The ancient Greek parable states: âThe fox knows many things, but the hedgehog knows one big thing.â While foxes pursue many strategies simultaneously, hedgehogs simplify the world into a single organizing idea. Good-to-great companies think like hedgehogsâthey develop a simple but deeply insightful concept that guides all their decisions.
Isaiah Berlinâs famous essay divided people into two categories: foxes and hedgehogs. The research found that comparison companies often acted like foxesâpursuing many goals, reacting to opportunities, never achieving crystalline clarity. Good-to-great companies, by contrast, were hedgehogs.
Foxes:
Hedgehogs:
The Hedgehog Concept emerges from the intersection of three fundamental questions. Good-to-great companies discovered what they could be the best at, what drove their economic engine, and what they were deeply passionate about.
1. What can you be the best in the world at? (And equally important: what can you NOT be the best at?)
2. What drives your economic engine? (The single denominator that has the greatest impact on economics)
3. What are you deeply passionate about? (What ignites your passion and the passion of your people)
A true Hedgehog Concept is not a goal, strategy, or intention. Itâs an understandingâa deep understanding of what you can and cannot be the best at, combined with passion and economic insight.
This is not about what you want to be best at, or what your core competencies are. Itâs about a deep understanding of what you genuinely have the potential to be the best in the world atâand what you cannot.
âJust because something is your core businessâjust because youâve been doing it for years or perhaps even decadesâdoes not necessarily mean you can be the best in the world at it.â â Jim Collins
Abbott realized they could never be the best pharmaceutical companyâbut they could be the best at creating products that contribute to cost-effective health care. This insight led them to focus on diagnostics, nutritionals, and hospital products where they could genuinely be #1.
Each good-to-great company attained profound insight into how to most effectively generate sustained and robust cash flow and profitability. They discovered the single denominatorâprofit per Xâthat had the greatest impact on their economics.
The key is to identify one ratioâprofit per Xâthat best captures the essence of your economic engine. Examples:
Good-to-great companies focused on activities that ignited their passion. This is not about stimulating passionâyou canât manufacture passion. Itâs about discovering what you are genuinely passionate about.
âYou canât manufacture passion or âmotivateâ people to feel passionate. You can only discover what ignites your passion and the passions of those around you.â â Jim Collins
The passion circle doesnât mean cheerleading. Passion is not pumped up from the outside. Gillette wasnât passionate about blades per seâthey were passionate about building sophisticated great brands that make a difference. Philip Morris people were passionate about excellence and being the best.
Good-to-great companies often used an informal âcouncilâ to develop and refine their Hedgehog Concept. This wasnât a committee or task force, but a group of right people who engaged in dialogue and debate to gain understanding.
Walgreens exemplifies the Hedgehog Concept. Cork Walgreen crystallized a simple concept: be the best, most convenient drugstore, with high profit per customer visit.
This concept drove everything: corner locations (even at higher rent), clustering stores, drive-through pharmacies, and satellite technology linking stores. While Eckerd scattered into food service and other areas, Walgreens relentlessly executed their hedgehog conceptâand beat the market 15x over.
Developing a Hedgehog Concept is an iterative process. On average, it took four years for good-to-great companies to clarify their concept. Itâs not a brainstorming exercise or strategic planning sessionâitâs a deep, penetrating understanding that emerges over time.