champion hidden
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Prague, May 9, 2012
Prof. Dr. Dres. h.c. Hermann Simon
Hidden Champions
Vanguard for Globalia
Bonn OfficeHaydnstrae 36, 53115 Bonn, GermanyPhone +49/228/9843-115, Fax +49/228/9843-380
E-mail: [email protected]
Internet: www.simon-kucher.com
www.hermannsimon.com
University of Economics Prague
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Exports 2011
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147
197
298
331
336
495499
509
559
578
801
1 511
1 543
1 897
0 500 1000 1500 2000
Czech Republic
Poland
India
Spain
Mexico
UKRussia
Italy
South Korea
France
Japan
USA
Germany
China
Billion US-$Country
Source: CIA World Factbook (estimates)
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Per Capita Exports
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13 964
5 159
7 165
11 408
8 399
7 9848 784
18 863
2 992
6 258
3 490
4 859
246
1 415
0 5000 10000 15000 20000
Czech Republic
Poland
Spain
South Korea
Italy
UKFrance
Germany
Mexico
Japan
Russia
USA
India
China
Per capita exports 2011 in US-$Country
Source: Calculations based on data from CIA World Factbook (estimates)
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Per Capita Exports
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5 060
-3 559
-1 499
2 763
- 167
- 573253
10 439
-5 226
-1 854
-4 522
-2 020
- 572
1 479
-8000 -3000 2000 7000 12000
Czech Republic
Poland
Spain
South Korea
Italy
UKFrance
Germany
Mexico
Japan
Russia
USA
India
China
Deviation from empirical norm 2011 in US-$Country
Source: Calculations based on data from CIA World Factbook (estimates)
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The Origin of the Hidden Champions-Idea
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Ted Levitts question from 1986:
Why is Germany so successful in exports?
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Is it due to large corporations?
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Do Large Companies Explain Export Performance?
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USA 133Japan 68
China 61
France 35
Germany 34UK 30
Korea 14
Italy 10
Spain 9India 8
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Fortune Global 500 Corporations:
Source: Fortune, July 25, 2011
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Do Large Companies Explain Export Performance?
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USA (133)
Japan (68)
Korea (14)
Italy (10)
Spain (9)
China (61)
India (8)
0
200
400
600
800
1 000
1 200
1 400
1 600
0 50 100 150
Germany (34)
France (35)
UK (30)
Fortune Global 500 Corporations
Exports in US-$ billion
R2= 0.4838
number of large companiesexplains less than half of the
variance in exports
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Contribution of the Mid-sized Sector
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China:
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Germany:
68% of Chinese exports come fromcompanies with less than 2000employees (Economist, Sept. 5, 2009)
ca. 70% of exports come fromMittelstand companies
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What Is a Hidden Champion?
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Top 3 in the world or no. 1 on its continent
Revenue below5 billion
Not well known in general public
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Hidden Champions by Country
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Number of Hidden ChampionsCountry
44777
910111113141416191923
2729
4967687576
110128
220
366500
Hungary
Czech Republic
Israel
SloveniaLuxembourg
Turkey
Australia
Brazil
Spain
Norway
Finland
Russia
Canada
Belgium
DenmarkKorea
Poland
Netherlands
Sweden
United Kingdom
China
France
Italy
Switzerland
AustriaJapan
USA
Germany 1307366
Total number worldwide: 2746
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Hidden Champions per Million Inhabitants
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Number of Hidden ChampionsCountry
0,10,10,10,10,20,40,40,50,50,50,70,91,11,11,21,2
1,71,71,8
2,72,8
3,43,5
5,413,7
14,4
15,616,0
China
Brazil
Russia
TurkeySpain
Czech Republic
Hungary
Australia
Canada
Korea
Poland
Israel
United Kingkom
France
USAItaly
Netherlands
Japan
Belgium
Finland
Norway
Denmark
Slovenia
Sweden
LuxembourgSwitzerland
Austria
Germany
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Key Facts
1 million new jobs in ten years
Annual growth of 10%, revenue 4 times largerthan 1995
More than 150 new-billionaires
Sharp increase of world market share
Massive wave of innovation
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Hidden Champions
Delo
Baader
Brainlab
Neumann Invers
Tetra
Belfor
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Hidden Champions from Czech Republic
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Company Product
Contipro Hyaluronan
2N TelekomunikaceTelecommunications
equipment
Elephant Orchestra Empty web domains
PixmacStock agency in
selling/buying images
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Hidden Champions Worldwide
January 26, 2004
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Lesson 1
Excellent export performance is driven by mid-sized
firms rather than by large corporations. Countries
seem well advised to build their global competitive-
ness on strong mid-sized companies of the Hidden
Champion type.
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Why are they successful?
How good are they
in marketing and strategy?
What can CEE countries
learn from them?
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Extremely ambitious goals:
Market Leadership
Growth
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Chemetall
The goal of Chemetall
is the worldwide
technology and marketing leadership.
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3B Scientific
We want to become
and stay no. 1 in the world.
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Deep Leadership: Sick
We lead by anticipating our customers
expectations. Leadership means becoming
the benchmark for others. We set the
standards on the world market.
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Market Share of Hidden Champions
Relativemarket share
Absolutemarket share
1.6
10 years ago
2.333%30%World
TodayToday10 years ago
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G th
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GrowthFrom Hidden Champion to Big Champion
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Fresenius
SAP
WrthSchaeffler
0
5 000
10 000
15 000
20 000
25 000
1995 2010
Reve
nuesin$millions
G th
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GrowthSmall Hidden Champions
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Rational
Igus
BrainlabBartec
0
100
200
300
400
500
1995 2010
L 2
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Lesson 2
Success always begins with ambitious goals. The
Hidden Champions of the 21st century go for
growth and market leadership. This is the fuel that
drives them forward.
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Focus and Depth
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Flexi
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Flexi
We only focus
on one thing,
but we do it better
than anyone else.
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Deep Value Chain
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Deep Value Chain
No outsourcing of core competencies
Strong outsourcing of non-core activities
Own machine shops
Very secretive in R&D
Avoidance of strategic alliances
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Comments on Outsourcing
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Comments on Outsourcing
We produce all parts ourselves, based on the qualitystandards we define. Wanzl
As many parts as possible are self-prod uced, al l of whic h
takes place in a small region w ith down-to-earth people. Miele
We make our own tools. We can only deliver top quality
if zero tolerance begins with these tools. Weidmueller
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Lesson 3
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Lesson 3
Only focus and depth lead to world class. The
Hidden Champions focus on narrow markets and are
deep rather than broad. They tend to do things
themselves and refrain from outsourcing core
competencies.
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Globalization
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The Hidden Champions Strategy
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- Specialization in Product and Know-how -
Global Selling and Marketing
The Hidden Champions Strategy
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Accelerating Globalization
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Accelerating Globalization
Exports per capita in US-$
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6 23
437
985
2160
1900 1950 1980 2000 2010
Globalization: Kaercher
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Globalization: Kaercher
Founding year of subsidiaries
Numberof
subsidiaries
World leader in high pressure water cleaners
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WOMA 75LVEEKTCIN
KAZ 70MUN
RINCB
FSSCMDLT
ARKUE
KC DEKC GR 60KSDROSK
LEUCOUNIFLEX
KFIUA
CERAT Leas
K Financ 50
THKRUKFT
C-TechKNA MXCEN
KRCN
cwTR 40
DKIE
AENZ
MYTWK ALV
K Leas.
DECET 30
CIPSEAMXPLHUCZ
HKGR
cpAKHI 20
JPES
CAKBGZA
AUSFI
NONL
SE 10AKI
BEGB
BRIT
CHAT
FRAKW 1
1 93 5 1 9 62 1 96 4 1 9 66 1 97 4 1 9 75 1 97 8 1 9 82 1 98 3 1 9 84 1 98 5 1 9 88 1 99 0 1 9 91 1 99 2 1 9 93 1 99 4 1 9 95 1 99 6 1 9 97 1 99 8 1 9 99 2 00 2 2 00 4 2 00 5 2 00 6 2 00 7 2 00 8 2 00 9 2 0 10 2 01 1
Lesson 4
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Lesson 4
The Hidden Champions combine specialization in
product and know-how with global selling and
marketing. Globalization is the growth booster for
them. They serve the target markets through their
own subsidiaries. They heavily invest into the
markets of the future.
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Innovation
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Innovation: EOS E-Manufacturing/3D Printing
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Innovation: EOS E Manufacturing/3D Printing
Innovation: Enercon E-Ship
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Innovation: Enercon E Ship
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Innovation: Schott Concentrated Solar Power
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Innovation: Schott Concentrated Solar Power
R&D Intensity
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y
3.0%
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Normal firms* Global Top 1000** Hidden Champions
3.6%
6.0%
*IDW study, ** Booz study on R&D
Patents
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Largecorporations
HiddenChampions
6
31
Largecorporations
HiddenChampions
$3.717 m
$0.725 m
Patents per 1000 employees Cost per patent
European Patents 2010
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0,1
0,4
1,2
1,5
1,5
2,7
3,4
4,38,4
29,6
37,5
69,5
102,4
154,1
161,4
254,0
312,7Switzerland 2389
Luxembourg 130
Sweden 1467
Germany 12553
Netherlands 1725
France 4536
Italy 2287
United Kingdom 1857
Spain 393
Portugal 29
Griechenland 16
Country Patents Patents per million inhabitants
Czech Republic 45
Hungary 34
Bulgaria 3
Romania 3
Slowakia 8
Poland 45
Driving Forces of Innovation
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Large corporations Hidden Champions
Market Technology Market &technology
Market Technology Market &technology
50%
31%
19%
65%
14%
21%
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Lesson 5
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The Hidden Champions are in a phase of massive
innovations. The effectiveness of their R&D-
activities beats that of large companies by a factor of
5. Their innovation processes are fundamentally
different. Their innovations are both market- and
technology-driven.
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Customers and Competition
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Market-related Strengths
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36,4%
84,1%
88,7%Closeness-to-
customer
Image
Professional
marketing
Five times as many employees (25-50%) have regular customer contactscompared to large companies (5-10%).
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Closeness to Top Customers
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Close to most demanding customers
Grohmann Engineering: Top 30 customers
worldwide as target group, most important
customer is Intel
Top customers as drivers of performance and
innovation
Follow top customers everywhere
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Value and Pricing
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Hidden Champion strategies are value-driven, not
price-driven.
Hidden Champions command price premiums.
Big opportunities in new ultra-low price segment.
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Competitive Advantages of the Hidden Champions
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Competitive performance
Importance
weaker strongerthan the strongest competitor
Product quality
Price
Economy
Closeness-to-customer
Systems integration
Advice
Service
Punctuality
Flexibility
Advertising
Distribution
Cooperationwith suppliers
Made inGermany
Patents
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Ease of use
Lesson 6
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Closeness to customer is the greatest strength of
the Hidden Champions even ahead of
technology. Their strategies are value-oriented,
not price-oriented. The Hidden Champions hold
strong competitive positions. Advice and systems
integration are new advantages which create
higher barriers to entry.
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Employees and Leaders
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Employees
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More work than heads
High performance cultures
High qualification
Low turnover
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Vocational Training
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Pillar of German competitiveness
Highly qualified workers
Combination of practice and theory
Vocational schools
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Higher QualificationIn the last ten years the share of university graduates has more than
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10 years ago Today
Universitygraduates (%)
8,5%
19,1%
In the last ten years, the share of university graduates has more thandoubled.
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Employee Turnover Rates
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2,7%
5,3%
7,3%
8,8%
9,0%
15,0%
Austria
Switzerland
Daimler
Hidden
champions
Germany
9.0%
8.8%
7.3%
5.3%
2.7%
USA 30.6%
Source: Hernstein-Institute/US Department of Labor
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Leaders
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70% of Hidden Champions are family-owned
Identity of mission and being
Leadership
- authoritarian in the principles
- participative, flexible in the details CEOs come young into power
Very high continuity
(average CEO tenure 20 years,large corporations 5.1 years)
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Lesson 7
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The Hidden Champions have more work than
heads and high performance cultures. Employee
qualification is top. Turnover and sickness rates
are extremely low. Total identification and
continuity of the leaders are the foundations for
long-term success.
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Lessons for CEE Countries
CEE t i h ld f t id i d i t
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CEE countries should foster mid-sized companies topromote internationalization and job creation.
Ambition, focus and global selling are the strategicpillars of Hidden Champions.
Avoid diversification if you aspire to become world class.
Closeness to customers and customer-driven innovationform the core of Hidden Champion marketing.
A countrys natural advantages should be transformed
into competitive advantages in the market place.
Government support is necessary, but not sufficient.Entrepreneurship is indispensable
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To conclude.
a personal
Hidden Champions Story
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Simon - Kucher & Partners
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Worldwide Strategy & Marketing Consultants
Focus: Revenue-driven Profit Growth
Core Competency: Pricing
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Best Consultancies in "Marketing and Sales"In 2007 and 2011 top managers ranked Simon-Kucher as best consultancy in
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In 2007 and 2011, top managers ranked Simon-Kucher as best consultancy inmarketing and sales before Boston und McKinsey.
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Rank Consultancy Score*
1 Simon-Kucher & Partners
2 Boston Consulting Group
3 McKinsey & Company
4 Bain & Company
5 Roland Berger
Competence-Ranking "Marketing and Sales"
08/2007 und 08/2011
395
379
359
347
342
*Average for 2007 and 2011, maximum score 500;
Source: manager magazin August 2007&2011/IMB, Survey among German top managers
World Leader in Price Consulting
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Simon-Kucher is wo rld leader in giving adv ice
to companies on how to price their products.Business Week
Simon-Kucher is the worlds leading pricing consultancy.The Economist
In pricing you offer something nobody else does.Professor Peter Drucker
No one knows more about pricing than Simon-Kucher.Professor Philip Kotler
No firm has spearheaded the professionalization of pricing
mo re than Simon -Kuc her & Partners.William Poundstone (Priceless, Hill and Wang, 2010)
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Employees and RevenueRevenue 2011:121 million
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3 4 5 7 1318 19 22 27
35 4656
7190
112130
147165
187220248
283
354
436446
500
585
632
-60
40
140
240
340
440
540
640
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
5/2012
Global Presence
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Germany,Bonn
Switzerland,Zurich
England,London
Italy,Milan
Spain,Madrid
USA,San Francisco
GermanyMunich
Japan,Tokyo
Poland,Warsaw
Germany,Frankfurt
USA,New York
Germany,Cologne
USA,Boston
Luxem-bourg
AustriaVienna
Belgium,Brussels
USA,Miami
Denmark,Copenhagen
Netherlands,Amsterdam
France,Paris
China,
Beijing
Singa-pore
Australia,Sydney
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Czech Books
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Management ThinkersThe most influential management thinkers in German-speaking
t i 2010 2011
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countries 2010-2011
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Source: Frankfurter Allgemeine Zeitung, Feb 6, 2012, p. 31 www.managementdenker.de, Internet Survey, n=804
1. Peter F. Drucker 40.1%
2. Hermann Simon 22.5%
3. Fredmund Malik 14.6%
4. Michael E. Porter 7.5%
Hermann SimonHermann Simon is chairman of Simon-Kucher & Partners Strategy & Marketing Consultants withoffices in Amsterdam Beijing Bonn Boston Brussels Cologne Copenhagen Frankfurt
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Professor Simon has published over 30 books in 25 languages, including the worldwide bestsellers Hidden Champion s(Boston 1996, cover story of BusinessWeekin 2004) and Power Pr ic ing(New York 1997), as well as Manage for Prof it ,Not for Market Share(Boston 2006). His book Hidden Champions of the 21st Century, Success Strategies of Unkn own
World Market Leaders(New York 2009) investigates the strategies of little known market leaders. Beat the Crisis (NewYork 2010) provides companies with practical advice against the crisis and for a quick recovery.
Simon was and is a member of the editorial boards of numerous business journals, including the International Journalof Research in Marketing, Management Science, Recherche et Applications en Marketing, Dcisions Marketing,European Management Journal as well as several German journals. Since 1988 regularly writes columns for thebusiness monthly Manager Magazin. As a board member of numerous foundations and corporations, Professor Simonhas gained substantial experience in corporate governance. From 1984 to 1986 he was the president of the EuropeanMarketing Academy (EMAC). Simon is co-sponsor of the first Special Purpose Acquisition Company (SPAC) listed onthe German Stock Exchange in Frankfurt, which acquired Exceet Group S.E. in July 2011.
A native of Germany, he studied economics and business administration at the universities of Bonn and Cologne. Hereceived his diploma (1973) and his doctorate (1976) from the University of Bonn. Simon holds honorary doctoratesfrom IEDC Business School of Bled, Slovenia, and from the University of Siegen, Germany. He is a honorary professorat the University of International Business and Economics in Beijing.
offices in Amsterdam, Beijing, Bonn, Boston, Brussels, Cologne, Copenhagen, Frankfurt,London, Luxembourg, Madrid, Miami, Milan, Munich, New York, Paris, San Francisco, Singapore,Sydney, Tokyo, Vienna, Warsaw and Zurich. Simon is an expert in strategy, marketing andpricing. He has an extensive global range of clients. In the German language area he was votedthe most influential management thinker after the late Peter Drucker.
Before committing himself entirely to management consulting, Simon was a professor ofbusiness administration and marketing at the Universities of Mainz (1989-1995) and Bielefeld(1979-1989). He was also a visiting professor at Harvard Business School, Stanford, LondonBusiness School, INSEAD, Keio University in Tokyo and the Massachusetts Institute ofTechnology. From 1995 to 2009 he was CEO of Simon-Kucher & Partners.
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