A Hedgehog Concept is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles:
- What you can be the best in the world at (and, equally important, 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.
- 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 the economics. (It would be cash flow per x in the social sector.)
- 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.
Despite its vital importance (or, rather because of its vital importance), it would be a terrible mistake to thoughtlessly attempt to jump right to a Hedgehog Concept. You can’t just go off-site for two days, pull out a bunch of flip charts, do breakout discussions, and come up with a deep understanding. Well, you can do that, but you probably won’t get it right. It would be like Einstein saying, “I think it’s time to become a great scientist, so I’m going to go off to the Four Seasons this weekend, pull out the flip charts, and unlock the secrets of the universe.” Insight just doesn’t happen that way. It took Einstein ten years of groping through the fog to get the theory of special relativity, and he was a bright guy.
It took about four years on average for the good-to-great companies to clarify their Hedgehog Concepts. Like scientific insight, a Hedgehog Concept simplifies a complex world and makes decisions much easier. But while it has crystalline clarity and elegant simplicity once you have it, getting the concept can be devilishly difficult and takes time. Recognize that getting a Hedgehog Concept is an inherently iterative process, not an event.
The essence of the process is to get the right people engaged in vigorous dialogue and debate, infused with the brutal facts and guided by questions formed by the three circles. Do we really understand what we can be the best in the world at, as distinct from what we can just be successful at? Do we really understand the drivers in our economic engine, including our economic denominator? Do we really understand what best ignites our passion?
- Extracted from Good To Great by Jim Collins