The Hedgehog Concept was created by Jim Collins in “Good to Great: Why Some Companies Make the Leap… and Others Don’t” in 2001. In his book, Jim Collins argues that when organizations focus on being the best in a few specific areas, they have a better chance of success than if they try to be good at everything.
What is the hedgehog concept?
The hedgehog concept is the theory that a small number of core ideas (the “hedgehogs”) can be used to successfully navigate an organization through any business environment. The key is to determine the hedgehog(s) that are most relevant to your organization’s mission and then align the organization’s efforts around these ideas.
The Hedgehog Concept implies that knowing what you can’t be the best at, in addition to what you can, will help you to find success in your industry and position yourself as a leader.
The hedgehog concept recognizes that organizations will succeed by being the best in their field in terms of 1) knowing what they can be best at and 2) knowing what they can’t.
In business, “greatness” comes to those who create a product or service that can revolutionize an industry, change the way people think, or become so ubiquitous that it’s a utility.
You should choose your three or four core competencies wisely, maximize them and put all your energy toward being the absolute best at them.
What are the benefits of knowing your Hedgehog Concept?
1) It helps to clarify an organization’s goals. Having a clearly defined Hedgehog Concept makes it much easier for an organization to effectively communicate its mission, which can result in more employee buy-in and greater efficiency within the company structure. Taking the time to understand what you’re good at allows employees and customers alike to understand where the company is headed and what they can expect from it.
2) It is a key component of effective decision-making. Declaring the Hedgehog Concept enables a business to make decisions based on that concept rather than be swayed by other opportunities that come along. This allows the organization to focus on long-term, sustainable growth instead of increased short-term revenue.
3) A defined Hedgehog Concept can help an organization find and attract top talent. When an organization aims for greatness in a select few areas, it becomes clearer about the type of people that can help it achieve those goals. An organization with a clear Hedgehog Concept can more easily attract employees who believe in that Hedgehog Concept and are passionate about furthering it.
How to apply the hedgehog concept?
The Hedgehog Concept can be implemented in many different ways. However, it is important that the hedgehog concept is a part of an organization’s strategic plan because it can be very easy to lose sight of your priorities if you don’t keep them close at hand.
The process you should use applying the hedgehog concept to your organization depends on the type of company you have. If you are a new company, or even if you are not a new company but feel like this is a new direction for your business, it is a good idea to create a mission, vision and set of values that reflect your Hedgehog Concept. This will not only help you become more cohesive internally, but it will also be something that your customers and employees can understand and relate to.
Step 1: What are you or company good at
Discovering what your company is good at can be a challenge sometimes, especially if you are a large corporation. If you have been in business for some time, it may be more difficult to determine what your core competencies are because you may have lost focus on your core business when diversifying your company. Becoming clear about what you’re good at can be achieved in several different ways:
1) On the most basic level, determine what processes or strategies yield the best results or profits for your organization.
2) Determine what customers and markets you are good at.
3) Look to your competitors first. What do they do well? What don’t they do well? By seeing what your competitors are good at, you can create a more profitable edge by applying the core competencies to your company’s products or services.
4) Identify the results that matter the most to your organization or its customers. In other words, identify the issues that should be solved through the use of your products or services.
5) Look to the past. If you think back at the situation from five or 10 years ago, what does the last good business purchase or investment that your organization made reflect?
6) Start with a focus on your own employees. What about them makes them successful in their jobs? By knowing what is important to employees and creating a culture that emphasizes this, you can create an environment where employees are more likely to buy into your Hedgehog Concept.
Step 2: What do you or the company need to be really good at?
After discovering what you are good at, it is important to identify what else needs to be in place or developed so that you are truly effective. This is usually a continuation of the strategic planning process that every organization must create for itself. You may also find that during this step, your business will discover a new way to solve an issue or capitalize on a new opportunity in its market.
Step 3: Identify the competitors you compete with
Along with identifying what you are good at, it’s also important to understand who your competitor is. In the modern business world, it is nearly impossible not to have a competitor, so don’t be afraid of considering all of them. By understanding who your competitors are and how they operate, you are better able to make yourself stand out from them.
Step 4: Look for the overlap
Using the information gathered in steps 1-3, it is now time to put it all together. This will help you identify what your organization excels at and where your organization must improve. By understanding these three things, you can determine what your Hedgehog Concept should be.
- What does your market want or need?
- What do you do better and faster than anyone else?
- What is unique about how you do it, that differentiates you from your competitors?
Step 5: Communicate it to the entire organization (and stick to it!)
After all of this hard work, the last thing you want to see is a confused organization that doesn’t know what direction it is headed in. Therefore, communication with stakeholders is of the utmost importance during this process. The only way to tell your team what you are doing is if they know about it. Communicating the Hedgehog Concept can be the most difficult part because it can be difficult to bring it up without making people feel like you’re trying to complicate or change their job or responsibilities.
An effective way to do this is through quarterly briefings. Make sure that stakeholders are able to participate in these meetings and ask for feedback on how the Hedgehog Concept has been received by various departments within the business.
What are the common pitfalls of businesses with a Hedgehog Concept?
There are two major issues that can arise when an organization is not careful about how it applies its Hedgehog Concept. Firstly, you run the risk of becoming overly focused on your niche and neglecting other areas that may be important to your organization’s success. This means that you should focus on being good at what you do, but it does not mean that you should forget about how doing this interacts with your other goals. A great way to prevent this pitfall is by including the other stakeholders (customers and employees) in your strategic planning. This will keep everyone on the same page and prevent you from completely forgetting about them.
Secondly, another common issue with Hedgehog Concept is that organizations can become too specialized in their niche. The idea here is that if you do one specific thing well, it may be impossible to do something different well or even at all. It is important to remember that your organization should never completely centre itself around its niche. This means that you should always be looking for opportunities to diversify your services and be prepared to find ways to apply your existing competencies to a new niche when the time comes.
Hedgehog Concept Summary
This tool was developed by Jim Collins, who based his ideas on some works of Phil Rosenzweig, especially The Halo Effect (2007).
The Hedgehog Concept is inspired by the philosophy of Aristotle: “The whole is greater than the sum of its part.”
Hedgehogs are simple creatures with a strong defence system. If they feel threatened, they hunker down and fight from the inside. The Hedgehog Concept is an organizational strategy that is based on these principles and values as well. The Hedgehog Concept takes into account an organization’s structure, culture and core competencies to enable it to best cope with the threats in its industry. It is important not to become overspecialized in one thing, to ensure long-term success.
The main principle of the Hedgehog Concept is: it is all about the intersection of three circles, where the three circles are what you are passionate about, what you do better than anyone else and why your organization exists. It is not enough only to be passionate about something; if it is true that you are good at something, then that’s very important too. The last circle represents why your company exists. If all the circles equally matter, then there is a good chance that you will have a long-term solution to your problems. For example, if what you are passionate about is serving the customer and the reason why your company exists is to make money, this strategy will be very successful.