The document discusses the "Hedgehog Concept" developed by Jim Collins, which advises companies to focus on a single, core idea that guides their strategy and product development. It states that companies should define three circles: what they can be the best in the world at doing, what drives their economic engine, and what they are passionate about. The document then provides an example of a company that applies the Hedgehog Concept to successfully focus its product strategy.

1. The Hedgehog Concept and
How It Applies to Product
Development
By Chris Marocchi
‘The Practical Product Marketer’
January 12, 2011

2. The Problem
 Product Development and Management is
all about managing the product lifecycle
“Cradle to Grave”.
 Customer and market research will
determine what could be developed
(product, feature set, service).
 A common problem evolves from this: a
brand loses its identity by becoming “All
things to all people”.

3. The Question
 After a product reaches a certain point of
robustness and gains traction in the
marketplace, the question evolves from:
What to develop?
into
What not to develop?

4. The Answer
 Jim Collins, in his book ‘Good to Great’,
addresses this question by defining the
Hedgehog Concept.
 “Those who built the good-go-great
companies were, to one degree or another,
hedgehogs. Those who led the comparison
companies tended to be foxes…, being
scattered, diffused, and inconsistent.”
(Collins, pg. 92)

5. The Story

6. Foxes vs. Hedgehogs
 Foxes pursue many ends at the same time.
They are “scattered or diffused moving on
many levels”.
 Hedgehogs simplify a complex world into a
single organizing idea, a basic principle or
concept that unifies and guides everything.

7. Examples
 Foxes:
ITT in the 1990’s (owned Sheraton, ITT – Tech,
etc.)
UPS in early 2000’s (owned Marriott, aircraft
carriers, etc.)
Time Warner in the 1990’s (owned Warner
Music Group, AOL, Time Inc., etc.)
 Hedgehogs:
In N Out Burger
Krispy Kreme
Starbucks

8. The Three Circles
 Collins’ definition of the Hedgehog concept is
based on three key dimensions that should lead
the strategy of product development for any
company:

9. Three Circles Defined
 What you can be the best in the world at – it’s an
understanding of what you can be the best at. Not
just a core competency.
 What drives your economic engine – determine
what is your denominator. If you were to pick one
ratio (e.g. profit per x), what would have the
greatest and most sustainable impact on your
business?
 What are we passionate about? You can’t
“manufacture” passion, you can only “discover”
what ignites your passion and the passion of your
employees.

10. A Case Study
 Company – CB Richard Ellis
 Division – Asset Services
 Profit Center – Axis Portal Group
 Team:
Director
Marketing Manager
Business Analysts
Customer Service Manager and Rep
Developers

11. Axis Portal

12. Where To Begin?
 Off-Site Strategy Meeting
 Presentation of the Hedgehog Concept
 Define objective: The team doesn’t leave
the room until it defines the 3 circles and
applies the Hedgehog Concept to the
product strategy
 Split into 3 teams
 Brainstorm

13. The 3 Questions Answered
 Compile the brainstormed answers from all
teams into a single list
 Compare and analyze the results of all
three teams
 Determine common patterns by analyzing
frequency of results
 Discussion
 Agreement

14. The Answers
 What can Axis Portal be the best in the world at
doing?
Offering online service products to benefit property
managers and tenants
Provide customer service/support
• What drives Axis Portal’s economic engine?
Monthly fees (recurring $ per month and the # of properties
paying recurring fees)
Setup fees
• What are we passionate about?
Web technology
Providing high level of service and training
Providing solutions to our clients’ challenges

15. The Results
 What product enhancements should we
pursue?
Portfolio data/reporting
Improved analytics
Improved customer experience/footprint
Axis Community
Sustainability module
 38% revenue growth with 14% margin
increase over 3 years.

16. The Team (Newport Beach, CA)