Newsletter No. 9 | One Word: Core!

This week, I want to dive deeper into an insight from my recent keynote, where I introduced a concept I developed with my former boss and friend while reflecting on our time at SIX Innovation and Digital: The Teenager Theory of Innovation.

Like teenagers striving for independence, companies that embrace innovation often go through a "playtime" phase where they explore new ideas and directions. While this experimentation is necessary, it ultimately must remain grounded in the company’s core strengths. Without this grounding, innovation can stray too far and become hard to reintegrate.

This leads me to another framework that connects well here—the Hedgehog Concept from Good to Great by Jim Collins, which helps companies focus on their core.

One Insight from Me

The Hedgehog Concept is about finding your company’s “sweet spot” at the intersection of:

What you are deeply passionate about

What you can be the best in the world at

What drives your economic engine

It’s named after the parable of the hedgehog and the fox: while the fox knows many things, the hedgehog focuses on one big thing—rolling into a spiny ball to protect itself. Similarly, companies that focus deeply on their core strengths tend to thrive, avoiding distractions that pull them in too many directions.

Now, here's the challenge: like teenagers, companies often rebel against their core strengths. They explore innovations that are far from their core, which may hold long-term potential but require substantial time and resources to develop.

This is where the McKinsey Innovation Horizons model becomes essential. It helps companies manage how far they are moving away from their core and align their innovation efforts accordingly:

Horizon 1: Innovations that improve or extend your core business—closely aligned with the Hedgehog Concept.

Horizon 2: Adjacent opportunities that may stretch your business but still maintain some connection to your core.

Horizon 3: Disruptive innovations that are far removed from your core, often requiring entirely new capabilities and significant resources.

In my work with a healthcare clinic, we initially rebelled against the core—venturing all out into Horizon 3 with disruptive telemedicine initiatives, completely different from their established business model. It felt like a teenager testing boundaries, exploring who they could become by moving far away from their roots. However, over time, I realized there are many elements that impact successful innovation: company culture, leadership’s acceptance of new ideas, or the available budget.

As we progressed, it became clear that Horizon 1 and Horizon 2 innovations were not only more feasible but also more aligned with the clinic’s strengths. We are now focusing on initiatives in those areas, and they seem much more promising, based on how the leadership engages with the ideas.

But I don’t see the time we spent on Horizon 3 as wasted. It was a valuable phase of exploration—fooling around with what the clinic could be, which ultimately helped clarify who they truly are and where they can succeed.

The key takeaway? Innovation isn't easy, even when it seems close to the core. Focusing on Horizon 1 and carefully venturing into Horizon 2 makes the most sense for most businesses, but it requires a deep, ongoing understanding of your core strengths. The more you work on stretching these boundaries, the clearer your "Hedgehog" will become.

One Question for You

What’s your organization’s "sweet spot"? Have you identified where your core strengths lie? And if you haven't already, how can you start gathering insights from your key stakeholders to figure this out?

One Opportunity for Us

If this resonates with you, I’d love to explore how we can dive deeper into finding your organization’s hedgehog concept. Tomorrow's dawn.friends lunch will focus on this very topic—how to define your core strengths and leverage them to drive innovation that sticks.