Are you a hedgehog or a fox?
Monday, 31st August 2020
“Some business decisions can be difficult and painful, especially when it is forced on you by external circumstances that are out of your control such as the COVID-19 pandemic,” said entrepreneurial coach, Christoff Oosthuysen. He was speaking a recent Eastern Cape Parks and Tourism Agency (ECPTA) online event for Women in Tourism and other owners of tourism businesses.
The webinar explored options for a business in distress and frameworks to recreate a feasible and profitable business, geared for the future.
Oosthuysen highlighted a simple but powerful strategy to respond to business distress called the Hedgehog concept. The strategy developed by business researcher and consultant, Jim Collins is based on an ancient Greek parable that states, "The fox knows many things, but the hedgehog knows one big thing." This is a metaphor for people and their business decision-making. It means that foxes pursue many goals and interests at the same time. As a result, their thinking is scattered and unfocused, and ultimately, they achieve very little. Hedgehogs, however, simplify the world and focus on a single, overarching vision, which they then achieve.
The concept flows from deep understanding about the intersection of three circles:
1) What you are deeply passionate about
2) What you can be the best in the world at, and
3) What best drives your economic or resource engine.
Transformations from good to great businesses come about by a series of good decisions made consistently with a Hedgehog Concept.
Oosthuysen gave a case study of the oldest pub in the country, The Percy which reportedly closed its doors during the national lockdown. He said business owners in this difficult time need to know that they have options and need to make solid decisions. Either “reshape your currently distressed business or close your badly distressed business to start a new one”. What is not an option he said, is expecting things will go back to normal. Elaborating on this point, Oostuysen explored some business options:
- Restructure to achieve performance improvement
- Informal turn-around with out-of-court agreements
- Reach compromise with creditors and parties of interest
- Formal business rescue with am to return to profitability
- And structured wind-down leading to liquidation
In reinventing a business and finding its purpose, Oosthuysen advised that a business should do more of what is driving its sales or revenue and cut down on production costs, overhead costs, vulnerability and unproductive assets and resources. “This is a difficult time, where we are experiencing strain... we need to take a step back a bit and ask questions about what we are about, what legacy do we want to leave and whether we are on track,” Oosthuysen said adding: “Once you define your purpose, you will be able to know which direction to take your business”.
Therefore, as a business in distress, the questions you need to ask yourself are:
- Can I add value to the services I am offering or what can I do differently to attract a different audience?
- What resources or opportunities outside my business are available?
- Having identified the resources and opportunities, how can my business create new customers and cash flow?
During the webinar, East London based Tour operator, Velile Ndlumbini shared that the Covid-19 pandemic was a cleansing for him and his business that largely is dependent on the international market. ‘It has changed the way I look at my business,” he said. Ndlumbini added that he had to take a step back and think what else he could do to generate revenue and he came up with organising hikes. "I started with my friends. Now every week I am promoting those hikes and it is getting big.”
The Stay in Business online session is an annual event hosted by Seeza Tourism SME Network in partnership with the Eastern Cape Parks & Tourism Agency.
For more information and resources on the topic, you can visit: http://StayInBusiness.Support
About Christoff Oosthuysen:
Founding CEO @Entrepreneurial Planning Institute
Christoff Oosthuysen is a leading entrepreneurial coach, facilitator and Certified Business Advisor with 24 years of experience in working with start-up entrepreneurs, small business owners, social entrepreneurs and the practitioners supporting them.