The document summarizes key concepts from Chapter 5 of the book "Good to Great". It introduces the hedgehog concept using the parable of the hedgehog and the fox. The hedgehog knows one big thing and always defeats the fox despite its greater cunningness. The hedgehog concept involves focusing on the intersection of three circles: what you can be the best at, what drives your economic engine, and what you are deeply passionate about. It is an understanding, not a goal, of what an organization can be exceptional at. The document also discusses the Stockdale paradox about having faith you will prevail while confronting brutal facts.

1. Good to Great Chapter Five – The Hedgehog Concept

3. The Parable of the Hedgehog and the Fox

4. The Fox The Fox knows many things….

5. The Hedgehog … .but the Hedgehog knows one big thing.

6. The Fox Fast Sleek Fleet of Foot Crafty Cunning A Winner

7. The Hedgehog Dowdier creature Waddles Genetic mix-up between a porcupine and a small Armadillo

8. The Fox Waits in cunning silence Leaps out Lightning Fast Thinks; Aha! Iv’e got you now!

9. The Hedgehog Minding his own business, wanders into the path of the Fox Sensing danger, thinks; Here we go again Rolls up into a sphere of sharp spikes

10. The Fox Bounding towards his prey…. … . He sees the Hedgehog’s defense … .. Calls off the attack Goes back to calculate a new line of attack

11. The Hedgehog Each day the same battle…. Despite the Fox’s greater cunning… The Hedgehog always wins

12. The Fox Pursues many ends at the same time Sees the World in all it’s complexity Scattered and diffused, moving on many levels

13. The Fox Never integrating their thinking into one overall concept or unifying vision

14. The Hedgehog Simplifies the World into a single organizing idea… a basic principle or concept that unifies or guides everything

15. The Hedgehog No matter how complex the World, reduces all challenges and dilemmas to simple – indeed almost simplistic – Hedgehog ideas

16. The Hedgehog For the Hedgehog, anything that does not somehow relate to the Hedgehog idea holds no relevance

17. The Hedgehog Hedgehogs are not stupid Understand that the essence of profound insight is simplicity

18. Famous Hedgehogs Freud – the unconscious Darwin – natural selection Adam Smith – division of labor Einstein - relativity

19. The Hedgehog Concept Is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles…..

21. Circle One What can you be the best in the World at (and equally important, what you cannot be the best in the World at.) Just because you possess a core competence does not mean that you can be the best in the World at it

22. Circle One Conversely, what you can be the best at might not even be something in which you are currently engaged

23. Circle Two What Drives your Economic Engine Attain piercing insight into how to most effectively generate sustained and robust cash flow and profitability Discover the single denominator providing the greatest impact on the economics

24. Circle Three What Are you Deeply Passionate About Focus on those activities that ignite your passion The idea is not to stimulate passion, but to discover what makes you passionate

25. The Hedgehog Concept The Hedgehog concept is not a goal to be the best, a strategy or intention to be the best…….. It is an understanding of what you can be the best at.

26. The Hedgehog Concept The Curse of Competence Just because you are making money at it doesn’t necessarily mean you can be the best at it Focusing solely on what you can potentially do better than any other person is the only path to greatness

27. The Hedgehog Concept It is an Iterative process

29. Good to Great The Stockdale Paradox

30. Admiral Jim Stockdale Awarded 26 personal combat decorations Medal of Honor and four Silver Stars

31. Admiral Jim Stockdale Shot down over North Vietnam Spent eight years in the “Hanoi Hilton” Tortured over twenty times No prisoners rights

32. Admiral Jim Stockdale Refused to be used as propaganda Cut himself with a razor and beat himself so he could not be put in front of cameras

33. Admiral Jim Stockdale “ I never lost faith in the end of the story” “ I never doubted not only would I get out, but also that I would prevail in the end and turn the experience into the defining event of my life”

34. Admiral Jim Stockdale “ Who didn’t make it out? The optimists”

35. Admiral Jim Stockdale “ You must never confuse faith that you will prevail in the end, which you can never afford to lose, with the discipline to confront the most brutal facts of your current reality”

36. The Stockdale Paradox

37. The Stockdale Paradox Current Reality Unemployed Underemployed Lifelines (a.k.a. “Money”) running low No responses to resumes Brutal Facts WI Unemployment is approaching 10% Racine is 17.1% Economy lost 7 million jobs – up to 5 yrs to recover

38. Success