GOOD TO GREAT/COLLINS 92-95

95 The essential strategic difference between the gtg and comparison companies lay in two fundamental distinctions. First, the gtg companies founded their strategies on deep understanding along three key dimensions--what we came to call the three circles. Second, the gtg companies translated that understanding into a simple, crystalline concept that guided all their efforts--hence the term Hedgehog Concept.

More precisely, a Hedgehog Concept is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles.

1. What you can be the best in the world at (and, equally important, what you cannot be the best in the world at). This discerning standard goes far beyond core competence. Just because you possess a core competence doesn't necessarily mean you can be the best in the world at it. Conversely, what you can be the best at might not even be something in which you are currently engaged.
2. What drives your economic engine. All the gtg companies attained piercing insight into how to most effectively generate sustained and robust cash flow and profitability. In particular, they discovered the single denominator--profit per x--that had the greatest impact on their economics.
3. What you are deeply passionate about. The gtg companies focused on those activities that ignited their passion. The idea here, is not the stimulate passion but to discover what makes you passionate.