The Hedgehog Concept

A brief explanation of what I understand and what you need to know

In Jim Collin’s book “Good to Great” he discusses a ton of amazing principles that explain how companies went from Good to Great. One of which is this idea of the hedgehog concept. It’s rather simple and can be evaluated by just 3 main questions. But first the backstory of the name…

There is an ancient proverb or story that has been told by many different people in different ways. The basics involve a hedgehog and a fox. Typically the listener is asked which of the two animals one would prefer to be? Many choose the fox because of its desirable traits and characteristics and beauty. Foxes tend to be cunning and creative in their attempts to trick the hedgehog and catch them for dinner. However, the difference between the fox and the hedgehog lies in the fact that the fox is good at a bunch of things, while the hedgehog is only really really good at one thing, defense.

So when trying to understand the Hedgehog concept that backstory of understanding the value of one really good proficiency makes sense in its application to your new or existing business.

They broke it out in a venn diagram like chart:

So here are the three questions you need to ask yourself:

  1. What are you DEEPLY PASSIONATE about?
  2. What can you be the BEST IN THE WORLD AT?
  3. What drives your ECONOMIC ENGINE?

You can be passionate about anything, but you’ve got to be going after something that you are interested in or you are highly likely to fail or only provide mediocre work.

Question number 2 is the most important in my opinion, this goes back to the 21 Immutable Laws of Marketing idea that you need to be #1 in the market you’ve chosen in order to be successful, and being the best in the world at the market niche you’ve chosen makes a ton of sense in this regard.

Your economic engine is the way you are going to make profit, you have to understand what your ideal profit per _____ is in order to be successful. It can’t be a vanity metric, but something that drives profitable growth.

For us here is my attempt at how we would break things out:

  1. We are deeply passionate about knowing all the data for our marketing campaigns for each client, including cost and revenue data joined at every level of granularity to provide data driven profit decisions.
  2. We can be the best in the world at combining cost and revenue data from any marketing channel, in other words we are platform agnostic.
  3. Our economic engine is driven by daily profit per ad, or perhaps profit per type of media purchased (i.e. profit per click, or profit per CPM).

Think about your hedgehog and what your answers would be, and if you are starting something new I can’t think of a better way to get started actually, this is brilliance, thanks Jim Collins.