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The Hedgehog Concept and Focusing on Your Company’s Core Purpose

Hedgehog Concept in BusinessWhenever someone you know is experiencing back pain, you often hear about their doctor or physical therapist telling them to start building up their core muscles. The reason for doing this, as you know, is not only to improve a person’s chances of eliminating the back pain, but also to prepare their body against future injuries or issues.

As a small business owner, this same principle can be applied in how you operate your business—and it has just as profound an impact on the financial health of your company. So just as a doctor prescribes core exercises in order to stay healthy, we recommend focusing on your organization’s core competencies and objectives in order to become even stronger than you are today.

But the question then becomes, how do you identify your small business’ core area and give it your full attention?


To begin answering this question, we’ll reference a parable from Greek history, and one that was further expanded upon by Isaiah Berlin in his celebrated essay from 1953 “The Hedgehog and the Fox”.

The fox knows many things, but the hedgehog knows one big thing.

In his essay, Isaiah Berlin groups history’s greatest writers and thinkers into two categories, designating them as either hedgehogs or foxes. Nevertheless, when you take a look at his work from a modern perspective, you soon discover a theory and approach that is just as valuable in the business world as it is in academia.

Enter author and business consultant Jim Collins, who skillfully demonstrated this in his book Good to Great: Why Some Companies Make the Leap…and Others Don’t, elaborating on how “The Hedgehog Concept” can be highly beneficial in business.

A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at. The distinction is absolutely critical.

As Jim Collins points out, knowing your core competency as a business, and where your company excels, should be your sole focus as an owner and entrepreneur. It’s critical, in fact. And here are three things Mr. Collins has identified to help you find out what your focus, and your company’s focus, should ultimately be.

Discover What Makes You Passionate Again

Starting on the path to entrepreneurship involves an insatiable appetite for solving problems. When you first launched your company, or took over the organization, you were very likely single-minded in how the goods or services you provided could transform your industry.

Yet, as time has continued on, and the strains of operating a business have become more challenging, have you felt yourself losing sight of what originally made you passionate? As you’re reading this, do you still believe in your company’s potential?

If not, then it’s time you revisited the reasons why you made the leap into business ownership, and effectively reawaken your earliest purpose and motivation. And don’t be afraid to modify them to your current situation either. As long as you are excited about your business again, you’re on the course from good to great.

Determine What You Are Best At

It’s tempting when you’re running a growing company to start expanding your goods and services in order to build on your successes. Sometimes, however, this is not always the best choice, and could lead to financial or organizational problems somewhere down the line.

It has been our experience that companies who do several things well, compared to businesses who do one thing perfectly, often find themselves on the wrong side of the survival rate curve. But even if you’re currently engaged in one product or service—is it absolutely the best you have to offer?

Whether you need a dialing down of your offerings, or your core competency needs a slight adjustment to truly exhibit your capabilities, making your best even better is certainly a characteristic of moving your business from good to great.

Ascertain What Drives Your Economic Engine

Without profitability, a small business wouldn’t stay afloat for very long. However, even profitable companies sometimes find themselves struggling with how to make ends meet when their other financials aren’t in order.

This is why it’s important to always take a deep look—on a regular basis—at your KPIs in order to discover the one or two things driving your financial sustainability. Then once you know what they are, find out how you can maximize their ability to bring in even more money to the business, and center your company’s efforts on making that happen.

In the end, “The Hedgehog Concept” only works as well as your application of all three of these items. While you might have an opportunity to become better by working on a single concept, utilizing all three all but guarantees your company will not only be around in the coming years, but also thriving in the meantime.

Posted by: Brendan Anderson A co-founder and managing partner at Evolution, Brendan has spent the past 20 years as an investor and manager of businesses ranging from manufacturing to financial services. @Brendan_Andersn

Comments (1)


  1. Geetha:

    This blog provides useful information about new techniques and concepts.very impressive lines are given which is very attractive.

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