1. Hidden Champions of the 21st Century
Success Strategies of Unknown World Market Leaders
Warsaw Office
Wołoska 9, 02-583 Warszawa
Prof. Dr. Hermann Simon Tel +48 22 330 57 00 Fax +48 22 330 57 01
e-mail: hermann.simon@simon-kucher.com
Warsaw, November 17, 2008 Internet: www.simon-kucher.com

2. Who is No. 1 in Exports?
China
USA
Japan
Germany
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3. Exports in 2007 (Billion US-$)
Germany 1354
China 1220
USA 1148
Japan 678
France 546
Italy 502
Netherlands 454
Canada 431
United Kingdom 442
Korea 379
Belgium 322
Spain 257
Australia 139
Poland 138
Norway 136
Turkey 110
Hungary 67
Source: 2008 CIA World Factbook
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4. What Is a Hidden Champion?
Top 3 in the world or no. 1 on its continent
Revenue below $4 billion
Not well known in general public
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5. Hidden Champions
Delo
Baader
Brainlab
Lantal
CEAG
Brita
Tetra
Belfor
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6. Polish Hidden Champions
Company Main Revenue
Product (PLN million/
year)
FAKRO Roof windows 600
Famur Mining equipment 909
Psiloc Smartphone applications ?
Atlas Adhesive mortars for tiles 560
DGS Closures for glass containers ?
Nowy Styl Chairs 900
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7. Hidden Champions Worldwide
Germany Taiwan USA India Russia
1997 1996 1996/2009 2006 2005
Japan
Turkey France 1998 Poland Korea
1999 1998 1999 1997
Brazil Netherlands Serbia Egypt Italy Spain China
2003 1997 2007 2008 2001/2007 1997 1997/ 2000/
2005
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8. The Book
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9. Key Facts of the Last Ten Years
1 million new jobs
Annual growth of almost 10% p.a., revenue 2.5
times larger than 10 years ago
More than 200 new $-billionaires
Sharp increase of world market share
Massive wave of innovation
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10. Hidden Champions and Crises
30% have survived serious crises
Hidden champions profit from crises
Markets are redistributed in difficult, not in easy
times
Punctuated development
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11. Why are they successful?
How do they differ from large firms?
What can young entrepreneurs
learn from them?
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12. Extremely ambitious goals:
Market Leadership
Growth
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13. Chemetall
“The goal of Chemetall is the
worldwide technology and marketing leadership
in profitable niches of specialty chemicals.”
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14. 3B Scientific
“We want to become
and stay no. 1 in the world.”
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15. Karl Mayer
“We don’t want our world market share
to drop below 70%.”
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16. Market Share of Hidden Champions
Absolute Relative
market share market share
10 years ago Today 10 years ago Today
World 30.2% 33.0% 1.56 2.34
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17. Growth
From Hidden Champion to Big Champion
16000
Fresenius
14000
SAP
Revenues in USD million
12000
Wuerth
10000
8000
6000
4000
2000
0
1995 2007
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18. Growth
Mid-sized Hidden Champions
5000
4500
Cronimet
4000
Enercon
Revenues in USD million
3500
Leoni
3000
2500
2000
1500
1000
500
0
1995 2007
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19. Growth
Small Hidden Champions
400
350
Rational
Revenues in USD million
300
Bartec
250
Brainlab
200
150
100
50
0
1995 2007
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20. Lesson 1
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. Young entrepreneurs: Be very
ambitious!
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21. Focus and Depth
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22. Uhlmann
“We always had one customer and will only
have one customer in the future: the
pharmaceutical industry –
we only do one thing, but we do it right.”
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23. Flexi Bogdahn
“We will do only one thing,
but we do it better than anyone else.”
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24. Deep Instead of Broad: A Focused Strategy
The Case of Winterhalter
Dishwashers Dishwashers Dishwashers Dishwashers Dishwashers
for for for Hotels/ for for
Hospitals Schools Restaurants Companies Organisations
Dishwashers
Broad
Water
Conditioners
D
Detergents e
e
p
Service
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25. 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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26. Comments on Outsourcing
“We produce all parts ourselves, based on the quality
standards we define.” Wanzl
“At Kaldewei we make everything ourselves.” Kaldewei
“We can best fulfill the extremely high requirements for
quality and precision in-house.” Heidelberg
“As many parts as possible are self-produced, all of which
takes place in a small region with 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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27. Lesson 2
Only focus and depth lead to world class. By
focussing on a narrow customer segment the
Hidden Champions can offer superior value. High
vertical integration and a deep value chain create
unique products customers cannot do without.
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28. Globalization
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29. The Hidden Champions Strategy
- Specialization in product und know-how -
Global Selling and Marketing
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30. Globalization Has Only Just Begun
World export per capita (US-$)
3000
2000
1543
985
437
6 23
1900 1950 1980 2000 2005 2010 2020
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31. Globlization Multiplies Market Size
1135
Index
370
100
Germany Europe World
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32. Globalization: Kaercher
ARG 44
High pressure water cleaners
IN D 43
U KR 42
THA 41
SK 40
RO 39
RUS 38
KOR 37
IR L 36
TR 35
Duba i 34
MA L 33
TA IW 32
VR C 31
I ( C IP ) 30
MEX 29
S GP 28
Number of subsidiaries
I ( C ET) 27
PL 26
CS 25
H 24
HK 23
GR 22
NZ 21
U S A ( A KM) 20
JPN 19
E 18
CDN 17
AUS 16
ZA 15
DK 14
SF 13
N 12
NL 11
US A 10
S 9
B 8
UK 7
B RA 6
I 5
CH 4
A 3
F 2
1
1962 1964 1966 1974 1975 1978 1982 1983 1984 1985 1987 1988 1989 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2008
Founding year of subsidiaries
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33. Future Attractiveness of Emerging Markets
China 73%
Russia 48%
India 35%
Eastern Europe
34%
(without Russia)
Asia (rest) 21%
Brazil 13%
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34. Lesson 3
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.
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35. Innovation
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36. R&D Intensity
R&D as % Index
of revenue
German firms with R&D 3.0% 100
Booz (Global Top 1000 in R&D) 4.2% 120
Hidden champions 5.9% 169
1/3 of hidden champions > 9% 257
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37. Patents
Patents per Cost per patent
1,000 employees in 1,000 $
Patent-intensive
large corporations 5.8 3,717
Hidden champions 30.6 725
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38. Enercon Wind Turbines
Extremely innovative
Founded in 1984
More than 10000 employees, 3 billion € revenue
42% of all patents worldwide
Price 20% higher than competition
Superb service
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39. Driving Forces of Innovation
Large corporations Hidden Champions
65 %
50%
31%
19 % 21 %
14%
market technology market & market technology market &
technology technology
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40. Innovation Process
Role of top-management
Heads more important than budgets
Cooperation between functions
Co-development with customers
Continuous improvements rather than
breakthrough innovations
Speed
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41. Lesson 4
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 innovativeness is both market- and
technology-driven.
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42. Closeness to Customer
Marketing Professionalism
Value and Price
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43. Market-Related Strengths
Five times as many employees (25-50%) have regular customer
contacts compared to large companies (5-10%).
closeness-to-
88.7%
88,7%
customer
image 84.1%
84,1%
professional
marketing 36.4%
36,4%
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44. Closeness to Top Customers
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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45. Value and Pricing
Strategies are value-driven, not price-driven
Price premium 10-15%
Avoidance of price wars
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46. Competitive Avantages of the Hidden Champions
Product quality
Economy
Punctuality
Advice
Closeness-to-Customer
Service
Price Flexibility
Systems Integration
Importance
Distribution
Made in
Germany
Cooperation Patents
with suppliers
Advertising
weaker stronger
than the strongest competitor
Competitive performance
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47. Attributes with Strongest Increase in Importance
Attribute Increase in percentage points
last ten years
Advice +10
Systems integration +8
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48. Closeness to Competition
Head-on fight with strongest competitors
Fitness through tough competition
Often global top competitors in one location
Actively seek performance-oriented competition
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49. Competing with the “Neighbor”
Product Competitors Place Country Remarks
Shopping carts Wanzl Leipheim Germany Global No. 1
Product Competitors
Siegel Jettingen Location Remarks
Strong competitor
Orthopedic implants Zimmer Warsaw Indiana, USA Globale No. 1
DePuy Warsaw All three are leaders
Biomet Warsaw
Private Planes Cessna Wichita Kansas, USA Cessna global No. 1
Hawker Beechcraft Wichita others leading
Learjet Wichita
Sparkling wine Freixenet Sant Sadurni d'Anoia Spain Global No. 1
Codorniu Sant Sadurni d'Anoia Global No. 2
Strong competition
Eyewear Luxottica Agordo Italy Global No. 1
Safilo Padua Global No. 2
Very similar strategies
Assembly products Würth Künzelsau Germany Global No. 1
Berner Künzelsau Global No. 2
Aromas/perfumes Givaudan Vervier Switzerland Global No. 1
Firmenich Geneva Global No. 2/3
Interface technology Phoenix Contact All in the region of Germany Global No. 1, all three
Harting East Westphalia global leaders
Weidmüller
Golf equipment Callaway Carlsbad California, USA Both fight for global
TaylorMade Carlsbad market leadership
Wind energy Vestas Randers Denmark Global No. 1
Enercon Aurich Northern Global No. 3, techological
Germany leader
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50. Lesson 5
Closeness to customer is the greatest strength of
the Hidden Champions – even ahead of
technology. The Hidden Champions hold strong
competitive posititions. Advice and systems
integration are new advantages which create
higher barriers to entry. They closely compete
with their best competitors. Entrepreneurial
clusters foster the emergence of Hidden
Champions.
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51. Employees
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52. Employees
“More work than heads”
High performance cultures
High qualification
Early on sharp selection/later on “zero” turnover
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53. Higher Qualification
In the last ten years, the share of university graduates has more than
doubled.
University
graduates (%) 19.1%
8.5%
10 years ago Today
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54. Turnover Rates
USA 15,0%
30.6%
Austria 9,0%
9.0%
Switzerland 8,8%
8.8%
Germany 7,3%
7.3%
Daimler 5,3%
5.3%
Hidden
champions 2,7%
2.7%
Source: Hernstein-Institut/US Department of Labor
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55. Lesson 6
The Hidden Champions have “more work than
heads” and high performance cultures. Early
selection on the job is sharp. Turnover and
sickness rates are extremely low.
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56. Ownership and Leadership
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57. Ownership and Leadership
Ownership/management Ten years Today Change
ago (in %) (in %) (in %-points)
Family-owned 76 66 -10
- thereof with family management 82 78 -4
- therof with other management 18 22 +4
Corporations 21 16 -5
Stock exchange 2 10 +8
Private equity - 8 +8
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58. Key Financial Indicators
Return on Capital Emplyed (ROCE) 13.6%
Equity Ratio 41.9%
Self-financing dominates
Capital markets increasingly important
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59. Leaders
Identity of mission and being
Leadership
- authoritarian in the principles
- participative, flexible in the details
Young into power
More women in top positions
Very high continuity
(average CEO tenure is 20 years)
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60. Lesson 7
The secret of the success of the Hidden
Champions lies in their leaders. The leadership is
authoritarian in the principles, but flexible in the
details. Continuity is very high. Young CEOs and
women play a more important role than in large
companies.
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61. The Three Circles of the Hidden Champions
Focus
De
ce
n
h
Competitive
tra
pt
advantages
orientation
Leader-
De
liz
Global
ship with
ai
to
ambitious
n
goals
High
performance
employees
Closeness to
customer
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62. The Ultimate Lesson
The “Hidden Champions of the 21st Century”
go their own ways
– more decisively and successfully than ever.
They do most things differently…
from the teachings of management gurus,
from modern management fads,
from large corporations
Maybe this is the most important lesson…
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63. Lessons for Poland
The success of Poland in globalization will depend
heavily on mid-sized companies
Admiration not only for large firms, but also for
midsized companies required
Needed: Young entrepreneurs with high ambitions
The technical competencies are there, marketing
and globalization must be added
The role of large corporations: help start-ups,
spin-offs etc.
Poland is in a good starting position,
geostrategically ideal
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64. To conclude….
… a personal
Hidden Champions Story
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65. Simon - Kucher & Partners
Worldwide Strategy & Marketing Consultants
Focus: Revenue-driven Profit Growth
Core Competency: Pricing
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66. Best Consultancies in quot;Marketing & Salesquot; in Germany
Germany’s most prestigious business magazine ranks Simon-Kucher as the
leading consultant in quot;Marketing & Salesquot;, ahead of Boston and McKinsey.
Competence Ranking quot;Marketing & Salesquot;
Competence Ranking quot;Marketing & Salesquot;
Rank Consultancy Score*
1 Simon-Kucher & Partners 401
2 Boston Consulting Group 370
3 McKinsey & Company 346
4 Bain & Company 344
5 Roland Berger 338
manager-magazin 08/2007
* Maximum 500;
Source: manager-magazin August 2007/IMB (Institute for Management & Consulting); Survey of 264 Top Managers
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67. World Leader in Price Consulting
“Simon-Kucher is world leader in giving advice
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
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68. Employees and Revenue
Revenue in 2007: US-$ 120 million
485
379
311
261
235
205
160 169
125 134
82 99
51 60
16 20 20 24 30 40
3 4 5 9
8
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
11 07
00
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
/2
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69. Comparison Boston Consulting vs. Simon-Kucher
After 23 years Simon-Kucher is larger than the Boston Consulting group was after 23 years.
SKP (1985-2007) 331
308
BCG (1963-1985)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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70. Global Presence
France, England, Luxem- Netherlands, Germany, Germany, Germany, Germany,
Paris London bourg Amsterdam Bonn Frankfurt Munich Cologne
Russia,
Moscow
Poland,
Warsaw
USA, Japan,
San Francisco Tokyo
USA,
Boston
USA,
New York
Spain, Switzerland, Italy, Austria,
Madrid Zurich Milan Vienna
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71. SKP in Poland
Transporta-
Pharmacy
tion /logistics
Consumer Media
goods
Construction Telecommuni
materials cation
Financial
Energy services
Retail
Industrial
goods
Others
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72. The Most Influential Management Thinkers
in German-Speaking Countries 2005-2007
1. Peter F. Drucker † 31.8%
2. Hermann Simon 12.2%
3. Fredmund Malik 10.7%
4. Michael E. Porter 6.3%
5. Philip Kotler 5.1%
Source: www.managementdenker.de, Internet Surveys, n = 1 195, 2005 – 2007
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73. Hermann Simon
Hermann Simon is chairman of Simon-Kucher & Partners Strategy & Marketing Consultants
with offices in Amsterdam, Bonn, Boston, Cologne, Frankfurt, London, Luxembourg, Madrid,
Milan, Moscow, Munich, New York, Paris, San Francisco, Tokyo, Vienna, Warsaw and Zurich.
Simon is an expert in strategy, marketing and pricing. He has an extensive global range of
clients. In the German language area he was voted the most influential management thinker
after the late Peter Drucker.
Before committing himself entirely to management consulting, Simon was a professor of
business administration and marketing at the Universities of Mainz (1989-1995) and Bielefeld
(1979-1989). He was also a visiting professor at various international universities: Harvard
Business School, Stanford, London Business School, INSEAD, Keio University in Tokyo and
the Massachusetts Institute of Technology.
Professor Simon has published over 30 books in 22 languages, including the worldwide bestseller Hidden
Champions (1996, cover story of BusinessWeek in January 2004) and Power Pricing (1997), as well as Strategy for
Competition (2003) and Think! (2004). Manage for Profit, Not for Market Share (2006) takes a critical look at the
widespread focus on volume and market share and calls for a conscious shift of focus towards profit. His book
Hidden Champions of the 21st Century, Success Strategies of Unknown World Market Leaders will appear in
February 2009. It investigates the strategies of little known world and European market leaders in German-
speaking countries. In October 2008 his new textbook Preismanagement appeared in German.
Simon was and is a member of the editorial boards of numerous business journals, including the International
Journal of Research in Marketing, Management Science, Recherche et Applications en Marketing, Décisions
Marketing, European Management Journal as well as several German journals. Since 1988 he has regularly written
a column for the business monthly Manager Magazin. As a board member of numerous foundations and
corporations, Professor Simon has gained substantial experience in corporate governance. From 1984 to 1986 he
was the president of the European Marketing Academy (EMAC).
A native of Germany, he studied economics and business administration at the universities of Bonn and Cologne.
He received his diploma (1973) and his doctorate (1976) from the University of Bonn.
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