I recently prepared for an annual planning session with a client and one thing the client wanted to work on was their Big Hairy Audacious Goal (BHAG). The best way to develop your BHAG is to first discover your Hedgehog. If you have not read much of Jim Collins' work, you may be asking yourself, what does a Hedgehog have to do with my BHAG and long-term goals for the company? The term comes from the famous essay by Isaiah Berlin titled “The Hedgehog and the Fox.” The crux of the story is that the fox is cunning and knows many things while seeing the world in all of its complexity, but the hedgehog knows one big thing and simplifies a complex world into a single organizing idea.
As it relates to business, many companies pursue many avenues and opportunities, requiring them to be good at many things. Other companies are laser-focused and concentrate on what they can be the best in the world at. Most of the great companies of our day have found their hedgehog over a period of time, remained focused on it, and have out-performed their competition because of it. They then use this simple crystalline concept to guide all of their efforts.
So, what is a hedgehog concept made up of? There are three primary questions to answer:
1. What can you be the best in the world at? This may not be what you are good at today or even one of your core competencies. It is more about what you “could” be the best in the world at or even the best within the “sandbox” you choose to operate. It may take time to become the best, but you need to be honest in the belief that you can. And equally important, you must be honest with yourself about what you can NOT become best at.
2. What drives your economic engine? What is the one KPI or Critical Number that allows you to drive profitability and growth in your business? This is also known as your Profit/X. Understanding this can set you apart form your competition and guide the decisions you make for growth.
3. What are you deeply passionate about? Again, this is not what you are good at, but rather what you and your company are passionate about. Why do your employees really care about the work your company does? Would they work for less just to be a part of the team and have the opportunity to participate? The old saying is that if you love what you do, you never have to work another day in your life. People who are passionate about what they do inherently do it well. Focusing on your hedgehog should tap into that passion.
It is the intersection of the answers to these three questions that creates your hedgehog. It's the work that you do that inspires your team, that you have the potential to do better than anyone else, and that you can make money doing. Discover what this is and turn it into a simple crystalline concept. Continue to ask these three questions among your management team until you figure it out. Start by creating a Think Rhythm to work on each question. Develop an iterative process, asking the question "why" over and over, digging a little deeper each time. This process can take time, but the results are well worth it.
Once you understand your hedgehog, you're ready to begin developing your BHAG. And as long as your BHAG connects to your hedgehog, you can go forward with confidence, knowing that your efforts to achieve your BHAG are reinforcing the three most important foundational questions in your business.
Good luck and happy planning. Alan
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Editor's note: This blog was originally published on Oct 7, 2013, and has been updated.