Good to Great

Chapter Five – The Hedgehog Concept

The Parable of the Hedgehog and the Fox

The Fox

The Fox knows many things….

The Hedgehog

….but the Hedgehog knows one big thing.

The Fox

Fast Sleek Fleet of Foot Crafty Cunning A Winner

The Hedgehog

Dowdier creature Waddles Genetic mix-up

between a porcupine and a small Armadillo

The Fox

Waits in cunning silence

Leaps out Lightning Fast Thinks; Aha! Iv’e

got you now!

The Hedgehog Minding his own

business, wanders into the path of the Fox

Sensing danger, thinks; Here we go again

Rolls up into a sphere of sharp spikes

The Fox Bounding towards

his prey…. …. He sees the

Hedgehog’s defense

….. Calls off the attack

Goes back to calculate a new line of attack

The Hedgehog

Each day the same battle….

Despite the Fox’s greater cunning…

The Hedgehog always wins

The Fox

Pursues many ends at the same time

Sees the World in all it’s complexity

Scattered and diffused, moving on many levels

The Fox

Never integrating their thinking into one overall concept or unifying vision

The Hedgehog

Simplifies the World into a single organizing idea… a basic principle or concept that unifies or guides everything

The Hedgehog No matter how

complex the World, reduces all challenges and dilemmas to simple – indeed almost simplistic – Hedgehog ideas

The Hedgehog

For the Hedgehog, anything that does not somehow relate to the Hedgehog idea holds no relevance

The Hedgehog

Hedgehogs are not stupid

Understand that the essence of profound insight is simplicity

Famous Hedgehogs Freud – the

unconscious Darwin – natural

selection Adam Smith –

division of labor Einstein -

relativity

The Hedgehog Concept

Is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles…..

Circle One What can you be the best in the

World at (and equally important, what you cannot be the best in the World at.)

Just because you possess a core competence does not mean that you can be the best in the World at it

Circle One

Conversely, what you can be the best at might not even be something in which you are currently engaged

Circle Two What Drives your Economic Engine

Attain piercing insight into how to most effectively generate sustained and robust cash flow and profitability

Discover the single denominator providing the greatest impact on the economics

Circle Three What Are you Deeply Passionate

About

Focus on those activities that ignite your passion

The idea is not to stimulate passion, but to discover what makes you passionate

The Hedgehog Concept The Hedgehog concept is not a

goal to be the best, a strategy or intention to be the best……..

It is an understanding of what you can be the best at.

The Hedgehog Concept The Curse of Competence

Just because you are making money at it doesn’t necessarily mean you can be the best at it

Focusing solely on what you can potentially do better than any other person is the only path to greatness

The Hedgehog Concept

It is an Iterative process

Good to Great

The Stockdale Paradox

Admiral Jim Stockdale

Awarded 26 personal combat decorations

Medal of Honor and four Silver Stars

Admiral Jim Stockdale Shot down over

North Vietnam Spent eight years

in the “Hanoi Hilton”

Tortured over twenty times

No prisoners rights

Admiral Jim Stockdale Refused to be used

as propaganda

Cut himself with a razor and beat himself so he could not be put in front of cameras

Admiral Jim Stockdale “I never lost faith in

the end of the story”

“I never doubted not only would I get out, but also that I would prevail in the end and turn the experience into the defining event of my life”

Admiral Jim Stockdale

“Who didn’t make it out? The optimists”

Admiral Jim Stockdale “You must never

confuse faith that you will prevail in the end, which you can never afford to lose, with the discipline to confront the most brutal facts of your current reality”

The Stockdale Paradox

The Stockdale Paradox Current Reality

Unemployed Underemployed Lifelines (a.k.a.

“Money”) running low

No responses to resumes

Brutal Facts

WI Unemployment is approaching 10%

Racine is 17.1% Economy lost 7

million jobs – up to 5 yrs to recover

Success