The Hedgehog Concept

I need to find my “one big thing”
Friday, October 14, 2005

In Good to Great, Jim Collins introduces the Hedgehog Concept as a key insight into taking a good company to greatness. The idea is to develop your strategy along three key dimensions and then to crystallize that into one concept that guides all efforts. The analogy to the hedgehog comes from an parable about a fox and a hedgehog in which the fox tries many different methods to catch the hedgehog. Each time the hedgehog just rolls himself into a tight ball of spikes, thwarting all the fox’s efforts. The hedgehog understands its one big thing and consistently applies it, achieving “greatness,” at least in the ongoing battle with the fox. What is interesting about this business concept is that it closely parallels individuals’ pursuits of their true calling, and thus their personal greatness.

The three questions that must be answered in the development of a hedgehog concept are

  1. What can you be the best in the world at?
  2. What drives your economic engine?
  3. What are you deeply passionate about?

The last question, about finding your passion, has an obvious parallel to the notion of finding a personal greatness. The other two are not as clear, but they still apply. First, I’ll tackle the idea of figuring out what you can be the best at. For a business this might be offering convenience drug stores (Walgreens) or manufacturing high profit razor blades (Gillette). For a person, this might be becoming an Ironman world champion (as Jim Collins’ wife realized she could do and actually did) or being the best hacker ever (or at least of 2005). It is important to figure out what you can be the best at, not just what you might want to be the best at. Once you do that, you can move on to the second question, “What drives your economic engine?”

Of course individuals do not have economic engines in quite the same way that businesses do. The hedgehog concept for a business dictates finding the key denominator in the profit per ‘x’ question (profit per customer visit, profit per employee) and exploiting that insight to drive the business. For an individual it makes more sense to figure out how to translate being the best in the world at something into making money doing it. For an Ironman world champion, this could mean securing sponsors, endorsing products, and giving motivational speeches. For a hacker it might mean freelancing, starting a business, or convincing Google to purchase your hack.

And now the question of passion. Jim Collins points out that in business you can be passionate about your product or the mechanics of your business, as the people of Philip Morris are. Alternatively, you can be passionate about what your company stands for, as the people of Fannie Mae are. The key to success in this arena is not to try to become passionate about what you do, but to instead do what you are passionate about. Kimberly-Clark is an excellent example, as they sold off their core competency business to focus on one they could become passionate about:

Kimberly-Clark executives made the shift to paper-based consumer products in large part because they could get more passionate about them. As one executive put it, the traditional paper products are okay, “but they just don’t have the charisma of a diaper.”

Imagine being passionate about a diaper. That seems difficult to me, but there is a lesson to be learned here for the personal life: find what you can become passionate about. It is this lesson that struck a chord with me, as that is the goal of many self-help books and yet it only really resonated when I read it in a business book.