In his bestselling business book, Good to Great, Jim Collins talks about the attributes of the very best companies and what separates the great companies from the good companies. In fact, several of the great companies were in industries that were considered ‘bad industries’ but they prospered anyway. His research showed that “…a company does not need to be in a great industry to become a great company. Each good-to-great company built a famous economic engine, regardless of the industry.” More importantly, it was the set of leadership traits they identified in the leaders of the great businesses that saw them elevate their businesses beyond just being good. He defined these leaders as either hedgehogs or foxes.
The concept of the hedgehog and the fox represents two contrasting leadership and strategy approaches. The hedgehog is characterized by a narrow focus on one's core strengths and objectives, while the fox is more scattered, constantly pursuing various opportunities. Collins argues that the leaders of great companies tend to be hedgehogs, concentrating their efforts and focus on what they do best, rather than being foxes, who often become distracted and spread their resources too thin.
When I first read about the hedgehog and the fox a few years ago it was simultaneously both profound and obvious. What I hadn’t realised up until then was that when it came to building my business, I was a fox. It was tough to have that realisation, but I simply didn’t know any better. I had ambition, drive and worked hard. But in hindsight, I didn’t really understand exactly what I was trying to build at the time. I was always on the lookout for new ideas and opportunities. Once I read the descriptions it completely changed my mindset. The most important change was genuine deep focus and that led to patience. It was a game changer for me and the way I went about business from that point on.
Where you’ll find the hedgehog operating is at the intersection of the answers to 3 critical questions:
· What you are deeply passionate about?
· What drives your economic engine?
· What you can be the best in the world at?
Refining what I am deeply passionate about was incredibly important to understand and it took me time to learn that. I love working with families and people who have built successful businesses. They are relationship-focused people who understand how to build a business for the long term. More often than not, they are hedgehogs too. I wasn’t passionate about the financial planning side. This was important to understand because it is equally important to define what you are not passionate about as it is what you are.
Moving from the fox to hedgehog mindset helped me tremendously. Firstly, it made me define what the one big thing I wanted to work on for the rest of my life was. I am deeply passionate about how the world works, understanding the inner workings of the global economy, geo-politics, and business. I enjoy the process of advising families and I believe I can grow to become the best in the world at it. The part of the process that drives the economic engine of my business is managing money for families. So, I refined the business to focus on that.
When you start trying to be the best in the world at something, your mindset shifts. You don’t have time to spend on things that don’t directly help you achieve your mission. From there I found it easy to simplify everything and focus. Unless a task, venture or opportunity directly relates to achieving your objective, then the answer is no. Once you realise you want to be hedgehog you understand exactly what almost all of these ‘opportunities’ really are – a distraction. I became very deliberate about where my time and efforts were being spent. It meant bringing in people who are equally passionate about different aspects of the business, such as Marcel for our marketing and more recently Poppy and Victoria to assist with research and administration. That process continues to evolve.
Perhaps the most surprising part was the impact all of this had on my work. Once I knew I was going to do this for the rest of my life I no longer felt in a rush to achieve results fast. It immediately made me more patient and genuinely build the business the right way for the long term. Doing that made all of my work better. Defining the answer to those 3 key questions was crucial in designing the type of business I want to be a part of for a very long time. When looking for stocks to invest in I often ask myself if the founders and management of the businesses are hedgehogs or foxes. In fact, it’s a great question for anyone in business to reflect on. So, are you a hedgehog or a fox?
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