GOOD TO GREAT/COLLINS 116-118

118 HEDGEHOG CONCEPT (SIMPLICITY WITHIN THE THREE CIRCLES)--Summary

To go from gtg requires a deep understanding of three intersecting circles translated into a simple, crystalline concept (the Hedgehog Concept) What you are deeply passionate about, What drives your economic engine, What you can be the best in the world at.

The key to understand what your organization can be the best in the world at, and equally important what it cannot be the best at--not what it "wants" to be the best at. The Hedgehog Concept is not a goal, strategy, or intention; it is an understanding.

If you cannot be the best in the world at your core business, then your core business cannot form the basis of your Hedgehog Concept.

The "best in the world" understanding is a much more severe standard than a core competence. You might have a competence but not necessarily have the capacity to be truly the best in the world at that competence. Conversely, there may be activities at which you could become the best in the world, but at which you have not current competence.

To get insight into the drivers of your economic engine, search for the one denominator (profit per x or, in the social sector, cash flow per x) that has the single greatest impact.

GTG companies set their goals and strategies based on bravado.

Getting the Hedgehog Concept is an iterative process. The Council can be a useful device.

The gtg companies are more like hedgehogs--simple, dowdy creatures that know "one big thing" and stick to it. The comparison companies are more like foxes--crafty, cunning creatures that know many things yet lack consistency.

It took four years on average for the gtg companies to get a Hedgehog Concept.

Strategy per se did not separate the gtg companies from the comparison companies. Both sets had strategies, and there is no evidence that the gtg companies spent more time on strategic planning than the comparison companies.

You absolutely do not need to be in a great industry to produce sustained great results. No matter how bad the industry, every gtg company figured out how to produce truly superior economic returns