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What if the key to sustainable success wasn’t about doing more, but doing less, but doing it better? This is the core of The Hedgehog Concept, a powerful framework that I learned in Jim Collins’ book Good to Great.
So, what is The Hedgehog Concept?
Collins’ concept is based on a simple metaphor: The fox knows many things, but the hedgehog knows one big thing. In the wild, the fox may be clever and can adapt to many situations, but the hedgehog excels at one thing – protecting itself by rolling into a ball of spikes when in danger. Similarly, in business (and life), those who are the most successful are the ones who focus on mastering a single, critical idea, rather than trying to be good at everything.
As you read through the rest of this blog, here is a worksheet that will help you better understand how to apply this concept to your world. Click here to download the worksheet.
The Three Circles of the Hedgehog Concept
The Hedgehog Concept asks us to focus on three essential questions:
- What are you passionate about?
- What can you be best in the world at?
- What drives your economic engine?
When these three elements align, that’s where the magic happens. The intersection of these three circles is where companies (and individuals) find their greatest potential for sustainable greatness. Let’s break it down:
1. What Are You Passionate About?
The first circle asks, “What drives you?” What excites your company, your team, or yourself? Passion fuels energy, creativity, and persistence. Collins emphasizes that being merely “good” at something is not enough for long-term success. Passion provides the resilience and focus needed to keep pushing through obstacles. When you identify your core passion, you create a foundation for growth and innovation. It’s the “why” that inspires everyone involved.
2. What Can You Be Best in the World At?
The second circle is about identifying where you have the potential to be the best in the world. It’s not enough to be “good” at something; you must pinpoint what differentiates you from the competition.
The goal is to focus on the things that your company can excel at, rather than spreading yourself thin across too many areas. Think about it like a student who has a mix of A’s, B’s, and a C in school. Instead of constantly trying to bring that C grade up to a B, the Hedgehog Concept suggests doubling down on your A’s – becoming the absolute best at what you’re already good at.
3. What Drives Your Economic Engine?
The third circle addresses the financial component—specifically, what metric drives your company’s profitability? Understanding what fuels your economic engine allows you to prioritize the right efforts that will sustain long-term growth.
This is about identifying the key drivers of your company’s economic success, whether it’s profit per customer, profit per transaction, or profit per unit. For Apple, for example, the economic engine is the revenue per device sold, driven by high-margin products and a loyal customer base willing to pay a premium for quality and integration.
The Sweet Spot
When these three circles converge, that’s where the real magic happens. That’s where companies can achieve sustainable, long-term greatness.
Let’s use Apple as an example:
- Passion: Jobs and his team were passionate about creating elegant, seamless technology that would change the way people lived.
- Best in the World: They became best in the world at integrating hardware, software, and services to create a powerful ecosystem.
- Economic Engine: They focused on profit per device sold by selling high-quality, premium-priced products.
The result? Apple became one of the most valuable companies in the world, all by sticking to what they were passionate about, leveraging their unique strengths, and focusing on profitability.
The Hedgehog Concept can be applied to both individuals and companies. For individuals, it’s about finding your core strengths, your passion, and aligning it with what drives your success – whether it’s building wealth, advancing in your career, or improving your personal life.
