This week I'm returning to 'Good to Great' by Jim Collins. I've read more of the book and had a few interesting debates with friends and colleagues, one of which I reference later. I like the constituent parts of what Collins calls the 'Hedgehog Concept' and in this article I suggest how this could be applied to micro and small businesses - including speakers, of course. 

Reprise - check who's on your bus

In part one of this analysis of Good to Great (Issue 21, week before last) I looked at Collins' idea of having the right people on your bus and how if you can't immediately find them - keep looking - don't accept second best, because that will just drag you down over the long term. I firmly believe this to be the case - from my own, personal experience - and from observing other organisations struggle with what's on going in their bus, as others whiz by them in the outside lane.

This 'right people on the bus' idea is really important for two reasons:

One of the major advantages small businesses have is their ability to react quicker to market changes than the 'big boys' - you can only do this if you have the right people on the team. Second, having the best people on your side makes in possible for you to consider implementing the 'hedgehog concept' - see below.
If you're happy with who's on your bus, keep reading to discover more about hedgehogs.

The hedgehog concept

I have to be honest and say that I'm not totally with Collins when it comes to his choice of name for 'the hedgehog concept'. He was looking for something that illustrated clear differentiation between companies that - despite being good - effectively did 'anything to turn a buck', versus companies that 'dug in for the long haul' to becoming great. In this respect, the story of the fox hunting the hedgehog is quite a good one - the fox tries many different tactics and the hedgehog wins out by just doing the same thing every time, (curling up into a spiny ball). Illustrative as the story may be, for me it doesn't reveal the essential core of the hedgehog concept particularly well and this is something I want to dig into.

For Collins, the heart of the concept lies in the three elements below:

1. What are you deeply passionate about?
This is nothing new for speakers and many people who run other types of micro or small businesses. Many people start businesses the wrong way round, by starting with what they're passionate about, before establishing whether there's a market for it. These people either learn quick, or go out of business. Passion is an essential part of making it, but it isn't anything like enough. I'm sure we all agree on that, so nothing new so far Jim Collins - what else is there to this hedgehog concept?

2. What single measure drives your financial performance?
To me, this was an interesting idea. Collins basic point was that all the companies that had made the leap from good to great appeared to have captured their financial performance in one measure (for example, profit per customer visit, or profit per employee). Last week I wrote about revenue being a key driver for small businesses - with a a low cost base, revenue tends to drop straight through to the bottom line. You might think then that the question becomes "how do I increase revenue?". Before you jump straight to the answer by quoting back at me the three methods I wrote about last week, I'd like you to consider this: 'what sort of revenue?' By this I mean, how are you going to measure it? Revenue per sale? Revenue per customer? Revenue per geographic region? Revenue per type of speech/workshop? Revenue per product (book, CD, DVD)? There are many different ways of measuring your revenue and my challenge to you is this:

Can you come up with a single way of measuring your revenue that has the biggest impact on your business - and then drive your entire business around increasing that number? This is not as easy as it looks on first sight. It's worth spending some time thinking about this - it'll clarify your thoughts considerably.

3. What can you be the best in the world at?
Allied to the other two elements above, this whole concept starts making a lot of sense to me. Let's be very clear what Collins is talking about here: he's not talking about being good at something; he's talking about being the best in the world - and what's wrong with that? I've met many speakers (and owners of small businesses) who are very passionate about what they do, but clearly haven't amounted the necessary evidence to convince themselves that they really are the best in the world at what they do. From where does that evidence come? From your client base for sure, but also from that single metric described in point 2 above. Imagine having that single metric and seeing it increase day after day, week after week, month after month. Don't tell me that wouldn't have a positive effect on you - I don't believe it. Just to emphasise the point: I'm not talking about the stuff you're good at - you may be good at lots of things - good for you. I'm talking about the thing you can do better than anybody else.

To summarise then: you've more than likely got the passion - well done. It's time to do some thinking and come up with (i) a simple, clear statement that describes what do you better than anybody else and (ii) a simple metric that tells you how much money you're making from doing it. It's that simple - resist all temptations to make it more complex.

Good to Great - an epilogue

I mentioned at the outset the conversations the past few Impact Improvers have triggered. One reader commented that he found the analysis behind the work to be nothing like rigorous enough, as wasn't Collins just post-rationalising events, from a perspective of having perfect hindsight? I believe this is a valid criticism - certainly Collins' comments on the good-to-great leap made by Fannie Mae make rather shallow reading now. If they were that great why didn't they see global financial meltdown coming? Despite the perfect hindsight and the possible tenuous links between (some of) the cause and effect stories in the book, I still believe that there are useful lessons to be learned and for that reason, I still believe it's worth a read.

 

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