The Hedgehog Concept (Simplicity within the 3 Circles) Good to great: Chapter 5

The Hedgehog and the Fox

Essay by Isaiah Berlin

Fox: Cunning, fast, and crafty with many different strategies

Hedgehog: Slow, awkward appearing, only good at one thing

Every day, the hedgehog wins

Simplicity, not Stupidity

Insight to see through complexity to discern underlying patterns

Hedgehogs see what is essential and ignore the rest

A Simple Concept

"Once we understood the concept, we just moved straight ahead." - Cork Walgreen

The best, most convenient drugstores, with high profit per customer visit

Fanatical consistency applied to all stores

  • Corner lots, even at $1 million cost
  • 9 stores in a 1 mile radius

The Hedgehog Concept

Good-to-great companies strategies differed from comparison companies in two ways.

1) Deep understanding along 3 key dimensions leading to . . .

2) . . . A simple, crystalline concept that guided all their efforts

The 3 Circles

1. What can you be best in the world at

  • Understand what you can be the best at
  • Not necessarily your core business or competence

2. What drives your economic engine

  • One ratio that most impacts your economic engine
  • "Profit per x" - Leads to deep insights into your economics

3. What are you deeply passionate about

  • Only do things you can get passionate about
  • Can be mechanics of business or what company stands for

The Foxes

Comparisons failed despite change programs and charismatic leaders

They never asked questions prompted by the 3 circles.

They set goals based more on bravado than understanding.

  • 2/3rds had an obsession with growth
  • "Growth" is not a Hedgehog Concept

The Turning Point

Transitions tended to follow within a few years of the Hedgehog Concept

Average of 4 years to clarify a Hedgehog Concept

The Council: Developing the Concept

  • The right people dialoguing and debating, in context of the 3 circles, about vital issues and decisions
  • An iterative process
  • Questions - Debate - Decisions - Analysis - Repeat

Thank You

Thank You

Credits:

Created with images by kevin dooley - "Business." • kevin dooley - "Business."

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