The ‘Hedgehog’ Effect
Do you consider yourself a Hedgehog or a fox? The question is from Isaiah Berlin's essay, which divided the world population into two types- Hedgehogs and Foxes. While the hedgehog was knowledgable for only one thing, the fox was said to have a wide variety of things known to him.
Hedgehogs have a single line of vision; they manage to reduce all the world’s complexities into simplistic hedgehog ideas. In contrast, the fox is a complex creature, who tries to operate on all levels rather than focusing on one.
While Berlin illustrates the above concept with the examples of famous world Philosophers like Tolstoy, Aristotle, and others, I wish to draw light on how businesses manage to succeed in the competitive market with the hedgehog strategy in place.
While building successful businesses, one must ensure the hedgehog nature is considered to drive them. One relatable example would be that of Walgreens vs Eckerd as illustrated in the book ‘Good to Great’ by Jim Collins. Walgreens is the second-largest pharmacy chain store in the United States and during the years 1975 to 2000, it managed to exceed the market by over fifteen times. What worked for the chain was to systematically place all the disruptively located stores with conveniently located ones. The company built stores at every corner so that customers didn't have to walk too far to reach a Walgreen. They added services with high margins and managed to increase their profits per customer visit. These profits were used to open more and more stores in convenient locations and Walgreen grew.
Eckerd did not use the hedgehog concept here but opened stores here and there with no strategy whatsoever. They then acquired the home video market with the idea that the industry is growing in comparison to pharmacies, but they went in losses too.
If businesses wish to apply the Hedgehog concept in place, Author Jim Collins talks about the three circles and how they must be implemented to ensure one doesn't run just a successful company but a great one.
Share examples of companies that may have applied the Hedgehog concept in their business model. What businesses come to mind who have applied the three concepts:
- being the best in the world at what they do ( my boss always told me to delve into the depth of things rather than width, and that has always stuck in the back of my head)
- what is/are the parameters that drive profitability
- do what passionates you ( Well, this is a common one! Your work shouldn't be forced, but something that ignites the fire within you)
