Concept Summary: The Hedgehog Concept

Why I’m creating these lessons?

For 2023 — I will be sharing concepts, mental models, and key learnings — with the goal to help reinforce my own learning of these key topics, but hopefully, create some useful content for my readers. This takes inspiration from many creators and writers like John Cutler’s “A Beautiful Mess”, and Jono Hay’s “Sketchplanations”.

What is the ‘Hedgehog Concept’?

The ‘Hedgehog Concept’ is explained here by Jim Collins — and aims to guide organisations in establishing a clear and singular focus on where the organisation should invest its resources to achieve success.

It focuses on identifying the intersection between three dimensions:

1. Best in the world
   What is the one thing your organisation will do better than any other in the world?
2. Passion aligned
   What can ignite motivation and drive the people in your organisation around a core organisation's purpose?
3. Economically effective
   What is the single economic measure the organisation will focus on that will ensure the long-term commercial success of the organisation?

How do I apply this?

The ‘Hedgehog Concept’ aims to create a decision-making tool, that enables an organisation to update its organisational strategy around a focused goal that will enable the company to be commercially successful.

It will guide the organisational strategy with tools to make decisions around how best to apply its limited resources to achieve market success.

To do this, follow the following steps:

1. Identify your Passions
2. Understand what you do best
3. Discover your economic engine
4. Identify your ‘Hedgehog Concept’ from the intersection of the three dimensions
5. Review & update strategy to be guided by your ‘Hedgehog Concept’

Your strategy will leverage the ‘Hedgehog Concept’ to inform a diagnosis of the strategic context, shaping a guiding policy to drive decision-making, and using that guiding policy to create a coherent set of actions².

Applying the ‘Hedgehog Concept’ to inform ‘Good Strategy’

You will be successfully applying the ‘Hedgehog Concept’ when your organisation has decision-making tools (in the form of aligned strategy, mission, vision, guiding principles, and tenets), that enable the organisation to make hard strategic decisions on where it will focus its limited resources in order to be the best in the world at one thing, that can be commercially successful, and aligned with organisational mission and vision.

References

1. Collins. J (2001), Good to Great: Why Some Companies Make the Leap and Others Don’t, HarperBusiness
2. Rumelt. R (2011), Good Strategy/Bad Strategy: The difference and why it matters, Profile Books