSONAL HEDGEHOG

Collins shares the Hedgehog Concept on a personal level.  Perhaps this analogy will be helpful:  To quickly grasp the three circles, consider the following personal analogy. Suppose you were able to construct a work life that meets the following three tests. First, you are doing work for which you have a genetic or God-given talent, and perhaps you could become one of the best in the world in applying that talent. (“I feel that I was just born to be doing this.”) Second, you are well paid for what you do. (“I get paid to do this? Am I dreaming?”) Third, you are doing work you are passionate about and absolutely love to do, enjoying the actual process for its own sake. (“I look forward to getting up and throwing myself into my daily work, and I really believe in what I’m doing.”) If you could drive toward the intersection of these three circles and translate that intersection into a simple, crystalline concept that guided your life choices, then you’d have a Hedgehog Concept for yourself.

How you doing here? 

Remember Happiness is a Direction.  The key to companies and people that achieve greatness is they are clear on their direction.  Not only clear on their direction, they are clear on this intersection of these three circles.

Holy Crap Doug, are you saying if I get these three circles figured out I’ll be happy?  Not only will “I” be happy, but my business will be “happy” too?

“Yes Grasshopper!”

To have a fully developed Hedgehog Concept, you need all three circles.

ARE YOU A FOX OR A HEDGEHOG?

Note this key distinction that Collins offers in Good to Great: “Those who built the good-to-great companies were, to one degree or another, hedgehogs. They used their hedgehog nature to drive toward what we came to call a Hedgehog Concept for their companies. Those who led the comparison companies tended to be foxes, never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent.”

Isaiah Berlin, the author of The Hedgehog and the Fox went so far at to divide the world into hedgehogs and foxes.  Which are you, a hedgehog or a fox?

My encouragement would be for you to take a personal journey to discover your Personal Hedgehog Concept.

This blog is for business, and as such I’ll leave the personal journey to your discovery.

Next blog I’d like to share insights into one of my customer’s journey to discover his economic denominator (Profit per X).  Anyone who believes discovering this is simply looking at their industry ratios to find something that fits your specific business is simply not aware of the subtlety of this process, or the significance that uncovering what truly drives your economic engine can mean for your business growth.