Hey everybody. This is NJ. Share the host of the NJ podcast. This is transformation Tuesdays. This is part of the everyday series where we hope to get you to say like Z, I'm not a businessman, I'm a businessman. Let me handle my business. Dang. And today's episode. I want to talk about the hedgehog principle, which will be pods of a discussion on how. Uh, us as individuals and how businesses as part of building a legacy can avoid declining into obscurity. Uh, this is based on put quote from Jim Collins. He's an absolutely fantastic, uh, author and business skirt, business scholar. One of the best out there, check out his books. He wrote to good to great. And how, uh, the book or goods degrades and how the mighty fall. And the how the mighty fall assisted in this episode that we are going to be sharing here today. You said Jim called and said, I've come to see institutional decline, like a stage disease, harder to detect, but easier to cure in the earliest stages, easy to detect, but harder to cure in the later stages. Now blockbuster video was founded in 1985 and was a most iconic brand at its. In 2004, eight employed, 84,300 people worldwide and 9,049 stores at this all time high. It made very poor decisions. In 2000 Netflix approached blockbuster with an offer to sell for $50 million. The CEO of blockbuster declined because it was a very small business niche. And Netflix was hemorrhaging money at the time in 2010 blockbuster foul for bankers. As of, uh, some of the reports in 17, July, 2019 back then Netflix has a hundred, have had 151 million paid subscribers, worldwide and hundred 58 million. If you include few trials with revenue, upwards of 15 billion users. Now blockbuster is one of those companies that has fallen from grace. It could have avoided decline and could have been cut a deal with Netflix and remained relevant blockbusters. Many of the companies that have once dominated, but then fell because they did not avoid decline and decline happens in five stages and the hedgehog principle will help you to be able to overcome this. So the first stage of a decline. Hubris born of success, hubris born of success, which is, this is the point where you become arrogant. You start by your own pure because you're doing well. So this happens when a mighty organization becomes inundated with its own success, and it's moving fast towards greater Heights. This success, even if there are poor choices, being made leads to people, becoming self-righteous and arrogant, nothing, and nobody can touch me. That's the spirit you operate. Success has given us automatic because of who they are. The results is a loss of focus on core activities and values that led them to be successful in the first place with the thinking that we are successful, no matter what replaces, let's not forget what made us successful happens than decline. Isn't it. The scripture says pride comes before a fall. It's this pride that overlooks all factors, including luck that played a major part of the success. The failure for true introspection leads to the Dunning-Kruger effect, where people overestimate, how good they are. And then for, to arrogance, this will lead to the organizations, blindly thinking it can expand aggressively without any consequence. Then you moved to the second stage of decline, which is an disciplined pursuit for more, when you overreach, this is the stage where the arrogant organization believes that it can now overreach grow and expand to more areas. The company starts losing the focus on being regimented and audit that got them to a place of being mighty. This leads to add discipline projects, initiatives, and acquisitions in places where it acquired grow faster and remained. When the organization starts flying too close to the sun, it sets itself up to fail. Post the stage, the company will start become ignorant of what could go wrong with its operations. Then we moved to the third stage of decline, which is the denial of risk and peril, which is ignorance that denial of risk and peril, which is. This is a stage where the internal problem starts becoming self evidence, but the external results are still strong enough to nullify those internal results. They are discarded as temporary, a normal trend, nothing to be alarmed about. And not that alarm in this stage, the negative results are muted and the positive results are amplified. The anchor information has given a positive spin the heads of the organization. Start putting blame on macro factors instead of owning the internal face. Facing fats and being neutral in approach is no longer focused. And the high-performance mindset that facts don't care about your feelings and the truth will set us free. Begin to disappear at this stage, those empowerment start taking bold actions that further engage at the company. The consequences are overlooked and denied, and the organization will be headed to a state of desperation. Then you move to the fourth stage of decline. Grasping for salvation. This is when you are desperate. This is a stage with a dangerous risk that decisions made by the management team starts plummeting the organization into decline where internal and external people can see it. How leadership responds will determine the fate of the company with a quick fix solution, be sought, or will there be a decision to return to the core values and disciplines that made the company great. At this stage, disparate strategies can be. Those commonly include getting a charismatic leader, employing a and proven strategies. Employing drastic changes, a dramatic culture, change, play some all bets on that one product or service hiring top talent or other silver bullet solutions. The initial results from these may seem positive, but often don't. This is the stage. It's the last stage where a company can turn the company around before it moves to the final stage, which is declined. The fifth stage, which we don't necessarily want to get to is capitulation to irrelevance or death decline. The longer a company stays in a state of desperation using silver bullet strategies, not returning to core values. Declined becomes inedible. Yeah. The compounding effect of setbacks, cost of risk expensive, false Dawson will consume the company's finances, erode the self-confidence of employees and leadership, and all hope for the future is lost. There can be cases where leaders sell out or the company becomes irrelevant or dies. However, if you work for an organization, Or leading one that is in this spot, or you as you, as you are your own business and finding it hard in your own career that you are in decline. Then I want you to know that there is still hope and this we can learn from apple. Now, apple was in decline at stage four and wasn't desperate need of a turnaround or else it would have to close the. The company reached out to one of its original founders, Steve jobs. Once he was reinstated jobs had a meeting in this meeting. He asked people to list all the products and services that apple was engaged. Multiple parent products and services were listed. And when the session was done, job said, we are going to focus on only on these four things as they are, what we will do better than anyone. Coupled with this ingenious and relentless marketing Apple's tunes were turned around. Hope for a company or individual in decline is outlined in a, in a good framework principle, some of which have ready to be expanded on in literature. That's out there. We want to talk about few of them and then we'll get to the one that is very important, which talks about focus. So some of the things you can use to turn the situation around when your company's in decline is first one is leadership. You know, there's the saying that their fish rots from. In a case where a company is a decline, the right change in leadership or leadership philosophy is needed. Another thing is to get the right people before you take action, get the right people before you take action. People drive all organizations and change. It doesn't matter what direction you want to take a company in. If you don't have the right competent and driven people that direction doesn't matter. Don't decide where to take the bus until you have the right people on the bus bars from Jim Collins, don't decide where to take the bus until you have the right people on the bus. Next thing we can do is to confront brutal fats, confront brutal fats. One way companies that got to a stage of decline were disregarding negative facts and overvaluing positive, uh, fats. When you face brutal fats, you can make better decisions about how to turn things around. Now let's talk about the hedgehog. The hedgehog principle. This principle is based on the ancient Greek parable that says a Fox knows many things, but the hedgehog knows one big thing. I'll say this again. The hedgehog principle is based on the ancient Greek parable that states a Fox, no many things, but the hedgehog knows one bit. This principle states that an organization must go back to its original value proposition and focus on doing that one thing very, very well decline can come as a result of over diversifying and losing your core value proposition and culture and beliefs. The hedgehog principle can be defined by surely state. But I truly understanding what your people and your customers are truly passionate about identifying what the organization does better than anybody else and understanding your economic engine. What are you good at generating revenue? Let's talk about focus. Talks about discipline. It talks about going back to what your highest values are operating around your key strengths. Focusing on revenue generating activities and those things that help you to add value to the marketplace and focusing on the key activities and focusing on your key, the area of strengths, that means that you leave your weaknesses. Outsource all those weaknesses and triple down on your strengths, it makes no sense, sense for you to be an, a student in English. And you're being told to work on your mats. The, because you are not good at it. Genius and service comes when people focus, uses hedgehog principle on the things that they know that they are in making. Very good at doing that. Add the most value to people out there. For example, if you're, you are an author, reading and writing are key activities and that you can full use as part of the hedgehog principle, instead of doing other things such as singing and dancing, because that's not what your value proposition is. That's not where your strengths are. So use a hedgehog principle to focus in zero. Get rid of, what's not working, focusing on what is working and triple down on your strengths. The B they'll be the hedgehog and not the Fox because the Fox knows many things, but the hedgehog knows one big thing. I'll click a share other things that can assist in turning things around and organization and for yourself, a culture of discipline. There are things in life and business that will require constant discipline. Discipline is doing what needs to be done regardless of whether you feel like it or not. If the organization returns to strong principles and values and crucible of hard work, openness, transparency, and keeping strict accounts, it is the lack of discipline that has led to a company's decline. And technology accelerators use technology accelerators. This is where a team in an organization has an idea for a company or program. You provide funding for equity for, to use the product and to benefit the company. There are many companies like slack who have used this to benefit them. So here's what we can expect from being able to avoid decline to build a legacy. You must be able to keep on growing. And that can only happen when you avoid decline building a legacy as a, as an individual. But when your legacy as a business partner organization, as a organization on our team requires for you to avoid decline, don't be arrogant. No company is exempt from declined, nobody, and no one, a note, nothing is exempt from declined. Ask the Lehman brothers OS Nokia as Kodak, blockbuster and plateau. You need to be constantly vigilant as it is hard to detect in the beginning and easier to cure and easier to detect at the end, but harder to cure decline occurs in stages of arrogance, overreaching, ignorance, desperation, and then death. There is a way to reverse decline and the, the most important one for me, as I've mentioned, The hedgehog principle, triple down on your strengths, focus on the key value activities. Don't overreach by going into areas that are not working do with the things that got you to where you the gotcha. Only once you have zeroed in on them. Can you start expanding, but don't forget what got you to where you go, where you need to be, unless it is absolutely necessary to do that. And Jim Connor said the greatest danger comes not from ignoring clear and assailable fats, but in misinterpreting ambiguous data in situations, where do you face severe or catastrophic consequences? If the ambiguity results itself in a way that's. In your favor, that is from Jim Collins. I hope that you enjoy this episode of transformation Tuesdays, where we talked about the hedgehog principle and how it's one of the key things that we can do to avoid decline as an organization. Or an individual, uh, hope that you enjoy this episode. If you'd like to please like share comment and subscribe. If you are interested in any books and merchandise, please head over to the websites and choose for you. Our hope that that day you choose to use this hedgehog principle to avoid falling. And I want you to say like Jay Z, that not a businessman, I'm a businessman. Let me handle my business. Damn. And I will see you. On the next episode.