BUSINESS

Hedgehog Concept – What are its three circles and why so important?

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Jim Collins is a renowned Business consultant and is remembered as an integral member of the Business History. One of his major contributions to the world of Business is the Hedgehog Concept. It is a representation of the important factors that serve as the pillars of success and growth for a business.

Collins, in his book ‘Good to Great’, depicts and emphasizes the surprising similarities in his Hedgehog Concept and successful business organizations. He shows that large, sustainable businesses are able to achieve success due to an amalgam of different ingredients. However, according to Collins, the significance of shifting your focus on one aspect of your business at a time is the key.

Circles of the Hedgehog Concept

Jim Collins’s Hedgehog Concept comprises of three distinct aspects to gauge the performance of an idea/business’s growth. According to Jim Collins, it is important for these three circles to overlap for accurate analysis. Enough about the good stuff, let’s see what these circles are.

1. Identify your deepest passion

It is a universally accepted fact that the most effective driving force in business is passion. As much as passion is important to kickstart a business idea, the idea deserves and demands a constant push by passion. According to Forbes, passion is one of the key factors in motivating a business’s growth.

Following your passion can be extremely easy on an individual level, but it gets difficult in an organization. According to the hedgehog concept, you need to figure out the passion of your employees. You need to identify their motivators, are their passions aligned with the company’s core principles?

It is a common practice in successful organizations to track their employees’ motivating factors. Then the organizations assign them projects that align with their employees’ passion which increases productivity.

Many people, however, confuse the actual meaning of the first circle of the Hedgehog Concept. It means to work in the fields that you are completely passionate about instead of finding several passions. The plan is to increase productivity, not to lessen it even further.

2. You must be the “Master of” something, right?

The debate between Jack of all trades vs Master of one has been around for a really long time. However, an organization should differentiate itself from its counterparts. The difference on the basis of abilities, services and why it is better than its opponents.

There are two approaches in the business industry. You can either be an organization that has multiple capabilities but are average in all of them. Or you could have a specific section you master in while maintaining the others too. The latter works for most successful companies, as they never take their attention away from their strengths. They keep on strengthening them while giving less focused yet sufficient attention to other abilities too.

3. What drives your economic engine?

No matter how competent a company is, it all comes down to how much revenue it manages to generate. A successful organization has a systematic economic channel that allows the company to keep the cash flowing.

The economic channel has a huge responsibility as it provides a clear picture of the company’s monetary performance to every department. This helps the departments to improve and enhance their participation in the company’s growth and success.

To conclude, it is evident that when these three aspects/circles of hedgehog concept overlap, they can be the best judge to gauge an organization’s success ratio. The company becomes clear of its passions, its capabilities and the defining factors that differentiate it from its counterparts. Other than this, what other ways do you think are pivotal to enhance a company’s growth? The comments are yours!

Pursuing my passion i.e. Graduation in Computer Science while creating exciting and informative content to satisfy my thirst of writing.

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