The Hedgehog Principle
In “Good to Great”, Jim Collins (citing Isaiah Berlin) compares a fox to a hedgehog. The fox knows many things, the hedgehog knows one big thing. The fox spends its day figuring out how to attack the hedgehog in various cunning ways, but the hedgehog remains safe because it knows that it is better than anyone else at one thing: curling up into a ball of spikes. The point of this is that companies should know what their “hedgehog” is — they should know what they are the very best at and stick to it. What is your company the very best at?
This question is one of the harder questions for a small business owner to answer because it’s quite likely that your small business isn’t the best at anything (yet). Answering the question is also complicated by the fact that even if you are the best at something, it’s hard to determine how narrowly to define what you are the best at.
I remember having this discussion at Sharp Analytics — what were we the very best at? Was it marketing dashboards or was it more narrow than that? Maybe we were the best at marketing dashboards for advertising agencies. Or maybe it was even more narrow – perhaps we were the very best at marketing data source integration for international advertising agencies. Or was it more broad? We knew that we weren’t the best at the larger category of business intelligence, but we had some thoughts about business intelligence that we felt could change the industry. If we defined ourselves too narrowly, would we miss the big opportunity? Answering the question would define our strategy. We would either be helped by the laser focus or we would choose the wrong “hedgehog” and get stuck doing something we weren’t the best at — a recipe for disaster.
I am of the opinion that if you are in the Crappy to Good stage of your business, you might not have a hedgehog. A startup should be a little bit more like the fox. Let’s look at the fox for a minute. The fox isn’t the best at anything yet (at least in our example) but he is cunning and willing to learn from his mistakes. I’d like to believe that at some point, the fox gets it right. He figures out that if he can get to the hedgehog before the hedgehog rolls into a ball, the fox can flip him over and win. Maybe the fox needs to take a lesson from the badger who knows how to pry open the rolled up hedgehog and eat him.
The worst thing a startup can do is define what it does so narrowly that it misses the big opportunity. It’s critical to have a strategy and a plan backed by a well thought out financial model but you have to recognize when you were wrong and learn from mistakes. In a startup, I value agility over focus until you find out what you really are the very best at. In the early stages there is clearly a balance and you have to be careful not to be so unfocused that you are out of control but again, the fox is probably a good example. The fox is going to turn over that hedgehog but he doesn’t know exactly how he is going to do it. So every day, he puts a plan of attack together and tries a different tactic. He’s still focused on the hedgehog and committed to eating it, but he’s agile and willing to change strategies to meet his long-term objective.