Imagine you are sitting at the top of a hill overlooking a grassy field. You notice a fox and a hedgehog resting in the shade of tree in the middle of the field. Suddenly, both snap to attention and stare off in the distance. You recognize a bobcat strolling through the edge of the field, beginning to look in the direction of our resting friends.
The fox turns to the hedgehog and says, “We need to do something fast!” and begins hurriedly looking around the field. The hedgehog suggests burrowing down under the tree, since they are both pretty good burrowers. The fox agrees and the two begin digging.
As the bobcat wanders closer, the fox looks up and exclaims, “This is taking too long, we should hide in the tree!” and bolts up the tree into its leafy branches.
The bobcat hears the rustle of the leaves and curiously turns to see what is causing the stir.
The hedgehog peeks up from his half-dug hole, “I think bobcats can climb too, but our hole will be too small for him to follow us down.” The fox shrieks, “He’s coming! We gotta get to the forest so we can hide! It’s not that far, I think we can make it.”
As the fox leaps from the tree, he is spotted and the bobcat gives chase. The fox zigs and zags, trying to trick the bobcat and race to the tree line of the forest. But the bobcat also knows how to zig and zag. Soon the bobcat’s longer, faster legs carry him to the fox and the chase ends before the fox reaches the forest.
The hedgehog, having watched the grisly scene from his completed burrow gasps in horror alerting the bobcat to a potential second course.
Like lightning, the bobcat pounces on top of the hedgehog’s burrow, but the hedgehog has ducked into his hole where the bobcats climbing ability, speed and agility are irrelevant because he is too big to follow the hedgehog.
The bobcat is Google/Facebook/Amazon/Walmart, any of those companies that have grown to be a diversified Titan in their market. The fox is any one of several companies we’ve seen fail due to a lack of focus, which kept it from successfully executing a strategy that properly utilized its skillset. The hedgehog is that rare company, who through a focused effort on its core competencies, has managed to carve out a niche in its market and continues to successfully compete despite the advantages held by its competitors.
Jim Collins talks about the ability to develop a Hedgehog Concept as a key differentiator between great companies and their peers in Good to Great: Why Some Companies Make the Leap…And Others Don’t. I’ve taken a great deal of liberty in reinterpreting his research, but I believe the key to great small companies is laser focus on the best application of a short list of core competencies. Finding, developing and applying your core competencies is a strategic imperative in today’s world where an increasing number of markets are subject to network effects and other advantages that favor incumbents and larger competitors.
Are there any recent examples of hedgehogs and foxes that you recall?
I’m going to answer the question by addressing (my impression of) the assumptions on which the question is based, all in the spirit of potentially starting a healthy debate. The fable supports the undeniable trait of hindsight description found in business writing and research. This metaphor no doubt helps us understand what may have transpired as a company or industry goes through periods of growth or decline. Where I disagree with the use of the metaphor is applying its lessons to future actions: prescription. I argue that most business success is not a result of focused thought out strategy, but rather elements such as vision, tenacity, persistence, preparation, and chance. For example most would not attribute the early failures of later successful entrepreneurs to their lack of focus or strategy, but rather to their circumstances. Borrowing from the metaphor to make the point, the hedgehog may have been eaten despite his focus if the fox had chosen to noisily run up the tree and the bobcat didn’t feel like climbing that day. Whatsapp.
Good points, thanks for the comment, I agree that a lot of research tends to rely too heavily on hindsight. In the context of a small business though, it’s important to draw a distinction between the many roles an owner/manager must play and the goals of the business as a whole. Discovering and then pursuing an opportunity (presumably one for which you have or are able to develop a core competency) requires focus. Time and resources create the need for discipline, even where you are lucky, you need to get things done to reap the benefit of a good situation. Ultimately, judgement plays a role in understanding when to press on or when to cut losses, but a thoughtful approach to marrying your strategic advantages to the right opportunity give you a greater chance at being lucky.
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Please if I may. I will agree to your premise as well as Ryan’s assumptions regarding the fable but what the fable lacks for me is less about technologies, core competencies and even vision. I do lean more towards Ryan’s discussion the his list of elements, etc. and would characterize the “per chance” as rather filling a vacuum based on many factors in the marketplace. What I feel is lacking is one simple notion and that is the notion of the right people putting forth the right effort. Jack Welch, former CEO of GE and “management guru” writes that “hiring good people is hard; hiring great people is brutally hard.” He goes on to say “and yet nothing matters more in winning than getting the right people on the field. All the cleaver strategies and advanced technologies in the world are nowhere near as effective without great people to put them to work.” Welch claims” Any strategy, no matter how smart, is dead on arrival unless a company brings it to life with people – the right people.”
Couldn’t agree more that getting the right people on the bus (another Jim Collins analogy that fits with Welch’s thinking) is mission critical. Its the people that make up and enable your core competencies. In thinking more about Ryan’s comments about hindsight vs prescription advice, a point that I think underpins Ryan’s comment is the fact that the inherent risk of being a small fish in a pond with bigger fish cannot be eliminated. As I like to say when someone tries to convince me that they have a foolproof idea, “You can still lose.” You have to find ways to minimize the risk of being swallowed whole by focusing on something you (as an enterprise) are good at (or can be) and surrounding yourself with people who make you even better.