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Good to Great-Chapter 5 The Hedgehog Concept (Simplicity within the Three Circles). Crystal Hill Stephen Lechtenberg Anand McGee Allison Purtell Jason Torres.

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Crystal hill stephen lechtenberg anand mcgee allison purtell jason torres l.jpg

Good to Great-Chapter 5

The Hedgehog Concept

(Simplicity within the Three Circles)

Crystal Hill

Stephen Lechtenberg

Anand McGee

Allison Purtell

Jason Torres


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“The fox knows many things, but the hedgehog knows one big thing-rolling into a perfect ball becoming a sphere of sharp spikes, pointing out in all directions to ward of predators.”

Hedgehog Concept


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2 Basic Groups-


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  • Those who all its complexitybuild the good-to-great companies are, to one degree or another, hedgehogs. They used their hedgehog nature to drive toward what theycall a Hedgehog Concept for their companies. Those who lead the comparison companies tend to be foxes, never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent

Hedgehog vs. Fox


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Example: Walgreens vs. Eckerds


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Example: Starbucks


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  • The essential strategic differences between the good-to-great companies lay in two fundamental distinctions:

    • Founded the their strategies on deep understanding along 3 key dimensions-

      the 3 circles

    • Translated that understanding into a simple, crystalline concept that guided all their efforts

The Three Circles


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What are you deeply passionate about?

What drives your economic engine?

The Three Circles (cont.)

What can you be the best in the world at?


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Understand what you can (and cannot) be best at


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Insight into your economic engine - what is your denominator?


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  • If you could pick one ratio- profit per returns in very unspectacular industriesx or in the social sector- cash flow per x to increase over time what x would have the greatest and most sustainable impact

  • Don’t have a denominator just to have one, but for the sake of gaining insight which leads to more robust and sustainable economics

Economic Denominator


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  • Philip Morris vs. R.J. Reynolds returns in very unspectacular industries

  • Passion is a key part of the Hedgehog Concept

  • Can’t manufacture passion or “motivate” people to feel passionate.

Understanding Your Passion


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  • Gillette returns in very unspectacular industries

  • Don’t have to be passionate about the mechanics of the business.

  • Fannie Mae

  • Having passion is key to succeeding.

Understanding Your Passion (cont.)


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  • Pre-hedgehog vs. Post-hedgehog returns in very unspectacular industries

  • 2 Reasons for Complexity

  • Mindless Pursuit of Growth

  • Great Western vs. Fannie Mae

The Triumph of Understanding over Bravado


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  • Turning Point in the Journey returns in very unspectacular industries

  • Disciplined Action

  • “Can’t just Jump” – Albert Einstein

  • Inherently Iterative Process

  • Useful Mechanism – The Council

The Triumph of Understanding over Bravado (cont.)


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Questions? returns in very unspectacular industries


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