The Hedgehog Concept: How to Use the Hedgehog Concept

The hedgehog concept is a business model large companies use to define what sets them apart, drives their economic engine, and increases their chances of success. The hedgehog concept works via a Venn diagram, where three overlapping circles detail what companies are passionate about, what they can be the best at in their field, and what drives their economic viability. The overlapping middle area of this Venn diagram represents the company’s central vision, unlocking its guiding principle. This core principle can help companies determine different strategies for long-term success.

Business writer and consultant Jim Collins outlined the hedgehog concept as an economic strategy in his 2001 book Good to Great. Companies that use the hedgehog concept define core values and focus on a central goal, accomplishing it through their core competencies. The hedgehog concept tool, per Collins, is part of what differentiates good companies from great companies.

The hedgehog concept is inspired by the hedgehog’s tenacity, reflected in a quote from Archilochus’s ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.” The hedgehog and the fox differ: While the former may be sly and quick, the latter focuses on one task and sees it from idea to completion.

To use the hedgehog concept, companies should create a Venn diagram with the following information:

1. 1. Name the company’s passion. In one circle of the Venn diagram, list the company’s passion and central mission. For a company that produces solar panels, this passion might be sustainability practices.
2. 2. Identify the company’s biggest strength. It is essential to identify what the company is best at doing. In this example, the solar panel company might have a competitive edge with its sustainable production and delivery process.
3. 3. Find what drives the company’s economic engine. This last step will help you hone in on what sets your company apart. The solar panel company might find that marketing its products to homeowners primarily drives the company’s sales. The hedgehog concept can help the company focus on that particular part to lead the company toward success.

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