They are typical "hidden champions," medium-sized, unknown companies (with PDF · The Mystique of the Hidden Champions. Hermann Simon. Pages „Hidden Champions of the 21st Century“. Presentation for the Conference. "Top management: Challenges and Limits of Competition". Harald L. Hidden Champions'. Own Way: Common. Sense and Mental. Internationalization. An Interview with Hermann Simon by Milenko Gudić. While having been voted.
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The Hidden Champions combine specialization in product and know-how with global selling and marketing. Globalization is the growth booster. PDF | Purpose In contrast to the predictions from the family business and the SME internationalization literature, Hidden Champions are. The first € price and the £ and $ price are net prices, subject to local VAT. Prices indicated with * include VAT for books; the €(D) includes 7% for. Germany, the.
Additionally, Saunders et al. Balinski and asserts that about 1, are in Germany, in the US and Japan has This exactly is their success secret. This gives participants the room to use their own words. International Journal of Production Economics, —
Research limitations During the data collection and literature search, there was limited literature, secondary data and news on the British HCs, although the researcher endeavoured to gather sufficient information through interview, the interviewee did not respond as agreed. Literature search During the literature review, the author first searches data bases that help to address key concepts and also give insights to the range of research. Additionally, Google scholar, news articles, books and conference papers also produced insights on HCs.
Literature and concept mapping During the search for literature on Hidden Champions HCs , it was necessary to synchronize the subject area to HCs to present clarity. This is illustrated in the hierarchical concept below, figure 1. Figure 1. Hermann Simon, the originator of the concept argues majority of HCs are located in German and Scandinavian speaking countries.
He identified several of such across five continents Simon, and Other Hermann! Globalisation Innovation Source: Designed by the author deriving from Simon as basic.
The above diagram focuses on existing literature on this subject. Other scholars have further developed the HC notion associating it with other concepts of management and produced work on HCs in other geographical locations Voudouris et al.
Innovation, ambitious leadership and globalisation concepts act as growth indicators. But, to avoid deviation from the dissertation, the literature review focuses on Hidden Champions in Germany and in the United Kingdom UK. Venohr and Meyer confirm that German export success relies on the HCs.
Simon and and Voudouris et al. HCs often produce a single product with variations. They have innovatively manufactured several variations giving them wide range of product portfolio thus leading the cleaning equipment sector. As a result of the success, several firms want to emulate these strategies.
According to the Economist several countries aim to imitate Germany. This scenario increased during the financial crisis as the country experienced a significant growth whilst other developed economies were stagnant and reached a negative growth. Also Chinese and South-Korean businesses visit some German Mittelstand firms to learn from the success factors, this demonstrates a further example of international interest in the strategies of Hidden Champions The Economist, German education system and traditional family business principles lay outstanding foundation for the development of the strategic factors of these firms.
Kersting et al. In the case of the traditional family principles, the founders are visionary entrepreneurs who have accessed the dual vocational apprenticeship. This type of vocational training varies between two to three years depending on the level of qualification before starting.
To understand the efficiency of their workforce, BMWi and Kersting et al. Fischerwerke GmbH epitomizes the combination of the family business principles and the vocational education system.
According to Fischer. He gained vocational training and later established his business. His son, Klaus Fischer who studied engineering worked in the firm combining his theoretical knowledge with experience developed under the training of his father. Klaus Fischer gradually took management position and eventually succeeded his father when he retired at 60 years old. Family participation is important to these firms, even though, not all members maximize the efficiency. The above analogy depicts the impact of family participation within the Mittlestand.
According to Simon and the majority of the Mittlestand firms are family owned small and medium enterprises; and HCs are those with extreme high performances and leading in their various sectors Simon, and He argues that not all German family owned SMEs fall under this category. To be considered as HC, the firm must posses the following criteria: The company must be among the top three leaders on a global or continental level, but in their respective industry.
Regarding its domestic market, it should occupy the market leader position Simon, and HCs purposefully select a niche market and focus on the specialization of their market or product to lead. This reflects the success of most HCs via innovation. Although most HCs rely on equity, self financing and bank loans to achieve their goals, some firms have exceeded the revenue limit with low debts whiles others have failed.
Contrarily, Hornitex and Glunz failed due to aggressive strategic growth. To avert this, growth ambition should follow S-M-A-R-T objectives, enabling businesses to avoid extremely ambitious growth strategies, rather setting goals which are specific, measurable, achievable, relevant and time-bound Tofade et al. The last criterion is the low public awareness. Consumers are not aware of most products HCs manufacture, the reason being that, other firms use them as components of their products.
Bender Wirth GmbH epitomizes those who produce for specific industries. Their products are lighting components for high quality lighting industry. Simon and confirms that the anonymity of the firms makes it difficult for rivals to emulate, the reason being that, competitors cannot identified them as existing rivals and therefore will not be able to study their strategies.
On the contrary, these firms limit their chances to attract talented employees and also the interventions of politicians. Schewe asserts that qualified employees mostly select firms that are familiar.
He further debates that if policy makers are not aware of their economic contribution, they will not consider them when making policies.
Due to their anonymity, they might be disadvantaged. To address this, Voudouris et al. Despite the fact that HC is famous among German speaking and Scandinavia countries, the question is, is it globally accepted? Simon himself claims he has identified several similar firms across the globe.
Balinski and asserts that about 1, are in Germany, in the US and Japan has This relates to the global presence of HCs. Hidden Champions in global publications Source: Simon-Kucher and Partners 2. Venohr and Meyer , Simon and observe that these firms build the vertebrate column of the German economy. Simon and claims Germany championed world exports for 6 years consecutively between and following the performance of the HCs.
This then augments quality of workforce and decreases unemployment. According to BMWi ; Economics and Schwartz and Tchouvakhina the cooperation of the HCs and institutions differentiate Germany from other European countries and reduces youth employment. Additionally, HCs employ approximately 16 million workers in Germany.
Subsequently, the collective economic contributions of the HCs depict their vital economic role and the ways they contribute to either regional or national economies. Countries without vocational training or dual education system and chamber of commerce can still develop such systems to embark the development of their Hidden Champions.
HCs strategies are applicable to large firms The notion that SMEs can be trendsetters in success strategies are anathema to the norm in business strategies that offer competitive advantages and growth. Eren and Zhaung , Yi-Yub et al. Some are mergers and acquisition, Joint-venture, and Boston Matrix among others.
However, a rising phenomenon is the undisputable strategic model of the HCs. Simon and , Michelsen et al. Besides the financial industry, Simon ; and states they are applicable to manufacturing, banking, and hospitality, among the few. Neubauer argues large logistic firms can also apply it whereas Bourlakis et al.
Whilst one may query, if it is applicable to all industries? Simon argues the focus is on the structure and the strategies firms adopt. However, they are decentralized from the parent company, permitting them to operate independently. Regarding the financial sector, Commerzbank exemplifies how large corporations implement the strategic factors and their impact.
However, Commerzbank accumulated more profits as the result of implementing the HC model Gilcher, ; Buyske, and Commerzbank. The institution firstly focused on operational objectives to respond swifter to clients, make quick decisions, reduce cost and provide quality services Slack et al. Commerzbank serves majority of the SMEs that supports the German economy, it diffused one of the three management levels thus mitigating bureaucratic decisions.
Also, to respond quicker with flexibility to investment decisions. This offers the management and workers to focus distinctly on SMEs with value, producing the determined growth.
Luxembourg, an international wealth management subsidiary to pursue customer value retention Kotler, ; Commerzbank. This shadows the focus on one business, as Simons suggests focus strategy to businesses.
Furthermore, the retail department underwent restructuring as well. This time, the department focused on the national retail.
Here, the three managerial hierarchy was reduced to one, simultaneously being responsible for wealth, retail and b2b services in Germany as a region. Also, the branches were consolidated to braches, with the aims to have close client proximity, reduce cost and provide quality services Kotler, ; Commerzbank.
The following section illustrates how Siemens also adopted the HC strategic model, although, it is a MNE serving different industries. The benefits Siemens gained again confirms the efficiency of the model most organizations. Siemens restructures to adopt HC strategic model Siemens a global conglomerate famous for engineering with numerous SBUs restructured to adopt the HCs model.
For Siemens to gain competitive advantage in every industry it serves, the company has some independent subsidiaries which represent; healthcare, automation, energy, building technologies, drive technologies, mobility, financial solution and consumer products Simon, and ; Hack and Prodhan, and Siemens. For example, marketing and sales decisions, expansions and products are the responsibilities of the SBUs and not the parent company Siemens.
With this process, Siemens targets to streamline the management structure to speed up decision making. To further develop sustainable strategic advantage, Siemens sold poor performing subsidiaries. According to Simon Siemens sold one of its healthcare businesses to St. Jude Medical, a specialized HC in the cardiology industry, consequently, helping Siemens to focus on profitable businesses and also strengthen their customer relations.
Moreover, Deutsche Welle propounds Siemens shrunk its division from 16 to 9, condensing the divisions to provide flexibility in decision making. Critical observation of how Siemens diffuses management and sells poor performing SBUs is to enhance decentralization. Siemens aims to fend off competitors with the model, but it is cost intensive. However, the downside is the incurring cost and lost of jobs in the process of the restructuring their strategies to pursue those of HCs.
Nevertheless, Siemens benefits and save approximately over 1bn Euros over long period compared to less than half of a billion reorientation cost. Exploring the HC strategic factors or characteristics This section identifies the distinctive characteristics of the HCs.
Simons ; and identifies eight characteristics illustrated in figure 3, which uniquely classify HCs or large firms operating with these strategies. An example of such is General Electric; in which the aircraft engine division evolved to market leader when Dr.
Gerhard Neumann with extensive HC experience took over the management Simon, Although, these factors are not distinctive, Simon and and Kertsing et al. The model singularly do not endow firms with success, however, selecting and complementing the single strategies with each other to create value. Porter refers to it as " ideal fit", this is when strategies complement each other to create strategic sustainable advantage.
He further argues that the fit is necessary because of the interdependency of the strategies. Simon and explains the strategic factors of HCs in diagram as illustrated below in figure 3.
These strategies mainly derive from Simon's work as a result of the limited research on HCs. However, authors such Voudouris et al. Simon provides an extensive work on the HCs strategies with numerous examples, but the author summarizes thus making them simple to comprehend.
Figure 3: Simon Leadership with ambitious goals is in the core and defines the actual capabilities of HCs. The inner circle depicts internal competencies while depth focuses on the product line and product specification for superiority in competition. Decentralization gives divisional, branch and subsidiary managers high autonomy in their decision-making.
Furthermore, decentralization encourages entrepreneurial behavior, as managers work independently- encouraging quick expansion into other markets. The competencies mentioned is efficient and possible with highly passionate and committed workforce. The internal competencies discussed are combined with external opportunities existing in the outer circle. The main concentration of HCs is the niche market and the skills to capitalize on their global presence, also exploring the market and customers.
The firms are able to collect data through their customer and integrate it in their innovation. Innovation supports the sustainable position and coupled with customer's closeness. Firms are then able to deliver technology necessary to satisfy the customers' requests.
HCs or firms adopting to these strategies distinguish themselves from the average corporations in several ways. Clients acknowledge their tailor-sized solutions and specialisation among other characteristics in figure 3. Additionally, Simon and reaffirms the success of these firms is interrelated with the commitment of the workforce to achieve the ambitious goals coupled with both morals and ethical principles.
When these strategic principles are pursued, businesses reduce the risks of deviating from the core business strategies and underperform acquisitions amidst others. Concept of UK Hidden Champion.
Evidence from the UK firms confirm the efficiency of the HC strategic model. Although, less is known about those in the UK. The high percentage of large firms saturated in the UK compared to Germany is the reason behind the low public profile of the British HCs. Therefore, the concentration of the media, policy makers and financial institutions is on the potential of large corporations. In support of this, Andreeva et al. The classification is distinguished from the German Hidden Champions, majority of the firms are within the Medium- Sized businesses MSBs and do not have a wider spectrum scaling from Small to the Medium Enterprises.
Exemplifying the benefits of operating with these HC model. The first 3 characteristers describe their requirements. However, Brown and Caridland associate the multiple ownership with the conflict in decision making. Although, HCs are known for their ambitious goals, Caridland argues that the British HCs should set up ambitious goals and be confidence in going global. The workforce and especially the management who mostly do not have university qualification should be complemented with external and skilled workforce.
He also suggests that these UK firms need a representative body to be their voice. Cariland argues the his proposals are identical, confirming how beneficial they will be to firms emulating them. It also explains both the justification and application of methods applied, in this research project.
In other words, the researcher elaborates on the processes of data collection. Bryman and Bell and Riley et al.
Moreso, there are two main types of research methods. These include quantitative and qualitative methods which are further discussed in sections 4. Epistemological research philosophy Epistemological consideration addresses the source of knowledge and how it undergoes scrutiny to be acceptable in a discipline. Saunders et al. Epistemological philosophy consists of two approaches which are positivism and interpretivism Riley et al. Positivism advocates the use of quantitative or statistical data as a research method.
Riley et al. Although, Gray argues that positivists explain human behaviour and objects, Riley et al. This demonstrates the different views of researchers when using positivism philosophy to explain human actions. Bryman and Bell assert that humans and objects are different entities, therefore interpretivism paradigm is appropriate to interpret human actions. The limitations of the positivism approach is that it provides facts and figures that may lack explanations.
This sometimes require the application of interpretivist approach to explain certain figures or events Lincoln and Guba Beside this limitation, positivists agree that human actions can be experimented objectively as natural science by adopting scientific methods to societies Mackenzie Weber suggests there is less room for error because of the rules which govern the experimental process.
Interpretivism is also an epistemological paradigm which argues that human interpretations to reality are not the same Bryman and Bell, and Saunders et al. Therefore, phenomenon or reality requires explanations. In other words, this approach is anchored on the construction of reality for example by both researcher and interviewees. Interpretivism supports researchers to comprehend human actions through their peculiar lenses or experiences Saunders, et al.
Moreover, Remenyi, et al. Some of the weaknesses of interpretivism is the bias of the researcher which might influence the result Riley et al. Inductive and deductive approach Inductive and deductive approach are the two approaches that proceeds the research paradigm discussed.
Opting for the appropriate research approach supports the process of methodology researchers favour during investigations. This approach pursues a process from specific to general observations Bryman and Bell, ; the procedure begins with observation, followed by pattern which is extracted from an existing data. Flick argues a specific way to collect data does not exist, thus making the approach flexible. At this stage new theories are generated. Also available data is evaluated to match an exiting theory.
Inductive approach is associated with interpretivism paradigm and qualitative research. This is because, researchers use the information gathered from real experiences and events to produce subjective explanations or arguments as a result of the data evaluation. For example, researchers use data obtained from interviews to create meaning. Conversely, deductive is the research approach for theories application. Wiles et al. Furthermore, the deductive approach is associated with the positivism paradigm and quantitative, proceeding from generalisation to some specific phenomena.
In this case, the researcher applies statistical data to reaffirm or oppose a theory Gill and Johnson, Quantitative research method This type of research method is for the quantification of events or problems by gathering numerical data and translating them into statistics that can be used Bryman and Bell, and Fisher, Fundamentally, this kind of research applies quantifiable data to agree or disagree with hypothesis.
And the benefit of using this kind of research is that the collated data can be presented in charts thereby making numerical data simple to comprehend. Trevor contends that the positivism paradigm of quantitative research method conveys an authoritative knowledge, due to the source of knowledge; researchers are able to generate the knowledge from logical and mathematical data acquired together. Quantitative method is also accompanied by disadvantages; researchers follow tedious and strict processes Riley et al.
However, a good quantitative research lies within the parameters of the requirement; consisting of validity, reliability and replication. Validity has an intricate composition; ecological, internal, external and measurement validity. Reliability, is a situation where the results of the study occur over and over again when conducting the same research Saunders et al.
Finally, replication is similar to the meaning of reliability and describes a situation where a repeated research produces the same result as the previous one but, this form is rare in business Bryman and Bell Moreover, Golafshani debates reliability is the consistency in results over a period of time.
In this case, if the result is repeated when using a comparable methodology, then the research instruments are reliable. He defines validity to be the accuracy of results and that the interview outcome should be close to the event.
Additionally, Golafshani and Lincoln and Guba argue they are applicable in qualitative to test the trustworthiness of a research, but uses differently terminologies to explain them, these are discussed in the qualitative research.
Qualitative research method Qualitative research method explains a primary exploratory method that is used to gain insights into problems or assists in developing ideas and hypothesis Bryman and Bell, Additionally, Saunders et al.
With the help of semi-structured or unstructured interview questions, interview participants explain phenomena and deliver answers based on their personal experience. Golashani and Lincoln and Guba use the concept of dependability or consistency for reliability. The author employs semi-structured interviews to support the dependability of the gathered data.
Golafshani and Lincoln and Guba argue there is no single term for validity, and use credibility for internal validity and transferability for external validity. To have credible interview outcome, the researcher selected respectable participants in the field of HCs with extensive experience and understanding. Through qualitative research, researchers gain depths concerning events.
Berg and Lune argue with qualitative method researchers are able to derive practical outcomes which are related to actual experiences of participants. Nevertheless, Bryman and Bell debate that the outcome of the research might be influenced by the unsystematic view point of the researcher and somewhat the close relationship between participants and the researcher.
To gather data; researchers may use either unstructured, structured and semi-structured strategies Riley et al. The structured method has a rigorous interview questions and avoids diversion. Bryman and Bell argue that, this is because, the researcher prepares specific questions related to his research topic. Bryman and Bell further argue structured interview has no flexibility. And finally, it becomes difficult to generalize the findings because, the interview entails few participants from an organization or a focus group.
Whereas the semi-structured permits the participants to add their opinions and observations. This method assists researchers to extract required information from participants. According to Bryman and Bell the semi-structured has an interview questions known as interview guide, which is not to be strictly followed.
The unstructured interview is spontaneous and varies among applicants. The participants are able to explain the situation deeper choosing their own words. Examples of research techniques used for qualitative research are individual interviews and group discussions Saunders et al. Each research paradigm and methods have inherent weaknesses as highlighted above. Thus, in ensuring the rigour of the study, Scholars advocates for a mixed- methods to solve their weaknesses Lincoln and Guba, Research design The researcher employs interpretivist epistemological approach as it is associated with inductive and qualitative research.
For instance, comprehending the research topic and objectives requires either observations or interviews whereby participants explain and deliver information which elaborates the trends in management and its development as Reeves and Hedberg argue that intepretivism has an analytical approach to social phenomena.
Regarding the inductive approach, the author claims, the rationale behind his choice is due to the flexibility it offers in data collection according to Flick This offers the researcher to apply semi-structured interview in order for the participants to respond without any constraints. The researcher uses semi-structured qualitative interviews to permit ideas generating from the respondents.
This gives participants the room to use their own words. The researcher sent the written interview questions as guidelines for all participants prior to the interview. The semi-structured interview approach enriches the available secondary data, as the participants draw practical knowledge from their experiences and current trends within the HCs. To extract information to tackle the objectives of the research, the primary data was acquired through an interview with three prominent and experienced individuals in the field of Hidden Champions.
However, one participants preferred to replied with written answers. Whilst the two others opted for a telephone interview.
The author then documented the answers and sent them to the interview volunteers to review their responses. Due to time constraints, the author could not personally interview them as a result an observational process is lacking. Both research design and methods are interrelated. Structured interviews, structured observations and self-completion questionnaires are some of the designs Bryman and Bell In the case of identifying the characteristics of HCs, Simon sent questionnaires to companies and also interviewed managers.
The questionnaires supported the quantitative research in finding the number of Hidden Champions.
Moreover, Voudouris et al. Additionally, this form of design requires high time investment, as a result it is not applicable Simon, and since, the author is geographically limited to observe the interview participants. Moreover, secondary data and semi-structured interviews are deemed to be appropriate entry points.
The author analysed the different characteristics of the HCs of both countries, this was conducted using secondary data and evaluating the interview patterns. What successful family owned businesses do differently.
Simplicity, Focus and Customer closeness. Additionally, the Best of German Mittelstand: Delivering on Growth and Agents of Growth: The power of mid-size businesses are underlying literature the author extracts his secondary data from and simultaneously combined with the information attained from the primary research. The interview answers confirm the existing materials and add varieties to the available information gathered. For decades the best companies have been thriving by eschewing complexity, avoiding diversification and focusing on their core skills.
The rest of the world is only beginning to catch up. What is the secret to their success and uniqueness?
Hermann Simon has been researching and dissecting these companies and their strategies for over 20 years. The targets of hidden champions are aimed at growth and market leadership. Hidden champions have created new competitive advantages in the form of advice and systems integration. Simon, a visiting Professor at Harvard, claims that there is more to be learned from these 'hidden' companies than those in the media limelight.
The book is written for those who have a good grasp of management theory This book was written for those who are interested in international business operations and for mangers of all types of companies The material covered reinforces and confirms the evidence that underpins the author's original identification of the hidden champions. This book is a welcome and timely reminder of the need to get back to basics reinforced by numerous documented examples that demonstrate incontrovertibly and organisations that do so are most likely to succeed in achieving their goals.
In the tradition of In Search of Excellence , Built to Last , and Good to Great , Simon identifies the factors in business operations, customer service and marketing, innovation, human resources management, organizational design, leadership, and strategy that separate these outstanding performers from the rest of the pack — and from the large corporations of the day.
Hidden champions teach us that good management means doing many small things better than the competition—quietly, with determination, commitment, and never-ending stamina.
And in turbulent economic times, the hidden champions represent an antidote to the short-sighted and excessive practices that have brought many corporate giants crashing down. The hidden champions provide invaluable lessons for all stakeholders in the business community, from entrepreneurs to corporate managers, investors to employees, union organizers to regulators, advanced and emerging countries and may well serve as the new role models for sustainable economic growth in the globalized world of the future.
Skip to main content Skip to table of contents. Advertisement Hide. Front Matter Pages i-xvi. The Mystique of the Hidden Champions.