The Hedgehog Concept And Its Significance For Your Company

The Hedgehog Concept And Its Significance For Your Company

If you think everyone in the world falls into two categories, you’ll get the hedgehog concept. Here, you will have to choose between being a fox or a hedgehog.

This isn’t like yin and yang, where one complements the other. You are either a complex and cunning fox, or a small and simple hedgehog.

You might think, why would anyone want to be a hedgehog in this scenario? While that is relevant, the more pressing question should be, what does this concept mean for companies?

Typically, you would assume that for a company, being the fox is a shortcut to success. That may not be true, however.

Let's find out why.

What is the Hedgehog Concept?

The Hedgehog concept comes from Isaiah Berlin’s renowned 1953 essay, “The Hedgehog and the Fox.” In the essay, Berlin divides the world into the fox and hedgehog archetypes. The concept comes from the Greek phrase, “The fox knows many things, but the hedgehog knows one big thing”.

A fox may find different ways to pounce on a hedgehog, but the hedgehog only has to do one thing i.e. roll up into a ball of spikes. Despite the fox’s efforts - the hedgehog always wins.

Berlin argued that foxes live in a world of complexity, pursuing multiple angles at once, which diffuses their abilities. Meanwhile, the hedgehog embraces simplicity and has a basic principle to follow, a unified guiding goal.

This doesn’t mean that the hedgehog lacks the intellectual capability for complexity. On the contrary, it means hedgehogs have simplified the complex and often dynamic art of escaping a cunning predator, into a single act.

The same concept can be, and is, adopted by organizations. Choosing simplicity over complexity is always a lot more profitable for companies.

Business researcher Jim Collins came up with this idea in his 2001 book, “Good to Great.” According to him, organizations that can deduce what they’re best at, are more likely to succeed - giving birth to the hedgehog concept in business.

This case study of Walgreens serves as a great proof of concept, and shows how it beat the competition in 25 years.

FutureFuel Directories are another great example. I simply added 5 different directories (like an employee benefits directory) and racked up thousands of new visitors. The concept is all about providing information and value to users, instead of creating complex strategies.

Understanding and Applying the Hedgehog Concept

The idea is for organizations to focus and devote their efforts towards a singular goal. Pursuing too many goals and angles can be troublesome, especially if your organization suddenly faces setbacks.

Here’s my detailed understanding of the three intersecting circles that make up the simple, yet crystalline concept.

1. What are you and your people deeply passionate about?

You need to know which activities and projects help ignite your people’s passions. If you can’t find anything, discover what might make you and your people passionate, rather than try to stimulate passion.

2. What is your company’s prime revenue-generating process?

What drives your economic engine? All successful companies come to the one recurring and robust profit source that drives profitability. They find the common denominator with the biggest impact on their economic standing. Then, they shift their attention, resources, and efforts towards that factor.

3. What are the things your company does better than everyone else?

This calls for asking yourself what your company isn’t the best at doing. This is not the same as having a core competency or a USP. You can have both and still not be the best in the world at what you do. You could also be the best at something your company doesn’t even do, yet.

Coming up with answers to each question will help you see where they overlap. The point of convergence will be the hedgehog concept for your organization.

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Steps to Applying the Hedgehog Concept to Your Company

I fully embraced the hedgehog concept when I co-founded Squibler. You can see in the Squibler case study that I focused on creating one simplified platform for writers of all backgrounds.

Here are the steps you should take to implement the success of the hedgehog concept into your company.

Step One – Identify Your Passion(s)

Your passion is something you look forward to doing or working on. It’s something that gets you up in the morning and/or makes you want to work late.

Your employees also feel excited about some things more than others, at work. You need to identify those things by analyzing how your company’s values, purpose, and processes affect your people.

Take a closer look at your company’s mission and vision statements, and find out whether your people are following it.

Step Two – Figure Out What You Do Best and Why

Now you need to understand what your company and your people can do, better than everyone else. Next, figure out why you’re the best, and in case you’re not, reevaluate your version of the hedgehog concept.

You should also discover your company’s weaknesses in the process, things you’re not good at. You can use tools like SWOT Analysis, USP Analyses, Core Competencies Analyses, and BCG Matrixes to identify these factors.

Step Three – Understand Your Revenue Generation

Your company should have a robust source of profit that guarantees sustainable growth. This involves having to single out what’s responsible for sustained cash flow and profitability at your company.

In other words, you need to find your ‘cash cow,’ or the ‘X’ in the ‘Profit per X’ measure. The ‘X’ represents the single highest contributing factor to your company’s sustainability.

The ‘X’ can be a customer, employee, brand, sale, location, geographic region, and/or product, among others.

For example, you can choose ‘Profit per User’ rather than ‘Profit per Paying Customer’. This economic denominator may help you better target users, and turn them into paying customers, rather than focus on existing ones.

Step Four – Identify the Overlap/Hedgehog Concept

Once you’ve answered the three main questions, you need to see where your answers overlap. The point where all three answers overlap will be your Hedgehog Concept.

For example, my passion is to create fast-growing websites while providing value. Meanwhile, I’m good at writing, and saw a need for a service that can help all kinds of writers connect through practice. I knew I could create the best software/website, and grow it substantially.

My Hedgehog concept was to develop Squibler, a place where all kinds of writers could practice, communicate, and even freelance.

Finding your Hedgehog Concept is tricky, and the answers may not be obvious. Try doing as many analyses as possible and explore multiple options before choosing one.

Step Five – Customize, Check and Communicate Your Strategy

You’ve already found your Hedgehog concept. Now it’s time to adjust your company’s strategy according to it.

Start by checking how much of your current strategy aligns with your newly found Hedgehog Concept. If you find too many abnormalities or room for improvement, consider revising your strategy.

It’s important to keep your people in the loop with this change. They should know what the Hedgehog Concept is, how you’ve changed your strategy with it, and its overall significance.

There is a good chance that your company will undergo massive change because of this. You can hire a consultant or a growth marketer to help you with it.

Once your new strategy is in place, you will see better results, engagement, profitability, productivity, and overall success. And, all of it will be through a concept of simplicity.

The Hedgehog Concept in Remote Work

There is no doubt that remote work is the future. It saves time, money, and effort. However, companies often stay away from the idea of remote work, calling it too complicated. In reality, it’s quite simple.

Once you identify your company’s hedgehog concept, you can use it to assign the right work for your remote workforce. This also helps in remote hiring, as you know exactly who to hire, and which skills to look for.

A simplified goal streamlines your remote hiring, business strategy, and overall work. In the long-run, this simplification is bound to boost your company’s growth and augment its success.