The hedgehog concept is a simple yet powerful framework for individual or business success. The hedgehog concept was created by Good to Great author and business consultant Jim Collins. The book is based on an ancient Greek parable about a hedgehog and a fox, stating that “the fox knows many things, but the hedgehog knows one big thing.”
Understanding the hedgehog concept
In the parable, the fox attempts to catch the hedgehog using a variety of strategies that fail. Ultimately, the fox is defeated because the hedgehog does one thing well: defend itself.
In business, Collins argues that a business is more likely to succeed by devoting its resources to one big thing. In the next section, we will look at how a business can determine what that big thing is.
The three circles of the hedgehog concept
The hedgehog concept is based on three circles. Each of the three circles begins with a question:
- What are you deeply passionate about? In the first circle, a business should define its core values to identify work that inspires them. Deep passion is important in building an authentic and sustainable brand.
- What can you be the best in the world at? Determine what the business can do better than any other competitor. Does the business have unique resources or capabilities? Perhaps it has access to economies of scale? Defining a competitive advantage means that an organization must also identify its weaknesses. In so doing, the business avoids spending time on money on initiatives that will never succeed.
- What drives your economic engine? That is, where is a business adept at generating revenue? Examples of revenue generation include products, services, and other resources. Whatever the driver, it must have a measurable and sustainable impact on cash flow and profits.
Consider the example of a company that is passionate about innovation and sustainability in third world countries. Through economies of scale, the company can manufacture solar panels at a lower cost than competitors. Although primarily operating in the UK, the company also has contacts in certain charitable organizations with a presence in Africa.
Therefore, a potential hedgehog concept may involve selling cheap and affordable electricity units to the African population. Utilizing bulk orders, the solar panel company works passionately toward its goals while still making a profit.
In summary, businesses should note that the hedgehog concept does not provide a blueprint for becoming the best at something. Instead, it gives insight into what a business could be best at given the common, intersecting information in each of the three circles.
- The hedgehog concept provides a simple yet clear focus for business success, allowing it to devote resources to a single unifying vision.
- The hedgehog concept is represented by three intersecting circles. Each circle asks important questions that help a business identify passions that are profitable and result in a competitive advantage.
- The hedgehog concept does not provide a concrete strategy on how an organization might realize success. But it does illustrate the potential benefits of a business adopting hedgehog concept principles.
Connected Business Concepts
Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework, BCG Matrix, GE McKinsey Matrix, Kotter’s 8-Step Change Model.