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Hidden champions

January 08, 2023

Hidden champions are relatively small but highly successful companies that are concealed behind a curtain of inconspicuousness, invisibility, and sometimes secrecy. The term was coined by Hermann Simon. He first used the term as a title of a publication in a scientific German management journal, describing the small, highly specialized world-market leaders in Germany.[1] According to his definition, a company must meet three criteria to be considered a hidden champion:[2]

  • Number one, two, or three in the global market, or number one on the company's continent, determined by market share
  • Revenue below $5 billion
  • Low level of public awareness

Discovering hidden champions

 
Annual exports 2003-2008 by different countries

The first English book about the subject was Hermann Simon's Hidden champions: lessons from 500 of the world's best unknown companies.[3] The book explores how Germany was able to consistently be (at the time) the number one exporter in the world. While Germany has global corporations like Volkswagen, Siemens, BASF and Bosch, these organisations are not substantially different from organisations like Ford, GE, DuPont or Visteon. Simon postulates that Germany's strong exports are supported by a large number of midsize firms. These smaller companies are normally known only in their market by their customers and suppliers, and are relatively unknown to the wider public. When these companies are very successful on the international markets they are hidden champions.

Simon conducted detailed research on 500 such companies and established a framework to describe them. The framework was also able to identify the main differences and traits common to hidden champions. With this framework in hand it was found that there are hidden champions everywhere around the world, but they are most frequently found in German speaking countries.

Success factors

Most of the hidden champions produce inconspicuous products. In the market for these products they are the top producer in the world. Often, but not always, these companies are family owned. They export most of their products, and so contribute significantly to the current account of their countries, and are more successful than the average.

The idea of market leadership means more than counting market share. Leaders as employees need an "inner flame" to become, and to remain, the number one. Hidden champions normally work in niche markets. For these markets they design unique products, which are produced with a high real net output ratio. They have to accept the risk of being a single product manufacturer. They divide between "good" and "bad" market share. The good is earned by performance and a solid foundation, the bad from price aggression and discounting.

One result of working with unique products in niche markets is quite often the need to deal on the global market in order to achieve economies of scale. For this reason, hidden champions feel a strong need to work abroad early in their company's development. Hidden champions also operate extremely close to their customers, and their customers' needs are an important driver for their innovations. On the other hand, customers of hidden champions depend on their products and they cannot easily change their source. This often makes for a high level of co-dependence between the producer and the customer, a result of the one product risk.

A lot of the hidden champions established their main product as an innovation and were able to keep this single position in the market, or were at least able to keep a leading position. Their markets are mostly oligopolistic with intense competition.

Competitive advantages of hidden champions are rarely because of cost leadership, more because of quality, total cost of ownership, high performance, and consultation close to the customer. They "earn" their market leadership through performance and not through price aggression. Their high real net output ratio is often achieved by working with proprietary processes which make it hard for competitors to imitate their products. On the other hand, management tasks like finance are often outsourced.

It also seems to be evident that to maintain market leadership hidden champions do business on their own, rather than depend on working in cooperation with others. Even sales in countries abroad are often organized from the parent company base. This keeps significant know-how inside, and helps recruit highly qualified staff at a small company.

The corporate culture of hidden champions is distinctive. Their values are conservative: hard work, strict selection, intolerance of underperformance, low sickness rates and high employee loyalty — and most are based in smaller towns.

Leadership style is authoritarian on strategic issues but participative on operations level. The leaders identify themselves with the company, are focused on their products, and stay for a long time, much longer than is normal in large public corporations.

A serious problem for hidden champions, as it is for SMEs in general, is to attract international professionals. Hidden champions need people who are happy to live in a remote location, who are attracted by job content, and who do not care much for a formal and prescribed career path. In Germany the concept of hidden champion is known to some extent, and therefore hidden champions there are able to utilise this label to recruit staff.[4] In 2011, the first "Hidden Champions Day" was organized by the student initiative bdvb e.V. at the University of Mannheim in order to promote the advantages and opportunities of working for a SME.[5]

Lessons to be learned from hidden champions

Hidden champions provide a best practice example. While a lot of business is local, it can be a goal to become the number one on such a local market. Also large companies may find some interesting lessons about international management. Hidden champions teach that exceptional management means doing small things better than the competitors instead of managing only one great thing. Simplicity in processes and organizational structures is another lesson. Investors may find determined, clearly focused, continuously successful companies.[6]

The idea and adaptation of hidden champions was implemented in a fund called Hidden Champions Fund, founded in Singapore by 8I Holdings Ltd.[7]

List of selected hidden champions

This list of companies selected by Hermann Simon in 2009 gives an idea of what hidden champions are:[8]

References

  1. ^ Simon, Hermann: Hidden Champions: Speerspitze der deutschen Wirtschaft. Wiesbaden: Zeitschrift für Betriebswirtschaft (ZfB) 60(1990)9, P. 876
  2. ^ Simon, Hermann: Hidden Champions of the 21st Century : Success Strategies of Unknown World Market Leaders. London: Springer, 2009.- ISBN 978-0-387-98147-5. P. 15.
  3. ^ Simon, Hermann: Hidden champions: lessons from 500 of the world's best unknown companies. Boston (Mass.): Harvard Business School Press, 1996.- ISBN 0-87584-652-1. The earlier version, published in German: Simon, Hermann: Die heimlichen Gewinner : die Erfolgsstrategien unbekannter Weltmarktführer. Frankfurt a. M.: Campus, 1996. - ISBN 3-593-35460-8.
  4. ^ Venohr, Bernd; Meyer, Klaus E.: The German Miracle Keeps Running : How Germany’s Hidden Champions Stay Ahead in the Global Economy Berlin: Working Paper No. 30, Institute of Management Berlin, Berlin School of Economics, 2007.
  5. ^ at the Wayback Machine (archived September 29, 2011)
  6. ^ Simon, Hermann: Hidden Champions of the 21st Century : Success Strategies of unknown World Market Leaders. London: Springer, 2009.- ISBN 978-0-387-98147-5. P. 378
  7. ^ "Hidden Champions Fund". 8I Holdings Ltd. 28 March 2018. Retrieved 28 March 2018.
  8. ^ Simon, Hermann: Hidden Champions of the 21st Century : Success Strategies of unknown World Market Leaders. London: Springer, 2009.- ISBN 978-0-387-98147-5. P. 2-13.
  9. ^ 3B Scientific homepage, 10-03-04
  10. ^ ARCITECTA
  11. ^ The Jamba! GmbH (German for Ltd.) is since 2009 Fox Mobile Distribution GmbH, no longer independent, and belongs to Rupert Murdochs News Corporation. Jamba! becomes only a label. Jamba! got into the list because nearly nobody knows, that is the world market leader.
  12. ^ mentioned in the book by Hermann Simon: "Hidden Champions - Success Strahtegies for World Market Leaders", Campus Frankfurt 1996, ISBN 3-453-13216-5, Page 63
  13. ^ (PDF). Archived from the original (PDF) on 2016-04-02. Retrieved 2013-07-09.
  14. ^ (PDF). Archived from the original (PDF) on 2016-04-02. Retrieved 2013-07-09.

Further reading

Books and papers

  • Audretsch, David B., Lehmann, Erik E., & Schenkenhofer, Julian (2018). Internationalization strategies of hidden champions: lessons from Germany. Multinational Business Review, 26(1), 2-24.
  • Fryges, Helmut: Hidden champions : how young and small technology oriented firms can attain high export sales ratios. Mannheim : Zentrum für Europ. Wirtschaftsforschung, 2006.
  • Hanna, Rosemary: Hidden champions of the B. C. forest industry : are small firms at the cutting edge of value chain innovation? Ottawa : Library and Archives Canada, 2007. - ISBN 978-0-494-16879-0.
  • Langenscheidt, Florian (Ed.), Venohr, Bernd (Ed.): The Best of German Mittelstand - THE WORLD MARKET LEADERS. DAAB Verlag, Cologne 2015, ISBN 978-3-942597-48-7.
  • Merrilees, Bill; Blackburn, Jillian; Tiessen, James; Lindman, Martti: . In: Chetty, Sylvia (Ed.); Collins, Brett (Ed.): Proceedings of the Australian and New Zealand Marketing Academy Conference 1–5 December 2001. Auckland: College of Business, Massey University: 2001.
  • Neubauer, Regina: Business models in the area of logistics : in search of hidden champions, their business principles and common industry misperceptions. Wiesbaden: Gabler, 2010. - ISBN 978-3-8349-2526-8
  • Simon, Hermann: Hidden champions : lessons from 500 of the world's best unknown companies. Boston (Mass.): Harvard Business School Press, 1996.- ISBN 0-87584-652-1.
  • Simon, Hermann: Lehren der Hidden Champions des 21. Jahrhunderts. In: Weissman, Arnold: Erfolgreich mit den Großen des Managements. Frankfurt a. M.: Campus, 2008.- ISBN 3-593-38634-8. S. 109-147.
  • Simon, Hermann: Hidden Champions of the 21st Century : Success Strategies of unknown World Market Leaders. London: Springer, 2009.- ISBN 978-0-387-98147-5.
  • Venohr, Bernd; Meyer, Klaus: The German Miracle Keeps Running : How Germany’s Hidden Champions Stay Ahead in the Global Economy Berlin: Working Paper No. 30, Institute of Management Berlin, Berlin School of Economics, 2007.
  • Venohr, Bernd; Meyer, Klaus: Uncommon common sense Business Strategy Review, Volume 20, issue 1, Spring 2009, p. 39-43
  • Voeth, Markus ; Herbst, Uta ; Barisch, Sina: Hidden Champion Region Stuttgart : Ergebnisse einer empirischen Untersuchung. Stuttgart : Förderverein für Marketing an der Universität Hohenheim, 2008.
  • Witt, Alessa: Internationalisation of hidden champions : market entry and timing strategies with international management and business ethics cases. Hamburg: Management Laboratory, 2010. - ISBN 978-3-9812162-4-0

External links

  • Whiteboard: guest article by Prof. Hermann Simon on the 13 management principles behind Hidden Champions, Dec. 2012
  • Whiteboard: guest article by Prof. Hermann Simon on the socio-economic factors that shaped the 'Hidden Champions', Jan. 2013
  • Business Week, JANUARY 26, 2004.
  • stimmt., Friday, July 31, 2009
  • inchina, 2009-09-14
  • The Korea Times: 2009-28-04, 2010-28-04
  • Japan's Hidden Champions Hold the Key to Revitalization of Regional Economies, 2009
  • , 11-01-31

January 08, 2023
hidden, champions, relatively, small, highly, successful, companies, that, concealed, behind, curtain, inconspicuousness, invisibility, sometimes, secrecy, term, coined, hermann, simon, first, used, term, title, publication, scientific, german, management, jou. Hidden champions are relatively small but highly successful companies that are concealed behind a curtain of inconspicuousness invisibility and sometimes secrecy The term was coined by Hermann Simon He first used the term as a title of a publication in a scientific German management journal describing the small highly specialized world market leaders in Germany 1 According to his definition a company must meet three criteria to be considered a hidden champion 2 Number one two or three in the global market or number one on the company s continent determined by market share Revenue below 5 billion Low level of public awarenessContents 1 Discovering hidden champions 2 Success factors 3 Lessons to be learned from hidden champions 4 List of selected hidden champions 5 References 6 Further reading 6 1 Books and papers 7 External linksDiscovering hidden champions Edit Annual exports 2003 2008 by different countries The first English book about the subject was Hermann Simon s Hidden champions lessons from 500 of the world s best unknown companies 3 The book explores how Germany was able to consistently be at the time the number one exporter in the world While Germany has global corporations like Volkswagen Siemens BASF and Bosch these organisations are not substantially different from organisations like Ford GE DuPont or Visteon Simon postulates that Germany s strong exports are supported by a large number of midsize firms These smaller companies are normally known only in their market by their customers and suppliers and are relatively unknown to the wider public When these companies are very successful on the international markets they are hidden champions Simon conducted detailed research on 500 such companies and established a framework to describe them The framework was also able to identify the main differences and traits common to hidden champions With this framework in hand it was found that there are hidden champions everywhere around the world but they are most frequently found in German speaking countries Success factors EditMost of the hidden champions produce inconspicuous products In the market for these products they are the top producer in the world Often but not always these companies are family owned They export most of their products and so contribute significantly to the current account of their countries and are more successful than the average The idea of market leadership means more than counting market share Leaders as employees need an inner flame to become and to remain the number one Hidden champions normally work in niche markets For these markets they design unique products which are produced with a high real net output ratio They have to accept the risk of being a single product manufacturer They divide between good and bad market share The good is earned by performance and a solid foundation the bad from price aggression and discounting One result of working with unique products in niche markets is quite often the need to deal on the global market in order to achieve economies of scale For this reason hidden champions feel a strong need to work abroad early in their company s development Hidden champions also operate extremely close to their customers and their customers needs are an important driver for their innovations On the other hand customers of hidden champions depend on their products and they cannot easily change their source This often makes for a high level of co dependence between the producer and the customer a result of the one product risk A lot of the hidden champions established their main product as an innovation and were able to keep this single position in the market or were at least able to keep a leading position Their markets are mostly oligopolistic with intense competition Competitive advantages of hidden champions are rarely because of cost leadership more because of quality total cost of ownership high performance and consultation close to the customer They earn their market leadership through performance and not through price aggression Their high real net output ratio is often achieved by working with proprietary processes which make it hard for competitors to imitate their products On the other hand management tasks like finance are often outsourced It also seems to be evident that to maintain market leadership hidden champions do business on their own rather than depend on working in cooperation with others Even sales in countries abroad are often organized from the parent company base This keeps significant know how inside and helps recruit highly qualified staff at a small company The corporate culture of hidden champions is distinctive Their values are conservative hard work strict selection intolerance of underperformance low sickness rates and high employee loyalty and most are based in smaller towns Leadership style is authoritarian on strategic issues but participative on operations level The leaders identify themselves with the company are focused on their products and stay for a long time much longer than is normal in large public corporations A serious problem for hidden champions as it is for SMEs in general is to attract international professionals Hidden champions need people who are happy to live in a remote location who are attracted by job content and who do not care much for a formal and prescribed career path In Germany the concept of hidden champion is known to some extent and therefore hidden champions there are able to utilise this label to recruit staff 4 In 2011 the first Hidden Champions Day was organized by the student initiative bdvb e V at the University of Mannheim in order to promote the advantages and opportunities of working for a SME 5 Lessons to be learned from hidden champions EditHidden champions provide a best practice example While a lot of business is local it can be a goal to become the number one on such a local market Also large companies may find some interesting lessons about international management Hidden champions teach that exceptional management means doing small things better than the competitors instead of managing only one great thing Simplicity in processes and organizational structures is another lesson Investors may find determined clearly focused continuously successful companies 6 The idea and adaptation of hidden champions was implemented in a fund called Hidden Champions Fund founded in Singapore by 8I Holdings Ltd 7 List of selected hidden champions EditThis list of companies selected by Hermann Simon in 2009 gives an idea of what hidden champions are 8 3B Scientific anatomical teaching aids 9 ARCITECTA 10 data management platform ARRI cinema cameras Belfor removal of fire and water damages Beluga Shipping heavy lift shipping company insolvent Bobcat Company farm and construction equipment Brainlab medical software and hardware Corticeira Amorim cork products De La Rue security printing papermaking and cash handling systems DELO Industrie Klebstoffe adhesives for chip cards Embraer regional jets Dickson Constant technical textiles for blinds truck sheeting etc Enercon wind turbines EOS GmbH rapid prototyping systems Essel Propack tubes for toothpaste Friwo Geratebau GmbH charging devices power supplies led drivers battery packs Josef Gartner GmbH facades for skyscrapers subsidiary of Permasteelisa Gallagher Group Limited electric fencing livestock weighing equipment Hans Gerriets single manufacturer of large stage curtains Hamamatsu Photonics optical sensors including photomultiplier tubes Heraeus Electro Nite measurement monitoring and control of molten metal processes HiFi Tuning developing engineering of finest fuses out of pure silver and gold Hoganas AB powdered metals International SOS medical assistance health care security and risk management services Jamba Jamster cell phone ring tones 11 Austrian Jungbunzlauer sodium acetate Klais Orgelbau large organs Swiss Lantal Textiles cabins for passenger aircraft McIlhenny Company Tabasco sauce Molex electronic components including electrical and fiber optic NetJets fractional ownership and rental of private business jets Nissha Printing small touch panels Nivarox regulating mechanism inside wristwatches Nordischer Maschinenbau Rud Baader supplier of fish processing systems Omicron NanoTechnology scanning probe and tunnel grid microscopes Orica industrial explosives PERI GmbH formwork and scaffolding Petzl climbing gear caving gear work at height equipment Phoenix Contact terminal blocks connectors interface solutions industrial automation PLANSEE high performance materials Q Cells solar energy solar cells Radiall electronic interconnect components Sachtler tripods for movie cameras SAES Getters Getter producer Sappi coated fine paper Schwank industrial heating 12 13 14 SGS Societe Generale de Surveillance inspection verification testing and certification services Tandberg and Polycom videoconferencing systems O C Tanner employee recognition programs Technogym fitness equipment Tetra aquarium and pond supplies ULVAC Technologies vacuum technology Universo S A wristwatch hands W E T car seat heating Webasto remote controlled heaters for cars Worldwide energy green energy Zimmer Holdings DePuy Biomet and Stryker Corporation all implants and located in the area of Warsaw Indiana References Edit Simon Hermann Hidden Champions Speerspitze der deutschen Wirtschaft Wiesbaden Zeitschrift fur Betriebswirtschaft ZfB 60 1990 9 P 876 Simon Hermann Hidden Champions of the 21st Century Success Strategies of Unknown World Market Leaders London Springer 2009 ISBN 978 0 387 98147 5 P 15 Simon Hermann Hidden champions lessons from 500 of the world s best unknown companies Boston Mass Harvard Business School Press 1996 ISBN 0 87584 652 1 The earlier version published in German Simon Hermann Die heimlichen Gewinner die Erfolgsstrategien unbekannter Weltmarktfuhrer Frankfurt a M Campus 1996 ISBN 3 593 35460 8 Venohr Bernd Meyer Klaus E The German Miracle Keeps Running How Germany s Hidden Champions Stay Ahead in the Global Economy Berlin Working Paper No 30 Institute of Management Berlin Berlin School of Economics 2007 1 Website des Hidden Champions Day at the Wayback Machine archived September 29 2011 Simon Hermann Hidden Champions of the 21st Century Success Strategies of unknown World Market Leaders London Springer 2009 ISBN 978 0 387 98147 5 P 378 Hidden Champions Fund 8I Holdings Ltd 28 March 2018 Retrieved 28 March 2018 Simon Hermann Hidden Champions of the 21st Century Success Strategies of unknown World Market Leaders London Springer 2009 ISBN 978 0 387 98147 5 P 2 13 3B Scientific homepage 10 03 04 ARCITECTA The Jamba GmbH German for Ltd is since 2009 Fox Mobile Distribution GmbH no longer independent and belongs to Rupert Murdochs News Corporation Jamba becomes only a label Jamba got into the list because nearly nobody knows that is the world market leader mentioned in the book by Hermann Simon Hidden Champions Success Strahtegies for World Market Leaders Campus Frankfurt 1996 ISBN 3 453 13216 5 Page 63 Frankfurter Allgemeine Zeitung Strahler machen es der Sonne nach Helmut Bunder 19 November 2012 PDF Archived from the original PDF on 2016 04 02 Retrieved 2013 07 09 IHK Plus Hidden Champions Weltmarktfuhrer aus der Region Oktober 2012 PDF Archived from the original PDF on 2016 04 02 Retrieved 2013 07 09 Further reading EditBooks and papers Edit Audretsch David B Lehmann Erik E amp Schenkenhofer Julian 2018 Internationalization strategies of hidden champions lessons from Germany Multinational Business Review 26 1 2 24 Fryges Helmut Hidden champions how young and small technology oriented firms can attain high export sales ratios Mannheim Zentrum fur Europ Wirtschaftsforschung 2006 Hanna Rosemary Hidden champions of the B C forest industry are small firms at the cutting edge of value chain innovation Ottawa Library and Archives Canada 2007 ISBN 978 0 494 16879 0 Langenscheidt Florian Ed Venohr Bernd Ed The Best of German Mittelstand THE WORLD MARKET LEADERS DAAB Verlag Cologne 2015 ISBN 978 3 942597 48 7 Merrilees Bill Blackburn Jillian Tiessen James Lindman Martti Hidden SME Champions The Role of Innovation and Strategy In Chetty Sylvia Ed Collins Brett Ed Proceedings of the Australian and New Zealand Marketing Academy Conference 1 5 December 2001 Auckland College of Business Massey University 2001 Neubauer Regina Business models in the area of logistics in search of hidden champions their business principles and common industry misperceptions Wiesbaden Gabler 2010 ISBN 978 3 8349 2526 8 Simon Hermann Hidden champions lessons from 500 of the world s best unknown companies Boston Mass Harvard Business School Press 1996 ISBN 0 87584 652 1 Simon Hermann Lehren der Hidden Champions des 21 Jahrhunderts In Weissman Arnold Erfolgreich mit den Grossen des Managements Frankfurt a M Campus 2008 ISBN 3 593 38634 8 S 109 147 Simon Hermann Hidden Champions of the 21st Century Success Strategies of unknown World Market Leaders London Springer 2009 ISBN 978 0 387 98147 5 Venohr Bernd Meyer Klaus The German Miracle Keeps Running How Germany s Hidden Champions Stay Ahead in the Global Economy Berlin Working Paper No 30 Institute of Management Berlin Berlin School of Economics 2007 Venohr Bernd Meyer Klaus Uncommon common sense Business Strategy Review Volume 20 issue 1 Spring 2009 p 39 43 Voeth Markus Herbst Uta Barisch Sina Hidden Champion Region Stuttgart Ergebnisse einer empirischen Untersuchung Stuttgart Forderverein fur Marketing an der Universitat Hohenheim 2008 Witt Alessa Internationalisation of hidden champions market entry and timing strategies with international management and business ethics cases Hamburg Management Laboratory 2010 ISBN 978 3 9812162 4 0External links EditWhiteboard guest article by Prof Hermann Simon on the 13 management principles behind Hidden Champions Dec 2012 Whiteboard guest article by Prof Hermann Simon on the socio economic factors that shaped the Hidden Champions Jan 2013 Business Week JANUARY 26 2004 stimmt Friday July 31 2009 inchina 2009 09 14 The Korea Times 2009 28 04 2010 28 04 Japan s Hidden Champions Hold the Key to Revitalization of Regional Economies 2009 High cost Germany shows how to succeed in exporting 11 01 31 Benchmarking and Hidden Champion to promote local development Tools description and their application Retrieved from https en wikipedia org w index php title Hidden champions amp oldid 1079339895, wikipedia, wiki, book, books, library,

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