5. 5 - The Hedgehog Concept
  • Three Circles of the Hedgehog Concept
                 1. What you are deeply
                    PASSIONATE about.

                                X

2. What YOU can                            3. What drives your
be the BEST in the                          ECONOMIC engine
WORLD AT?
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  • Know Thyself - A Hedgehog concept is an understanding of what you can be the best at, as opposed to a goal, a strategy, an intention, or a plan to be the best.  It is about personal potential of what you can and can not be the best at. (ie:  I will never be the best guitar player or singer.)
  • Liquid Development is not on a path to be the best developer of cinematics, whereas we may be able to achieve the best character developers.
  • "Best in the World" Understanding - The "best in the world" understanding is a much more severe standard than a core competence.  You might have a competence but not necessarily have the capacity to be truly the best in the world at that competence.  Conversely, there may be activities at which you coul dbecome the best in the world, but at which you have no current competence.
  • Economic Drivers - To get insight into the drivers of your economic engine, search for the one denominator (profit per x or, in the social sector, cash flow per x) that has the single greatest impact.
  • Goals based on Understanding - Good-to-great companies set their goals and strategies based on understanding; comparison companies set their goals and strategies based on bravado.
  • Iterative Process -Getting the Hedgehog Concept is an iterative process.  The Council can be a useful device.
Unexpected Findings
  • The good-to-great companies are more like hedgehogs-- simple, dowdy creatures that know "one big thing" and stick to it.  The comparison companies are more like foxes -- crafty, cunning creatures that know many things yet lack consistency.
  • It took four years on average for the good-to-great companies to get a Hedgehog Concept.
  • Stategy per se did not separate the good-to-great companies from the comparison companies.  Both sets had strategies, and there is no evidence that the good-to-great companies spent more time on strategic planning than the comparison companies.
  • You absolutely do not need to be in a great industry to produce sustained great results.  No matter how bad the industry, every good-to-great company figured out how to produce truly superior economic returns.
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