The Hedgehog Concept is developed in the book Good to Great. What struck me about this, is that I’ve encountered many business owners, who believe they can do everything. There is a great benefit to your business to focus on a niche. Because what that means is that you become the best at what you do. The hedgehog concept poses three questions to help you define your business.
What are you deeply passionate about?
This is about understanding and finding out everyone’s passion within the organization. What:
- core values resonate with the employees
- work most inspires them
- are they most enthusiastic about
What can you be the best in the world at?
This is about understanding the why’s. Why is the organization good at what it does? What unique resources and capabilities does the organization possess? What differentiators give the organization scale and scope economies?
In other words, the emphasis and focus should be on the organization’s strengths. It’s not just about core competencies, but also about other competencies that haven’t been achieved yet. It’s not a bad thing to have weaknesses. An organization can have lower scores in certain areas.
What drives your economic engine?
An organization has to be aware of what its economic engine is. In other words, what products, services, resources, or capabilities generate revenues and profits. Simply put, the organization should understand what they earn money with. This insight will reveal the drivers that deliver a lasting effect on the organization’s long-term success.
After researching the questions from the three circles, the organization should determine where they overlap. Hedgehog Concept is found at the overlap – the central vision that supports the organization’s strategy. By answering the questions from the circles, the organization becomes more self-aware. Subsequently, they can translate self-awareness into a simple concept to guide important decisions. Hence, the Hedgehog Concept isn’t a goal or strategy. But rather, it’s more about insights and guiding principles for strategic choices.