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In the current crisis, there is no shortage of advice and recommendations. And yet, the same standard solutions that are pitched in times of stability are also being put forth during the crisis: innovation, growth, market share gains, and so on. Unfortunately, this kind of advice is not only useless but can prove outright dangerous in the midst of a downturn of this magnitude. Solutions that require...
What do the hidden champions teach us? According to modern management literature, we mainly—or only—learn from large successful corporations. In this book we have changed this perspective radically. We have discovered that many of the most consistently successful, longest-surviving, most competitive companies operate behind a veil of discretion and remain unknown—even to business experts. Consequently,...
In Chapter 2, we dealt with the relation between supply and demand. During a crisis, supply outpaces demand, leading to unfavorable pricing and competitive outcomes. While it is hardly possible to overcome these negative effects altogether, it is crucial to mitigate their impact. What measures are effective against these threatening developments? Supply needs to be reduced as quickly as possible while...
Financing and organization are pillars of corporate strategy. The business environment or context is another important factor of the emergence and the development of the hidden champions. In view of their fast growth, the demands on financing capacity are always high. How do the hidden champions deal with this situation? Do they view their financial capacities as a strength or a weakness in competition?...
It is common knowledge that employees’ motivation and sense of identification are key to a company’s success. The difference between companies lies in the energy with which these aspects are actually lived out. In this chapter, we look at employees and corporate culture. The growth of the hidden champions means they create numerous new jobs, particularly in foreign markets and for highly qualified...
The hidden champions have extremely close relationships with their customers, due to the complexity of the products and services they offer. Three quarters of the companies practice direct sales. Five times as many employees in hidden champion companies have regular contact with customers than in large corporations, leading to the pronounced closeness.
How can a strategy be developed that turns a company into a hidden champion? Where is the best place to start? What results does strategy development achieve? What is the role of consultants in this process? We will address these and similar questions in this chapter. There are naturally no standard answers. The lessons of the hidden champions are not a checklist to be worked through, automatically...
How do the hidden champions compete? Which competitive strategies do they apply? What competitive advantages do they have? We will address these and similar questions in this chapter. The hidden champions operate predominantly in oligopolistic markets, and even on a global scale, they face only a limited number of competitors. However, competition is fierce. Their strategy is oriented to superior...
Services are not only offered by “typical” service providers such as hotels, airlines or banks. Industrial companies also generate a considerable part of their revenues from services. Services such as maintenance, repair, refurbishing, and spare parts often account for 20% of the revenue of industrial firms and for an even higher percentage of their profits. Services, including spare parts, usually...
Perhaps the gravest mistake in hazardous times is to stand by helplessly believing that the crisis will take its toll anyway. The 33 quick solutions and the numerous case studies described in the previous chapters demonstrate that companies are not defenseless against the crisis but can successfully tackle it. Siemens CEO Peter Loescher warns against resignation, “We managers have to put all our strength...
The average profit margin of European retailers is a mere 0.7 %. Most companies blame the difficult economic environment for this low profitability. Yet the disastrous situation is largely self-inflicted, as is indicated by two facts. First, for years growth has been slower in the retailing industry than in private consumption, indicating a structural problem within the industry. In Germany,...
Faced with the catastrophic collapse in revenue, cutting costs has to be the top priority for companies trying to survive the crisis. Cost cutting is inevitable and mandatory in this situation. The challenge is to lower costs quickly without causing any long-term damage to the company. This calls for more intelligent solutions than simple-minded mass layoffs. Companies must utilize as many levers...
Large corporations are the subject of close and constant scrutiny by academic researchers, analysts, shareholders, and journalists. Hidden champions, on the other hand, remain a virtually unexplored source of knowledge. Scattered across the globe, thousands of these highly successful companies are concealed behind a curtain of inconspicuousness, invisibility and, in some cases, deliberate secrecy...
How does a company ascend to world market leadership? Certainly not by staying at home and waiting for customers to call on it. Instead, the hidden champions venture into the world and offer their products wherever their customers are. This process of globalization typically takes generations and requires unending stamina. In the preceding chapter we learned that the hidden champions operate in narrowly...
During a sales and revenue crisis, selling becomes the limiting factor to a company’s further growth – or even its survival. Justus von Liebig’s “law of the minimum” states that plant growth is controlled by the scarcest resource. Only by increasing the amount of the limiting nutrient can the plant thrive.1 This principle was later applied to management theory.2 According to this concept, managers...
In Chapter 1 we analyzed how customer behavior changes in a period of crisis. More than anything else, their perception of risk increases and their risk tolerance falls. This statement applies equally to consumers and to B2B customers. Consumers are apprehensive about the future and begin to hoard cash. Business customers are reluctant to make investments and long-term commitments. In this particular...
Is there one single explanation for the outstanding and continuing success of the hidden champions? If I had to choose one, it would without a doubt be the personalities at the top. Many of them are founders, but following generations of leaders have often made a lasting impression on me. What characterizes the leaders, their systems, and styles in these companies? Roughly two thirds of the hidden...
We have already seen that excellent performance with regard to goals, globalization, and closeness to customer is a necessary requirement for becoming a hidden champion. However, in most cases innovation is the foundation for success. Achieving and maintaining world market leadership requires outstanding and continuously innovative performance. The innovations of the hidden champions are in no way...
Goals play a central role for the strategy and the leadership of an enterprise. The hidden champions pursue highly ambitious goals aimed above all at growth and market leadership. When and how are these goals formulated? How are they filled with content? How are they communicated? And how successful are the hidden champions of the twenty-first century at realizing these goals? In this chapter, we...
The selection and definition of a market are the starting point for strategic planning. How do the hidden champions define their markets? How do they conduct their businesses in these markets? The hidden champions usually focus on narrow markets. Many of them do not feel restricted by customary market boundaries, but define their markets autonomously as part of their strategy. In doing so, hidden...
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