Feb 8, 2022
I had an interesting experience in my business recently I wanted to share with you.
You’ll have to listen to the show to hear what happened but why would anyone turn down 20K!?!
The reason I shared the story is to illustrate the importance of something Jim Collins calls the Hedgehog Concept.
In the podcast, I give a brief overview of it with my own twist.
In an effort to keep the episode short, I didn’t go into great detail about the components of the Hedgehog Concept or discuss how to find them. While I believe the episode will be helpful in and of itself, I wanted to use this space as a guide to apply the concepts, with a special emphasis on the financial side.
OK let’s go.
One of the circles is gaining an understanding of what you can be the best in the world at.
You see, you can get really competent at something but still not have the potential to be great at it. Conversely, you can lack the skills in an area but have the potential to be great. You just haven’t put the time in yet. I’ve been doing BJJ for many years. I’ve seen people put in tremendous amounts of effort and become very good but not great while I’ve seen others progress so well that is seems like they were born for it. With all of this said, even the best of the best need to practice extremely hard to reach the highest level.
Determining what you can (or can’t) be the best at will not happen overnight but once you discover it, they’ll be no stopping you.
The second circle is what you are deeply passionate about. It’s pretty self-explanatory. If you aren’t deeply passionate about what you do, you won’t persevere when times are tough. It doesn’t matter if anyone else is passionate about it. If you are, that’s all that matters. I’m deeply passionate about personal finance and helping people improve their situation. It’s a dream job for me. One thing I’ll mention is you don’t necessarily have to be passionate about the mechanics of the business but you might be passionate about what the business stands for. Zappos, for example is passionate about creating a WOW experience and it isn’t so much about what they sell. For Starbucks, it’s not really about the coffee. You might not even be passionate about the training side of things but find what you are!
The final circle and the most important one for our purpose is what drives your economic engine? The Good to Great companies developed an obsession with one economic driver and it wasn’t always the obvious one. The idea is to pick one ratio – profit per X, focus on it, and improve it over time. If you do that, you’ll be in great shape. Oftentimes, it’s simple but we get distracted and don’t stay focused on that one ratio. Many businesses focus so much on getting new customers that they forget the ones they have. Sure, marketing for new people is important but it’s more profitable and efficient to keep a customer than to lose one and have to find another. The lifetime value (LTV) of each customer or the revenue per member (RPM) are numbers that if you focus on increasing through delivering more value are guaranteed to improve your business and life.
So how do you arrive at the answers to these three circles?
If you want good answers, you have to ask good questions.
The best leaders are constantly asking questions, guided by the 3 circles, to themselves and trusted team members and customers. This iterative process will move you closer and closer to a business that makes the greatest impact and provides the most profit!
Can’t wait to hear what you think!
Here are some important links.
Contact Billy directly about possibly doing coaching with him, visit https://yourfitnessmoneycoach.com/coaching-with-me/ and fill out the form.
Listen/Subscribe to the show here:
You can also search for the Your Fitness Money Coach podcast on major podcast apps.