There were roughly 3.7m companies in Germany in 2010, more than 99% of them classified as the German 'Mittelstand' - - small and medium size enterprises. Over 1,300 are classified as 'Hidden Champions.'
Export sales are generated by about 345,000 Mittelstand companies - - roughly 98% of all German companies exporting goods and services.
The term Hidden Champions was coined by Prof. Hermann Simon.
A Hidden Champion is a private company that typically is family run; is of medium size up to 500 employees and
- is among the top three in its global market or is number 1 on its continent
- has less than $5bn in revenue
- and is little known to the general public.
Prof Hermann says Delo makes special adhesives for electronic applications. Eighty percent of all smart cards in the world and more than 50% of all mobile phones including the iPhone are held together by adhesives made by Delo. Tetra is the world leader in food for ornamental fish with a 60% global market share. Belfor, an industrial service company, is a world leader in the removal of water, fire and storm damages. It is the only company that provides these services around the world.
The Hidden Champions concept increasingly attracts attention all over the world. In the last ten years, the 1,307 German Hidden Champions created one million new jobs. The majority of their employees are now outside Germany, they are truly global companies. Globalization is the most important driver of the Hidden Champions’ continuing growth.
In many cases these are companies that have succeeded on a global level by specialising in a small number of products - - sometimes just one single product. Many of these enterprises achieved three quarters of their revenue or more in foreign countries. They account for around one quarter of all German exports.
Seven lessons for other companies
What can other companies learn from the Hidden Champions? What are they doing differently from large corporations? The answer: Almost everything! Here we present the seven most important lessons from which large as well as small companies can benefit.
- Extremely ambitious targets
The targets of Hidden Champions are aimed at growth and market leadership.
- Focus and depth
Hidden Champions define their markets narrowly and work deep into the value chain.
Focus makes a market small, globalization makes it large.
The effectiveness of the Hidden Champions’ innovation and R&D activities beats that of large corporations by a factor of 5.
- Closeness to customer and competitive advantages
Closeness to customer is the biggest strength of the Hidden Champions, even ahead of technology.
- Loyalty and highly-qualified employees
The Hidden Champions have “more work than heads” and high performance cultures.
- Strong leadership
The leadership is authoritarian in the principles, but flexible in the details.