How To Use The Hedgehog Concept To Compete With Massive Competitors (4/7)

July 13, 2013 - 9 minute read - Posted by

This post is part of my series on how to apply the concepts of the book Good to Great, by Jim Collins, to tech companies. In this post, I’m going to discuss the hedgehog concept and why it is important for tech companies to keep operating with a simple framework to win. The hedgehog concept is my favourite concept from the book Good to Great and I think it is the most potent. I have used this principle to simplify my personal life, and my extremely complex work life, running 7Geese which requires wearing many hats in sales, marketing, public relations, design, engineering, accounting, recruiting, training and everything else that is needed to run a successful startup. Without knowing about this concept I probably would have been broke and in a mental hospital by now! 😀

Jim Collins starts describing the hedgehog concept by talking about Isaiah Berlin’s famous essay “The Hedgehog and the Fox”, where Isaiah divided people into two categories, the Hedgehogs and the Foxes. The fox know many things, but the hedgehog knows one big thing really well. The fox spends all day coming up with complex strategies to attack the hedgehog, while the hedgehog goes about his simple day, searching for lunch and taking care of his home. When the fox finally attacks him, the hedgehog just rolls himself into a spiky ball and despite the greater cunning of the fox, the hedgehog always wins. People that are like foxes, pursue many things at the same time and see the world in all its complexity. Hedgehogs on the other hand, simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything else. For hedgehogs anything that does not somehow related to their hedgehog idea has no relevance.

For 7Geese, our hedgehog concept was very hard to define as we make a social performance management platform for continuous feedback, coaching, recognition, and goal setting. We touch and influence everyone in the company such as executives, mid-level managers, HR, and front-line employees. Talent management software is one of the most complex industries and we had to think deep to distill what is it that we stand for in a simple hedgehog concept. When we finally came up with the idea, it all made sense and it has made decision making very easy ever since. Our hedgehog concept is to enable our users to advance their careers and unleash their full potential.

Every product and company strategy that we have must pass this filter. If it doesn’t, it’s gone. Even if customers really push us to have a feature that doesn’t pass this filter, we say NO because we know that our hedgehog concept is our northern star. For example, one of our most effective features is the 7Geese peer recognition. Traditionally, employee recognition and rewards are linked together and a few of our customers have asked for tying money or giftcards to our recognition badges. Now this sounds like a good idea and many of our competitors do it. However, we know based on scientific research that if-then rewards kill motivation for professional workers, and they really don’t help people unleash their potential and advance their careers. So we said No, simplifying our product and our world.


The Three Circles:

Jim Collins then introduces the three circles of the hedgehog concept that differentiates a successful hedgehog concept and a failing one. Only when your hedgehog concept is at the intersection of the following three circles, you have a chance at winning:

  1. What you can be the best in the world at and equally important, what you cannot be the best in the world at.

  2. What drives your economic engine. This is piercing insight into how to most effectively generate sustained and robust cashflow and profitability. It usually has a denominator (profit per X) such as profit per product line or profit per customer visit.

  3. What are you deeply passionate about. We all know that without passion you will not stick in it long enough to win.

It’s important to know that the hedgehog concept is not about goals, strategy, or intentions. It’s about a solid understanding of where you stand. It’s a difficult process and it took 4 years on average for Good to Great companies to get a hedgehog concept. At 7Geese, we developed our hedgehog concept in one year. It’s the core of our business and very confidential, but I’m going to share it with you anyways:

  1. Best in the world:
    Our competitors are SuccessFactors (owned by SAP) and Work.com (owned by Salesforce.com). Both public companies worth billions of dollars. They have massive sales and marketing teams. How can a small company like 7Geese be best in the world at something when there are giants running the market. To answer this question, we first answered what we cannot be the best in the world at. We found out that we cannot be the best in sales and marketing. In fact, we don’t currently have a single sales person and we don’t do any marketing except for blogging (makes the complex world simple for us). However, we know we can create the best product in the world for the new generation of workers. Since our team is all in their late-twenties, we are born and live digital and can build the most innovative talent management tools that use social and mobile technologies to engage the workforce. This is exactly how we won the most innovative companies like HootSuite and Return Path as our customers.

  2. Economic engine driver:
    For us our economic engine is revenue per employee. Since we don’t have Venture Capital funding and don’t have a massive budget, our team has to be efficient and agile. We have an entrepreneurial team capable of wearing many hats from development to support and marketing.

  3. Deep Passion:
    We are extremely passionate about building tools to help people unleash their potential. We don’t build products to help companies control their people, treat them like a replaceable cog in the wheel, and squeeze every ounce of value out of their people. Instead, we focus on enabling people to be motivated, engaged, and inspired. This way both them and their organization can win. This is our true passion.

The hedgehog concept can really enable you and your organization to stay calm, grounded, and focused, when the outside world is chaotic and complex. I recommend you spend time to develop the hedgehog concept for yourself, team, and organization.

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