What is you hedgehog?

I’ve mentioned Good to Great by Jim Collins in previous blog posts. I think it is one of the best books I have found for members of organizations that are interested in becoming excellent. Today, drawing on that book, I would like to write about the three questions that excellent organizations have to answer and the organizational strategy that should be derived by the answer to those questions.

The three questions are:
1) What are we passionate about?
2) What are/can we be the best at?
3) What drives our economic engine

What are we passionate about? This question points to the foundational motivation for outstanding or excellent organizations – they are passionate about what they do or they are passionate about what the organization accomplishes. We don’t often talk about passion, at least in for profit business settings. Collins notes, “…throughout the good-to-great companies, passion became a key [condition]. You can’t manufacture passion or “motivate” people to feel passionate. You can only discover what ignites your passion and the passion of those around you.”

What are/can we be the best at? Collins makes the point this may be different from an organization’s core competencies. He states that for an organization to truly be excellent they need to identify the thing(s) they can do that are the best in the world. Expanding on this point, Collins writes, “The good-to-great companies understood that doing what you are good at will only make you good; focusing on what you can potentially do better than any other organization is the only path to greatness.”

What drives our economic engine? To answer this question fully is to know more than “how do we make money?” Developing an understanding of the driver of an economic engine is to discover the key financial ratio that determines financial success and profitability; this is usually expressed as some form of money/variable. Collins provides a guide to help us determine our most meaningful economic ratio: “If you could pick one and only one ratio – profit per x (or in the social sector cash flow per x) – to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” He further states, “That denominator can be quite subtle, sometimes even unobvious. The key is to use the question of the denominator to gain understanding into your economic model.” Typically, this might be expressed in such things as profit per customer, revenue per hour, or profit per unit sold. The key is to spend the time to figure out what is the most important ratio for your organization.

These three questions are envisioned as intersecting circles. The area of overlap (where what we are or can be best in the world at, our economic driver, and our passion intersect) is where we should focus our strategic energy. I won’t go into why this term is used (I guess you’ll just have to read the book :-)), but Collins calls this intersection the “Hedgehog Concept”, which he defines as “a simple, crystalline concept that flows from deep understanding about he intersection of the…three circles.” A clear understanding of, and focusing efforts on, their “hedgehog” was the fundamental differentiator between good and great companies; one could say of excellent organizations.

While this may sound simple, Collins makes the point that actually determining an organization’s hedgehog is an iterative process that times; on average, the companies in his research took four years to identify and focus their efforts and resources on these key drivers of success. However, if it can move an organization to greatness, it is worth the effort.

One of the things I like about this concept is that it is applicable to us as individuals as well as to organizations. Imagine the joy that would accompany spending your life on doing something that you were passionate about, something at which you were or could become the best in the world, and something that brought you ample economic rewards. How many of us can truly say we have all three of these variables fully met in our current work? How would life be different if we spent our time in the intersection of these three circles?

In a conversation recently, a friend of mine made the point that when an organization’s hedgehog and the hedgehogs of the organization’s members are the same, tremendous power, energy, creativity and ultimately success is unleashed. This statement points to the need for leaders to guide their organizations through the process of identifying the organizational hedgehog, and at the same time uncovering their own, and helping organizational members discover their hedgehogs. Ideally, those hedgehogs will be the same, or very similar. If there is not close alignment, particularly for key organizational members, one has to wonder whether that organization will ever truly be able to be excellent and whether its members will ever be happy and fulfilled working there.

How’s your organization’s hedgehog? Have you identified it? Do you know your passions, what you are the best in the world at, your economic drivers? Is your organization acting accordingly? How’s your personal hedgehog? Thinking deeply about these questions and taking action as appropriate can lead to organizational excellence and personal satisfaction.

Sustainable Excellence

There is a lot of discussion these days about sustainability. Usually when sustainability is invoked, the subject is environmental sustainability. Not without cause, there is a great deal of discussion about and effort expended towards trying to make organizations and our society environmentally sustainable.

Not too many years ago, environmental sustainability was not an issue on most people’s minds. Then, if someone spoke of organizational sustainability, they were more likely thinking in terms of the financial audit assumption of "going concern": an organization’s ability to survive as an ongoing entity; that it will be able to enjoy its assets and meets its obligations. This view is also too narrow, although it begins to get at the issue, at least as expressed in the organizations financial statements.

Without diminishing the importance of either of those meanings, today I would like to focus on a different aspect of sustainability, that of the organization itself.

What I am thinking about is an organization’s ability to sustain itself through its people. Jim Collins spoke to this point in his book Good to Great. He noted that a characteristic of great organizations is the ability to sustain themselves, and outstanding levels of performance, beyond the tenure of a given leader or even leadership team. I am concerned that too few organizations pursue this aspect of sustainability thoughtfully and purposefully.

Again drawing on Collins’ metaphor in Good to Great, if an organization has achieved excellence, it is safe to assume they have the right people in the right seats, at least for the most part. That is a great and notable accomplishment but insufficient. That coveted state can be changed in an instant through illness, accident, retirement, or a key person leaving to join another organization. In order to sustain greatness I believe two things have to happen. First, the culture of excellence has to be so ingrained, so fully and organically absorbed that it is not dependent on the efforts of any one person or few people to sustain it. Excellence has to have become embedded in the organizational DNA. Second, there needs to be a well thought out plan of succession and building of redundant skills, knowledge, and aptitude. I believe focusing on the second characteristic can help an organization develop the first.

The first step in this process is to identify potential successors for key organizational members. I have charged organizational leaders with identifying two or three possible successors to their role. This can be threatening, if sufficient trust has not been established. Some people may feel that asking them to identify possible successors is akin to asking a condemned man to dig his own grave. On the contrary, I believe it is an important aspect to leadership. Leaders train and nourish future leaders. How can you do that effectively if you have not identified who those future leaders are? One caveat: although I think it is important to identify possible successors, I would not tell a person he or she was next in line for a given position unless such a change was imminent. There are too many possible ways that knowledge could lead to problems.

Once the possible successors are identified for each key position, it is important that a well thought out development plan be implemented. Although, as stated above, I would not tell any of the individuals that they have been identified as the successor for a given person, I would tell them that they are viewed as particularly important current and future leaders for the organization. As such, the organization is going to specifically invest in their development.

Now comes the fun part: creating and implementing development programs for those identified. This is more art than science but the range of possible actions could include things as: formal training and/or education, special assignments, participation in select committees or task forces, mentoring, coaching, even lateral assignments to build professional breadth. The best action or set of actions will be different in each case. The goal of the plan will be to develop/ensure the values, skills, knowledge, traits the individual will need to successfully assume the target position.

It is possible that certain individuals will be identified as successors for more than one position. In that situation, careful discussions can ensure that there are not too many development resources applied to any one person or that gaps in experience are left because both parties thought the other was covering that area. Likewise in a large enough organization, cohorts of people who all need exposure to the same concepts or training in the same area could be formed to undergo the experience together. This has the added benefit of building vertical relationship networks that can pay untold and unexpected dividends to the organization over time.

In contrast to what I am proposing, spending time and money on developing people for a future eventuality that may never arise may seem foolish to some. There are those who have adopted a similar just-in-time attitude towards the people in the organization that they have for spare parts: don’t pay to keep them on hand, we’ll buy it when we need it. In this model, it is believed that little time or effort should be spent on developing people. Individuals should be brought in to do a specific job. If they do that well, fine - they should stay in that role until the organization either doesn’t need them anymore or until they are needed more in another role. In either case, promotion or discharge should be based on inherent goodness of fit with the job. Organizational resources should not be spent on development. If a person’s skills become outdated or no longer fit the needs of the organization, they should be discharged and a new person with the right set of skills should be brought in.

This type of transactional relationship between an organization and its members is the antithesis of organizational excellence. There may be short term gains, even flashes of brilliance that brings temporary success but sustaining excellence on the long term is not possible through that approach.

When we think of sustainability, let’s think of our organization, its culture and people, as well as the environment and profitability.