Hidden Champions I.

EINLADUNG The concept of hidden champions was initially identified and studied by Hermann Simon, where hidden champions are companies holding an international market leadership position in product categories and business models. According to the 1996 study performed on the German economy and the 2009 study extended from Germany also to Austria and Switzerland, Simon re-confirmed that hidden champion type of companies present an important pillar of advanced economies of Germany, Austria and Switzerland. Their importance for economic development is attributed to three factors. First, these companies exhibit higher resilience to economic recessions, shakeouts and restructurings. Second, they are creating new employment above the average rates in their respective economies. Last but not least, the companies that pursue pure hidden champion type of strategy exhibit much better chances of survival. Of course, some of the hidden champion companies also fail, but the failure rate among them is much lower than the country average. In general, this type of companies show to be a good indicator of maturity, stability and propensity of the national economy and therefore an interesting field of study. In particular, studying hidden champions in Central and Eastern Europe (CEE) might offer important insights, also on the positive developments in this part of the world. In general, this type of companies show to be a good indicator of maturity, stability and propensity of the national economy and therefore an interesting field of study. In particular, studying hidden champions in Central and Eastern Europe (CEE) might offer important insights, also on the positive developments in this part of the world. Especially after 2009, politicians and business people became seriously worried about the dynamics and stability of CEE region, and its losing relevancy in the globalized world. Many saw the reasons in a weak SME sector and in the lack of entrepreneurship. Also the global business press did not or could not publish distinctive business success stories from the region. Even quite recently some international consulting firms predicted that no important international industrial players in terms of size will emerge in CEE in the medium term. A study of hidden champions from this part of the world could have an important influence on its potential and image.

The internationally strongest industrial players from countries with close geographical proximity to Western Europe (eg Poland, the Czech Republic, Slovakia, Hungary, and Slovenia) are still very much part of Western European (mainly German) supply chains. They often do not produce goods that are directly consumed in Western Europe, but rather goods that are used by the Western European companies for export. Though some countries (eg Slovenia, the Czech Republic, Slovakia, Poland, and Estonia) have some high-tech business locations and Russia has recently set up its own Russian Silicon Valley, a group of high-technology industries at Skolkovo, the assessment prevailant in economic circles is that some CEE countries are losing the significance in the globalization battle. The question is whether this is an accurate assessment, or there are any business developments that are relatively unseen and unknown yet but represent a new lan in this region.

2. The notion of a hidden champion as described by Simon (1996a) is a company whose market dominance belies their low profiles. Many of these companies enjoy world market share of 70 to 90 percent in their given market, and were truly global before the jargon globalisation was coined (Simon, 1996b:1). Simon identified the phenomenon of hidden champions through an interest in international competitiveness, where further research revealed that the Germanys long-term export success is largely based on the strengths of medium-sized companies (Simon, 1996a). The studies were based initially in Germany, however Simon has identified hidden champions worldwide, including one New Zealand firm. The key work for this paper is Simons book Hidden Champions: Lessons from 500 of the Worlds Best Unknown Champions, (1996a), and his following 1996 paper You Dont Have to be German to a Hidden Champion. Further there are a small number of additional studies of reference, including Voudouris, Lioukas, Makridakis and Spannos (2000).

Simons Hidden Champion Thesis Simons position on hidden champions seems essentially practical. He goes so far as to state

that his framework is not a recipe for success, as Once the recipes for success are broadly disseminated, they lose their value, because others adopt and imitate them .

The characteristics of the hidden champions (Simon, 1996) are as follows: 1. It must occupy number one or two positions in the world in its market or the number one position in its home market. (Ideally, market position is measured by market share). They play an active role in defining the rules of the game: As Hidden Champions define their markets so narrowly, their markets are relatively small. 2. It must be small or medium-sized and generally unfamiliar to the public. It should not generate in excess of US$1 billion. 3. Hidden Champions tend to have low public visibility

The nine specific lessons (from Simon 1996 (a) and Simon 1996 (b) are:. 1. Set clear and ambitious goals 2. Define market narrowly 3. Combine a narrow market focus with a global orientation 4. Be close to customers in both performance and interaction 5. Strive for continuous innovation in both product and process 6. Create clear-cut competitive advantages in both product and service 7. Rely on your own strengths 8. Try always to have more work than heads 9. Practice leadership that is both authoritarian in the fundamentals and participative in the details Beyond these prescriptions lies a simple, but not simplistic, view on the key ingredients of the hidden champion. Hidden champions do not follow fads and management propagandist buzzwords such as out-sourcing and time competition . Instead, the success of the hidden champion is not due to one specific factor, but to the sum of the implementation of many small moves, slowly and consistently to improve performance.

Strategic Model for Hidden (SME) Champions Simons thesis was developed through action research, that is, through ongoing consultations and seminars. His research appears relatively unstructured and quite descriptive. We aim then to formalise this structure, as it is not clear which of the nine factors are the primary keys to success. As an outcome of our qualitative research, that is the conduct of structured interviews of Canadian SMEs, we have transformed the Simon list of nine success factors into a theory of hidden champions, as shown in Diagram 1. A tighter focus is implied with just five of the original nine elements highlighted. Additionally, directional relationships between the five elements are specified, so the elements are integrated in a strategic way. A global vision and particular capabilities provide the foundation for the strategic drivers of innovation and relationship marketing. In turn, the strategic drivers determine the value proposition and interactive engagement with the customer. The Canadian case studies were the primary source of theory building, though the cases were grounded a priori by Simon's work. A subsequent Greek study of Simon's concept is also consistent with our theory. Voudouris, Lioukas, Makridakis and Spanos conducted a study to identify businesses within Greece that could be classified as hidden champions. Their study provided strong evidence for the hidden champion framework. Voudouris et al. identified four overall themes or recipes that they contend explain the success of the little known firms; including Intense specialization in narrowly defined market segments (our vision) Commitment to customer service (our value) Innovative culture and adaptation to new technology (our capability) Strong leadership and a healthy organisational culture.(our vision). The Greek study has similarities with ours in that they have reduced the nine elements down, to four in their case. However their study lacks meta-constructs, such as vision, strategic drivers, value proposition and capabilities and strategic relationships between them. Other studies that have relevance to our proposed theory of hidden champions include Lee, Bennett and Oakes with their emphasis on a learning organisation and the notion of continuous

innovation in small and medium sized manufacturing firms. Simon asserts that this is further exemplified by the willingness of hidden champions to become their own suppliers if they are dissatisfied with the performance of their suppliers. Germany only has half the number of global corporations as Japan, but German exports are almost twice as high as Japanese exports (1.8 times higher for the years 2008-2010), and while large companies conduct the majority of exporting in Japan, Germany has a powerful mid-sized sector that is the main driver of its economy. Germany's strength in exporting can be accredited to its ambitious mid-sized companies, or more specifically, what is referred to as "Hidden Champions." Hidden Champions are companies that are world leaders in their respective markets, with revenues below $4 billion. They are usually unknown to the public. The smallest Fortune 500 Company is about three times larger than the biggest Hidden Champion. This topic has attracted worldwide attention because countries are increasingly recognizing that they cannot build their futures in the global market with large corporations alone. 88% of all countries have no entry in the Fortune Global 500. Countries need strong mid-sized companies. South Korea, for instance, has started an initiative to create 300-500 Hidden Champions in the next 10 years. Of course, the current structure of South Korea is similar to Japan, with big successful corporations and a weak mid-sized segment, so this is a very ambitious project. In the case of Germany, Hidden Champions have created one million new jobs in 10 years, achieved growth of 10% per year, and today are four times larger than they were in 1995. Additionally, more than 200 new billionaire (US$) companies have emerged from former Hidden Champions. The Hidden Champions of the 21st century strive for growth and market leadership. This is the fuel that drives them forward. One does not stumble into world market leadershipone needs ambition from the beginning. Focus and depth are the essential elements of the strategies of these companies. An example is Winterhalter, a dishwasher company that changed its focus from broad to deep in order to become the market leader in its field. In this case, instead of serving all segments of the

commercial dishwasher market, it decided to deepen their focus and concentrate on hotels and restaurants and providing better products and customer service. As a result, all of the big players such as McDonald's and Burger King use its cleaning equipment. It found that the needs of hotels and restaurants are more or less similar around the world, whereas the needs of hotels and hospitals are very different, and adopted them to its company's policies. The hottest fashion of the last 20 years has been outsourcing, these champions do not outsource any of their core competencies, and often even make their own machines. They refrain from outsourcing their products to maintain a high quality standard and go deeper into the value chain where they create unique processes and technologies, which are then used to create a superior end product. Superiority can only be created internally because what you buy on the market is also accessible to your competitors. If you create it internally and keep it for yourself, there is a better chance that your product will beat all others. Products are created by strictly following the quality standard guidelines that are defined by the company itself. 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. Globalization is the second pillar of their strategy. If you go with accelerating globalization, here is no limit to growth. However, this takes time because it requires that you go directly to your customers and markets. Few of the products of Hidden Champions are like the Apple iPad or Google which are global from the time they hit the market. Instead, they build their global presence through their own subsidiaries and establish direct relationships with their customers rather than delegating this to trading houses, intermediaries, or distributors. Globalization is a growth booster for them. They serve the target markets through their own subsidiaries. They heavily invest into the markets of the future. The biggest difference between the Japanese Hidden Champions and others is their lack of international presence. One does not become the market leader by imitation but by innovation, which starts with spending on R&D. The Hidden Champions spend 6.0% on R&D, while the Global Top 1000 spend only 3.6% and normal firms just 3.0%. While large corporations have six patents per 1,000 employees, Hidden Champions have 31 patents per 1,000 employees. This makes the cost

per patent for large corporations $3.717 million, while it is only $0.725 million for Hidden Champions. Hidden Champions are successful because they are in a phase of massive innovation. The effectiveness of their R&D activities beats that of large companies by a factor of five. Their innovation processes are fundamentally different. Their innovations are driven by a balance of technology and consumer needs. The biggest strength of the Hidden Champions is their closeness to customersthe customers drive these companies into performing better. Quality is more important than price to most customers, and the companies aim to meet this demand. Five times as many employees (25-50%) have regular customer contact compared to large companies (5-10%). The Hidden Champion's strategy is not price-driven but value-driven. This means that their prices are usually 10-15% higher than the market average. The key elements in value-based pricing are understanding a product's value, quantifying the value in terms of price, and, finally, observing the product line and competitive situation. The most important competitive advantages of the Hidden Champions are product quality and service directly relating to customers. Additionally, as a result of the importance of systems integration, advice for products has become essential. These advantages are different from attributes that are integrated in products which you can reverse engineer and imitate. These advantages are rooted in the heads of the employees or the capacity of your organization to manage complexity. Closeness to customers is vital. It is the greatest strength of the Hidden Championseven more important than 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 and limit the competition. With regard to ownership and financing, most of the Hidden Champions are family-owned. This does not mean that they are necessarily family-managed, and there is a trend toward hired managers. In the past, few Hidden Champions were publicly listed, but the percentage has gone up in recent years. Private equity is a new phenomenon with about 10% currently owned by private equity investors.

Key financial indicators of Hidden Champions include a 13.6% return on capital employed (ROCE) and an equity ratio of 41.9%. In particular, their high equity ratio helped them survive the recent financial crisis, despite being affected by the overall market decline. Hidden Champions are very solidly financed. Their ownership is long-term oriented, and capital markets do not play a big role. Rather, the Hidden Champions rely on self-financing and are conservative in financial matters. Hidden Champions have "more work than heads" and have a culture of high performance. This is the best productivity driver for companies. They focus on high qualification and low turnover. The foundation for this is the German vocational training systemone pillar of German competitiveness. The combination of practice and theory creates highly qualified workers. Global competition is increasingly concerned about qualifications and less about cost. Once you train highly skilled employees, it is important to retain them, and Hidden Champions maintain extremely low turnover rates with strong company loyalty. The Hidden Champions instill a sense of mission and identity into their employees. For leadership, while it is authoritarian in principle, they promote employee participation and are flexible in the details of implementation. More often than in large companies, CEOs come into power while young, and more women are in top positions. In addition, the clear identification and continuity of leaders are the foundations for long-term success. If one breaks up the workings of Hidden Champions into three different circles, then the core is leadership with ambitious goals, while the middle circle consists of innovation, depth, and high performing employees. Finally, regarding the outer circle, the important concepts are focusing on a narrow market, closeness to customers, clear competitive advantages, and conducting business with a global orientation.

In conclusion, the Hidden Champions of the 21st century go in their own ways more decisively and successfully than ever. They do most things differently from the teaching of management gurus, modern management fads, and large corporations. Hidden Champions are exceptionally successful midsize firms that are mostly not publicly known, yet are global leaders in their respective fields. These firms consistently excel in their markets despite strong international competition and are able to successfully adapt to continuously changing demands and new technological developments. Although the majority of Hidden Champions is located in German speaking countries (Germany, Switzerland and Austria), this type of company can also be found in different countries, on every continent. The secret behind their remarkable success has been attributed to a number of different structural and management-related factors that are surprisingly similar across different sectors and countries (Simon 2009): 1. They are often suppliers and do not provide end products visible for customers. This way, their products are not clearly distinguishable within the final product and thus remain quite unknown, except to other players in the market. 2. They handle their success with discretion, not being too keen on making their success strategies publicly known. 3. Hidden Champions are surprisingly robust and have a high survival rate over long periods of time. They are remarkably able to overcome critical business challenges, even those that might threaten their very survival. 4. They have long term (many years) strategic goals and pursue them with diligence. Long term sustainability is a high value. 5. They are characterized by above average growth, both in revenue and employees.

6. They are market leaders regarding latest innovations and the exploitation of new business opportunities. 7. The high market share of Hidden Champions is gained not through aggressive/low pricing but through superior performance (high quality, innovation, reliability, etc.). Through this, they are able to achieve good profits. 8. Predominant focus on a specific market segment and a deep value chain: depth, rather than breadth, with little diversification. 9. A large part of their revenue is generated outside their home market. Hidden Champions are strongly present in international markets and often sustain many subsidiaries abroad. The ability to make successful use of globalization is one of the main reasons for their impressive growth. 10. Hidden Champions have particularly close and long-term relationships to their customers (which are typically not too many). Their excellent reputation among their customers is the main basis for success. 11. They have a detailed, in-depth knowledge about their customer's needs and requirements. This serves as an indispensible knowledge base for continuous successful innovation. Being able to repeatedly successfully solve their customer's problems is the key to Hidden Champion's business success. 12. Hidden Champions often have a decentralized organizational structure with organizational units that encompass the entire value chain. This delegation of responsibility at the customer interface fosters closer and more in-depth customer contact. 13. The proven ability of Hidden Champions to provide customers excellent service (including system integration and system solutions) also if they are manufacturers of industrial goods, not primarily service companies - distinguishes them from their direct competitors. 14. Despite their limited resources, Hidden Champions show sustained outstanding innovation performance regarding technological, service, process, design, marketing, or business model

innovations. Technological leadership often goes hand in hand with non-technological innovations. 15. For the innovation success of Hidden Champions, the "quality of people" is more important than the "size of the budget" (Simon 2009:181). These companies rely on a small number of experts who are strongly dedicated to constantly improve the company's products and services. These individuals are considered key innovators; they hold critical knowledge and have a long history working at the company. 16. These key individuals share a common vision and strategy and are typically characterized by different departments/business functions rather than rivalry. Strong cross-functional cooperation within the company minimizes waste of time and resources. 17. Many Hidden Champions pursue the strategy of joint innovation together with customers and suppliers. Improvements are frequently developed in collaboration with external partners. 18. The most relevant competitive advantages of Hidden Champions are product quality and closeness to the customer, thus the ability to provide qualified advice to customers. They pursue a strategy based on excellence rather than low price. 19. Often regional proximity of strong competitors enhances Hidden Champion's performance. 20. Employee-related characteristics account for the strength of Hidden Champions. Employee loyalty is typically high and turnover very low, which provides a high degree of stability regarding skills and long term expertise. 21. The majority of Hidden Champions have their headquarters in rural areas. Their corporate culture is strongly shaped by this fact and is characterized by high commitment and identification, long-term orientation, loyalty and a strong bond between company and employees due to the strong mutual interdependency between them. 22. A large and increasing share of Hidden Champions' employees has higher education degrees. The knowledge level and creativity of employees is considered to play a key role for sustained business success.

These characteristics are shared by a large number of Hidden Champions and are seen to be the key for the sustained high performance of these firms. Interestingly, there is a strong affinity between the concept of knowledge angels and some of the above mentioned success factors of Hidden Champions. The strong focus on knowledge and innovation as driving competitive factors, deep regional roots and grown personal networks, as well as the importance of key innovators a small number of experts who have a long history working within the company implies that the existence of knowledge angels might be of great relevance for these companies as well. Many Hidden Champions are located in Baden-Wrttemberg. Although they are highly innovative, they do not always pursue an innovation strategy that is based on high R&D (research and development) investments. Quite many Hidden Champions are not only "hidden" in terms of the broad visibility of their business success - as convincingly pointed out by Simon - they are also "Hidden Innovators", because they manage to continuously create new and better products/services without considerable expenditures for R&D. Particularly in the region of Baden Wrttemberg, there is an agglomeration of small and medium-sized companies (SME's) that are highly innovative and successful in their markets, yet do not necessarily invest much in classical R&D. Usually, the intensity of R&D expenditures is considered to be one of the most relevant indicators for assessing the innovation capacity of firms. For a long time, research and policy have focused predominantly on the role of R&D when looking at innovation. Although performing R&D is certainly one very important way towards generating innovations, it is not the only way. A considerable number of successful firms are able to innovate without it. Their innovation competence is based instead on a mix between advanced technological process competence and deep knowledge of their market's and customer's needs .

Although they often do not perform formalized R&D at all and do not have an R&D department, their technological competence in combination with customer specific application skills enables them to repeatedly develop new products and solutions, and excel in their markets . This is also often the case in knowledge-intensive business services (KIBS). Their high "absorptive capacity" , the ability to recognize, integrate and successfully exploit new technological and market opportunities enables them to develop and implement new products and services, and/or improve their technological and organizational processes in a way that creates added value for customers. Another facet of Hidden Innovator's success is their superior management performance , in terms of being able to bring together and make use of knowledge which is also emphasized strongly in Simon's work on Hidden Champions (Simon 2009). Beispiele Simons hidden champions are mainly originating from mature industries (industrial machinery, transportation, automotive, ICT), and many hidden champions from CEE are also placed in these areas, as well as in metallurgy and energy sectors. Die Graphische Darstellung presents the distribution of hidden champions from CEE, along the main industrial sectors.

Exhibit 2: Industries of hidden champion companies in CEE. Though hidden champions from CEE, all pursue the strategy of focused differentiation and try to create growth through international expansion, they exhibit many nuances in their strategic behaviours. The companies are mainly focused on narrow customer groups where they are able to create superior customer value than their competitors. Some are competing also on other dimensions like lower costs, economies of scale, or fast imitation. Most of the hidden champions innovate extensively and successfully, but invest much higher portion of revenues into R&D activities, and their innovation activity is intensive in both, products and processes. Deliberate innovations in business models are only a few. It is estimated that many of the hidden champions could succeed even more if they would design their business models better, especially in respect of company value propositions and revenue stream optimization. Here, business educators can help a lot by offering appropriate learning programs.

Many of the hidden champions are distinctive technological leaders - they have technologically superior products, yet this superiority is not well reflected in the market share by revenue. However, stated technological leadership is a good indicator of companys competitive strength, and technological leadership is expected to positively influence the company market share (measured by revenues) in subsequent years. Growth through internationalization (building global sales and distribution systems) combined with intensive R&D activity is financially demanding, and quite a few hidden champions expressed dissatisfaction with the available financing mechanisms. Here, financial investors, as well as national governments and international economic institutions should re-think the financial solutions for hidden champions. The majority of the companies (especially those set up after 1990s) are led by strong entrepreneurial founders who possess brave vision, a lot of passion for technology, great expert knowledge, and strong international networks. In addition to that, these leaders are also strong community builders. In particular, they are capable of building close ties with their employees, customers, suppliers, global research centres, educational institutions, and local community. Next to that, they are also very effective in building international management and supervisory boards that can best serve the interests of the company as well as other stakeholders. A first analysis of the nature of competitive advantage among CEE hidden champions shows a lot of diversity. The advantage can be found in quality of products and business models, labour costs, tradition, leadership, customer orientation, expert knowledge, barriers for new entries, supreme technology, partnerships, innovative power, design, market knowledge, etc. However, the most frequently mentioned are technology (knowledge), innovative power, quality of products, tradition, motivated and qualified staff, market knowledge, and customer relations. Among the success lessons, there are more than a hundred elements mentioned, showing again the variety of organisations in product, concept, maturity and environment. The items vary from creating peace and security to the leader has to be a dreamer. Some of the most important reasons for success are seen in knowing your core consumers/clients (working and designing together with them, learning from them), application of innovative solutions, quality focus, unique customer value proposition, strong and visionary leadership, employees as the main asset (training, trust, respect), partnerships (networks, joint ventures), and investing in R&D. Further

research and analysis will give more information on the impact of and the relation between these elements. However, the majority of studied hidden champions is still in adolescence stage, critical formative years when one can easily succeed as well as derail. As with people in this critical stage of life, the difference between those who fail and those who succeed lies usually in learning. Hidden-Champions aus CEE: Albania: Amla, Mare Adriatica, Venice Art, Xherdo. Belarus: STiM. Bosnia and Herzegovina: Alma Ras, Bekto Precisa, Feal, Invento Media Group, Lumen, Plastex, Prevent Leather, irbegovi Group, Turbina. Croatia: Bodren, DOK-ING, Durante m2. Czech Republic: 2N Telekomunikace, Adastra Group, Bochemie, Elephant Orchestra, Linet, Pixmac, Y Soft, Zoom International. Estonia: Eesti Energia (Enefit), Kivili Keemiatstus, Krimelte, Molycorp Silmet, Playtech Ltd / Playtech Estonia, Tallink Grupp, lo Pullisaar FIE (Jrveotsa Vutifarm), Viru Keemia Grupp (VKG), Wendre. Hungary: CASON, CycloLab, Energotest, Krt. Latvia: A Boards, Aerodium, BLUE Microphones, MADARA Cosmetics, Mammu. Macedonia: Ading, Konti-hidroplast, Mikrosam,Vipro. Poland: ADB, Ammono, Asseco, Axtone, Black-Red-White, Can-Pack, Canpol, City Interactive, Codility, Cynel, DGS, Fakro, Gamet, HTL-STREFA, JAAN NordGlass, Kler, Koelner, Kopex, Lumel, Mago, Maspex, MedicAlgo, Merida, Morpol, Nepentes, Nowy Styl, Optopol, PESA , Psiloc, Roleski, Selena, Snip.pl., Solaris, Tele-Fonika Kable, Tanssystem, Telesto, TZMO, VTS, WATT,X-trade Brokers. Romania: Electra Group, Gliga, Grapefruit. Russia: ABBYY, Acron, Bask, Chelyabinsk Zinc Plant, Grishko, Isotope, -Soft, Kaspersky Lab, Luxoft, Materia Medica Holding, Moscow ship-building and ship-repair factory, Nanotechnology MTD, Novikov Group, NTO IRE-Polus (Photonics), Parallels,

PetrovaksPharm, Pharmstandard, Rosatom, Roschimzaschita, Russian Helicopters, Saranskcable, Sitronics, SKIF-M, Technonicole, Transas, Tyumen Accumulator plant, VEMZ Vladimirskiy Electromotive Plant, VSPO-AVISMA, Yandex Serbia: Copper Mill Sevojno, DUOCHEM, EXECOM, Novkabel, PlusPlus New Technologies, Prvi Partizan, RT-RK, ACE enterprise, Drevodomy Rajec, Eset, Grand power, Media Control, Kvety.sk, Spinea, Sygic. Slovenia: Akrapovi, Atech, Bia Separations, BISOL Group, Europlus (NiceLabel), Genelitik (LifeGenetics), GenePlanet, Hidria, Instrumentation Technologies, Metrel, Optotek, Pipistrel, Seaway Group, Studio Moderna, Tajfun.. Ukraine: Eleks Software, Kakhovka plant of electric welding equipment (KZESO), PocketBook International, Ukrainian Beer Company (UBC Group), Weidmann Malyn Paper Mill. 4.Schlussfolgerung It has become clear that goals and their consistent implementation play a central role in the strategy and development of the hidden champions. The following aspects should be kept in mind: Growth and market leadership are the dominant goals of the hidden champions. These goals are often extremely ambitious and are formulated early. Entrepreneurial flexibility is not sacrificed in the pursuance of these goals. In the last ten years, the revenues generated by the hidden champions have more than doubled, with growth rates surprisingly similar across companies of different sizes. In this way, numerous midsize firms have become revenue-billionaires, (i.e., their revenues exceed $1 billion). The claim to market leadership is not confined to market share but includes performance attributes such as technology, innovation, quality, and reputation. Market leadership is more than just market share. Absolute market shares have increased in comparison over the last ten years, which is astonishing in view of fast-growing world markets. In addition, even the relative market shares increased strongly, and the hidden champions have become significantly more competitive in their respective markets.

 The hidden champions earn their market shares by superior performance and not through aggressive pricing. These good market shares are fully consistent with the profit target. Communication of the goals is generally clear and unequivocal. Strategy implementation is characterized by persistence. The will to be or become number one never ends. The goals are long-term and extend over generations rather than quarters. Long-term goals give a company great strength. However, shortterm necessities must not be neglected. Great successes always start with ambitious goals. The hidden champions of the twenty-first century pursue above all growth and market leadership goals. These goals provide a joint sense of direction and motivate employees. It is essential that the goals are effectively communicated and lived. The hidden champions have realized their visions in the last ten years with long-term orientation, persistence, and never-ending energy and in doing so have grown into new dimensions. They have improved their market positions relative to their strongest competitors. They teach us what is possible in the age of globalization. In this way, they can be shining examples for many other companies.

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