Hedgehog Principal – Popularized by his book “Good to Great”, Jim Collins emphasized the importance of the Hedgehog principal, which is certainly worth discussing here in this survey of concepts and tools. The Hedgehog Concept is not a strategy per se, but rather an business operating understanding that shapes or influences strategy formation and business execution. Per the illustration, the Hedgehog concept states that your business should focus on only 1) what you are truly passionate about, 2) what you can be the best in the world at, and 3) the key metrics that drive your economic engine. Your “Hedgehog” is at the intersection of these core ideas, and per Collins, getting too far removed from these core areas of focus is a distraction that leads to sub-par performance. I totally agree with Collins that if you focus your strategy on an area that your team is truly passionate about, where you have a real competitive advantage and strong expertise, and on programs that remain aligned with what drives revenue and profit for your company, your odds of success increase dramatically. With this attitude towards investment, you continue to raise competitive barriers against new entrants and further entrench yourself as the owner of your market.
According to the Hedgehog concept, leadership teams need to be disciplined in determining not only what to do, but to also have the discipline to not to pursue what may appear to be attractive alternatives outside of the three circles. Hedgehog companies build deep expertise in a particular field and a particular market, and as a result they become engines for innovation and business breakthroughs in these areas. Good to Great, or Hedgehog, companies stay focused and build up massive momentum – like building up the speed of a giant flywheel – in a given area of expertise. In Hedgehog companies, the breakthroughs and excellent business performance are the result of this necessary buildup of momentum.
So, while this is not per se a strategic planning tool, the Hedgehog principal is a valuable consideration in strategy formation. To drive success you need to stay true to your passions, what you can be truly great at, and on initiatives that will move the needle on your business results.
One potential trap of the Hedgehog model is you that need to be sure you have a “Whole Product”!