I started this blog with the intention of focusing on ways in which a business can improve its competitive advantage. To keep on this track this post is about one of the fundamental strategies that provides the cornerstone of developing a sustainable competitive advantage over your competitors. That strategy is, FOCUS.
Jim Collins in his classic book, Good to Great, retold the story of “The Hedgehog and the Fox”. The fox knew many things, but the hedgehog knew one big thing. The fox was a cunning creature, able to devise a myriad of complex strategies for sneak attacks on the hedgehog. Fast, sleek, beautiful, fleet of foot and crafty – the fox looked like a sure winner. The hedgehog , on the other hand, was a dowdier creature. He waddled along, going about his simple day, searching for lunch and taking care of his home.
One day the hedgehog wandered in front of the fox. “Aha, I’ve got you now!” thinks the fox as he leapt out towards the hedgehog. The hedgehog, sensing danger, rolled up into a perfect ball, sharp spikes poking out in all directions. The fox retreated back into the forest to plan a new line of attack. Time and time again the fox tried different ways to attack the hedgehog, but every time the hedgehog won by following the same, roll into a spiky ball strategy.
What has this got to do with business? Well, lots actually. Jim Collins used this parable to classify companies as either hedgehogs or foxes. A hedgehog company generally had a crystal clear understanding of what they can be the BEST in the world at, the single KEY economic driver that had the biggest impact on their profitability and PASSION for what they do best.
Fox companies, on the other hand, were quick to jump on new opportunities, even if they were in a significantly different market to where they had most of their business and were more passionate about “doing the deal” than their core business. Senior management were generally driven more by their egos.
Hedgehog companies generally outperformed similar sized fox ones in the same industry by many times over. The important message is that to be successful in the long term and develop a sustainable competitive advantage, you are better to focus on one thing that you CAN be the best at, even it appears to be rather boring in comparison to your flashy competitors’ try everything approach.
To receive help in determining if you have a hedgehog concept that will help to build your sustainable competitive advantage, contact me at: andy@tradescoach.co.nz
Andy Burrows – Website: The Trades Coach