Tuesday, August 25, 2026

76% of small businesses now use AI, but only 14% have it built into daily operations. Here's why the gap exists — and what the businesses getting real value are doing differently.

Ask three people in your business what you're actually best at, and you'll usually get three different answers — "good service," "quality product," "we really care about our customers." Every competitor in your market would say the same thing about themselves. That's not a strategy. It's table stakes.

Jim Collins spent five years studying companies that broke away from years of average performance into sustained, market-beating growth, and found something uncomfortable: the ones that broke away could answer, with brutal precision, what they could be the best in the world at. The ones that stayed average never could.

After over 30 years building strategy for brands from McDonald's to nine companies of my own, I've seen the same pattern at SME scale. The businesses that grow fastest aren't the ones doing the most things. They're the ones that have stopped doing everything else.

The Trap of Being Pretty Good at Everything

The enemy here isn't laziness or a lack of ambition — it's the opposite. Most SME owners say yes to too much, because every opportunity looks like growth: a new service line, a new customer type, a trade show in a market they've never served. Each one feels like progress, and each one quietly dilutes the one thing that could make the business genuinely hard to beat.

Collins' research, published in Good to Great, found this pattern specifically among the companies that made the leap from good to great: they identified the intersection of three questions — what you can be the best in the world at, what drives your economic engine, and what you are deeply passionate about — and refused to operate outside it. He called it the Hedgehog Concept, after the fable of the fox that knows many things and the hedgehog that knows one big thing, and does it extraordinarily well.

The Three Circles, Run Properly

This isn't a brainstorm. It's three honest tests, run in order:

  • Name your economic engine. Pick the single number that, if it improved, would change everything else — profit per customer, revenue per employee, margin per job. Most owners are chasing more revenue when the number that actually matters sits one level down.
  • Write the best-at claim. Not "we're good at this." Write it as a sentence a competitor couldn't honestly make: "No one in our region can deliver this as reliably, as fast, or at this quality." If you can't finish that sentence honestly, you haven't found it yet.
  • Run the passion test. Would your best people still choose this work if the money problem were already solved? If the honest answer is no, it isn't your Hedgehog — however profitable it looks on paper.

Collins and co-author Jerry Porras later added a second half to this: the Big Hairy Audacious Goal, a single, vivid, ten-to-twenty-five-year statement of where that Hedgehog takes you, specific enough that everyone in the business could repeat it from memory. Put the two together and you get something most strategic plans never deliver — a reason to say no, and a reason to keep going once the market gets noisy.

"He really got our vision from the beginning and has been a huge help in putting together a clearer plan and strategy for the next five years. Working with Kevin D'Ambros-Smith has given us the space to pause and reflect — on where we are now, where we want to be and how we get there."

— Gabby Kirk, Papier Hq

Why Owners Know This and Still Can't Do It

Here's the real obstacle: this isn't a knowledge problem. Most owners have an instinct for what they're genuinely great at. What stops them is that naming it honestly usually means naming the two or three things they're merely competent at — and those things often represent real, current revenue. Saying no to them on paper is easy. Saying no to them when a client is on the phone asking for exactly that is a different thing entirely.

This is precisely the conversation an outside strategist is built to have. An owner grading their own Hedgehog Concept is like a parent grading their own child's exam — too close to the business to be the honest judge it needs.

A Ten-Minute Test Before Your Next Planning Session

List every product, service and customer segment you currently operate in. Next to each, mark whether it sits inside your three circles, or outside them. For most SME owners, somewhere between a third and half of what's on that list sits outside — quietly consuming the capacity your Hedgehog needs to actually win.

Key Takeaways

  • Define your economic engine as one number, not "more revenue."
  • Write your best-at claim as a sentence a competitor couldn't honestly make.
  • Test for passion — if the money problem were solved, would your best people still choose this work?
  • Pair your Hedgehog with one vivid, time-bound BHAG everyone in the business can repeat from memory.

If your 2027 plan is still a list of everything you could do rather than the one thing you're built to be best at, that's the first conversation we have.