Monthly Archives: September 2012

Are you a fox or a hedgehog ?

I’ve been meaning for ages to blog on some of my favourite books that have “shaped my way of thinking”. When David Pottinger blogged on “Are you a fox or a hedgehog?”, I was spurred into action. In the famous essay “The Hedgehog and the Fox”, Isaiah Berlin divided the world into hedgehogs and foxes based upon an ancient Greek parable:

The fox knows many things, but the hedgehog knows one big thing.

The fox is a cunning creature, able to devise a myriad of complex strategies for sneak attacks on the hedgehog; each one more devious and cunning that the last. Fast, sleek, beautiful, fleet of foot, and crafty – the fox looks the sure winner; or so you would think. The hedgehog on the other hand is a simpler creature, who appears to dawdle along through life, taking his time searching out food, taking time time eating food and generally living life at a  leisurely pace.

So when, the fox attacks you might think there could only be one winner. However, the hedgehog’s response is always the same. You can almost imagine him thinking, in some kind of Tom and Jerry-esk cartoon sketch, “Here we go again …”. The hedgehog rolls up into a ball and becomes a sphere of sharp spikes, repelling attack from all directions. The hedgehog has one strategy but it is a beautifully simple strategy and it works within his environment.

That strategy wasn’t dreamed up on the spot, it has evolved our the years; but it is a wonderfully robust strategy; however simple it might be to explain. Having this kind of strategy and simplicity of thought requires great market understanding.

David’s blog post is primarily about scientists, but he throws out the question: “In a much milder form, maybe the same fox/hedgehog division is true in business?”. Well I believe, that it is absolutely true and I’d even question whether it is in a “much milder form”.

If you’re not convinced, I’d heartily recommend reading “Good to Great” by Jim Collins (who was also the author or “Built to Last”). Jim says:

“To be clear, hedgehogs aren’t stupid. Quite the contrary. They understand that the essence of profound insight is simplicity.”

Jim goes onto to apply the concept to Walgreens, who generated stock returns from the end of 1975 to 2000 that exceeded the market by over fifteen times. Their concept was simple: to be the best, most convenient drugstores, with high profit per customer per visit. In classic hedgehog style, Walgreens took this simple concept and applied it with fanatic consistency. It embarked on a systematic programme to replace all inconvenient locations with convenient locations, even if it meant moving a store just half a block away. At their peak, Walgreens were more densely packed in some city centres than Starbucks coffee shops. The philosophy was that in busy urban areas, no-one should have to walk more than a few blocks to reach a Walgreens. The ideal lot was a corner lot, where customers could easily enter and exit from multiple directions and Walgreen would even close stores in “good” locations half a block away in order to open stores in “great” locations, even if it cost millions to exit the lease. [Source: Chapter 5 of “Good to Great”.]

Have you got an understanding of your market-place that has let you develop your “Hedgehog Concept” ? Do you execute on that strategy with unerring drive and determination, and not get seduced by good opportunities that might distract you from your primary goal ?

I’d be intrigued to hear your thoughts on what you think might be a “hedgehog strategy” in the rail or transport industry.