Hidden champions are relatively small but highly successful companies that are concealed behind a curtain of inconspicuousness, invisibility, and sometimes secrecy. The term was coined by Hermann Simon. He first used the term as a title of a publication in a scientific German management journal, describing the small, highly specialized world-market leaders in Germany. According to his definition, a company must meet three criteria to be considered a hidden champion: * Number one, two, or three in the global market, or number one on the company's continent, determined by

market share Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a ...

Revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...

below $5 billion * Low level of public awareness

Discovering hidden champions

The first English book about the subject was Hermann Simon's ''Hidden champions: lessons from 500 of the world's best unknown companies''. The book explores how Germany was able to consistently be (at the time) the number one exporter in the world. While Germany has global corporations like

Volkswagen Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...

Siemens Siemens AG ( ) is a German multinational conglomerate corporation and the largest industrial manufacturing company in Europe headquartered in Munich with branch offices abroad. The principal divisions of the corporation are ''Industry'', '' ...

BASF BASF Societas Europaea, SE () is a German multinational corporation, multinational chemical company and the List of largest chemical producers, largest chemical producer in the world. Its headquarters is located in Ludwigshafen, Germany. The ...

and Bosch, these organisations are not substantially different from organisations like

Ford Ford commonly refers to: * Ford Motor Company, an automobile manufacturer founded by Henry Ford * Ford (crossing), a shallow crossing on a river Ford may also refer to: Ford Motor Company * Henry Ford, founder of the Ford Motor Company * Ford F ...

, GE,

DuPont DuPont de Nemours, Inc., commonly shortened to DuPont, is an American multinational chemical company first formed in 1802 by French-American chemist and industrialist Éleuthère Irénée du Pont de Nemours. The company played a major role in ...

Visteon Visteon Corporation (VC) is an American global automotive electronics supplier and Fortune 500 company spun off from the Ford Motor Company in 2000. Visteon is composed of multiple businesses that design, engineer, and manufacture vehicle cockpit ...

. Simon postulates that Germany's strong exports are supported by a large number of midsize firms. These smaller companies are normally known only in their market by their customers and suppliers, and are relatively unknown to the wider public. When these companies are very successful on the international markets they are hidden champions. Simon conducted detailed research on 500 such companies and established a framework to describe them. The framework was also able to identify the main differences and traits common to hidden champions. With this framework in hand it was found that there are hidden champions everywhere around the world, but they are most frequently found in German speaking countries.

Success factors

Most of the hidden champions produce inconspicuous products. In the market for these products they are the top producer in the world. Often, but not always, these companies are family owned. They export most of their products, and so contribute significantly to the current account of their countries, and are more successful than the average. The idea of market leadership means more than counting market share. Leaders as employees need an "inner flame" to become, and to remain, the number one. Hidden champions normally work in

niche markets A niche market is the subset of the market on which a specific product is focused. The market niche defines the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that it ...

. For these markets they design unique products, which are produced with a high real net output ratio. They have to accept the risk of being a single product manufacturer. They divide between "good" and "bad" market share. The good is earned by performance and a solid foundation, the bad from price aggression and discounting. One result of working with unique products in niche markets is quite often the need to deal on the global market in order to achieve

economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...

. For this reason, hidden champions feel a strong need to work abroad early in their company's development. Hidden champions also operate extremely close to their customers, and their customers' needs are an important driver for their innovations. On the other hand, customers of hidden champions depend on their products and they cannot easily change their source. This often makes for a high level of co-dependence between the producer and the customer, a result of the one product risk. A lot of the hidden champions established their main product as an innovation and were able to keep this single position in the market, or were at least able to keep a leading position. Their markets are mostly

oligopolistic An oligopoly (from Greek ὀλίγος, ''oligos'' "few" and πωλεῖν, ''polein'' "to sell") is a market structure in which a market or industry is dominated by a small number of large sellers or producers. Oligopolies often result fro ...

with intense competition. Competitive advantages of hidden champions are rarely because of

cost leadership In business strategy, cost leadership is establishing a competitive advantage by having the lowest cost of operation in the industry. Cost leadership is often driven by company efficiency, size, scale, scope and cumulative experience (learning cu ...

, more because of quality,

total cost of ownership Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or service. It is a management accounting concept that can be used in full cost accounting or even ecolog ...

, high performance, and consultation close to the customer. They "earn" their market leadership through performance and not through price aggression. Their high real net output ratio is often achieved by working with proprietary processes which make it hard for competitors to imitate their products. On the other hand, management tasks like finance are often outsourced. It also seems to be evident that to maintain market leadership hidden champions do business on their own, rather than depend on working in cooperation with others. Even sales in countries abroad are often organized from the parent company base. This keeps significant know-how inside, and helps recruit highly qualified staff at a small company. The corporate culture of hidden champions is distinctive. Their values are conservative: hard work, strict selection, intolerance of underperformance, low sickness rates and high employee loyalty — and most are based in smaller towns. Leadership style is authoritarian on strategic issues but participative on operations level. The leaders identify themselves with the company, are focused on their products, and stay for a long time, much longer than is normal in large public corporations. A serious problem for hidden champions, as it is for

SMEs Superconducting magnetic energy storage (SMES) systems store energy in the magnetic field created by the flow of direct current in a Superconductivity, superconducting coil which has been Cryogenics, cryogenically cooled to a temperature below ...

in general, is to attract international professionals. Hidden champions need people who are happy to live in a remote location, who are attracted by job content, and who do not care much for a formal and prescribed career path. In Germany the concept of ''hidden champion'' is known to some extent, and therefore hidden champions there are able to utilise this label to recruit staff. In 2011, the first "Hidden Champions Day" was organized by the student initiative bdvb e.V. at the

University of Mannheim The University of Mannheim (German: ''Universität Mannheim''), abbreviated UMA, is a public research university in Mannheim, Baden-Württemberg, Germany. Founded in 1967, the university has its origins in the ''Palatine Academy of Sciences'', ...

in order to promote the advantages and opportunities of working for a

SME SME may refer to: Economics * Small and medium-sized enterprises * Socialist market economy, an economic system of China Organizations Music * SME Limited, UK audio turntable manufacturer * Sony Music Entertainment, US * Spontaneous Music Ensembl ...

Lessons to be learned from hidden champions

Hidden champions provide a best practice example. While a lot of business is local, it can be a goal to become the number one on such a local market. Also large companies may find some interesting lessons about international management. Hidden champions teach that exceptional management means doing small things better than the competitors instead of managing only one great thing. Simplicity in processes and organizational structures is another lesson. Investors may find determined, clearly focused, continuously successful companies. The idea and adaptation of hidden champions was implemented in a fund called Hidden Champions Fund, founded in Singapore by 8I Holdings Ltd.

List of selected hidden champions

This list of companies selected by Hermann Simon in 2009 gives an idea of what hidden champions are: * 3B Scientific (anatomical teaching aids) * ARCITECTA (data management platform) *

ARRI The Arri Group () is a German manufacturer of motion picture film equipment. Based in Munich, the company was founded in 1917. It produces professional motion picture cameras, lenses, lighting and post-production equipment. Hermann Simon menti ...

(cinema cameras) *

Belfor Belfor is a multinational corporation that sells recovery and restoration services, for the purpose of restoring structures damaged as a result of fires, floods, and natural disasters. Ownership history Belfor begins as Quality Awnings & Con ...

(removal of fire and water damages) *

Beluga Shipping Beluga Shipping was a German heavy-lift shipping company in the Hanseatic city of Bremen. It was a world market leader in heavy-lift shipping and also highly innovative in related fields. As such, it was the first to equip ships of its fleet wi ...

(

heavy-lift An airlift is the organized delivery of supplies or personnel primarily via military transport aircraft. Airlifting consists of two distinct types: strategic and tactical. Typically, strategic airlifting involves moving material long distanc ...

shipping company; insolvent) *

Bobcat Company Bobcat Company is an American-based manufacturer of farm and construction equipment. Its American headquarters is in West Fargo, North Dakota, formerly in Gwinner, North Dakota. Its European headquarters moved in 2017 from Waterloo, Belgium, to ...

(farm and construction equipment) *

Brainlab Brainlab is a privately held German medical technology company headquartered in Munich, Bavaria. Brainlab develops software and hardware for radiotherapy and radiosurgery, and the surgical fields of neurosurgery, ENT and craniomaxillofacial, ...

(medical software and hardware) *

Corticeira Amorim Corticeira Amorim S.G.P.S., S.A., is a Portuguese subholding company belonging to the Amorim Group and claims to have been the world leader in the cork industry for over 130 years, with operations in hundreds of countries all over the world. Co ...

(cork products) *

De La Rue De La Rue plc (, ) is a British company headquartered in Basingstoke, England, that designs and produces banknotes, secure polymer substrate and banknote security features (including security holograms, security threads and security printe ...

(security printing, papermaking and cash handling systems) * DELO Industrie Klebstoffe (adhesives for chip cards) *

Embraer Embraer S.A. () is a Brazilian multinational aerospace manufacturer that produces commercial, military, executive and agricultural aircraft, and provides aeronautical services. It was founded in 1969 in São José dos Campos, São Paulo, where i ...

(regional jets) * Dickson Constant (technical textiles for blinds, truck sheeting etc.) *

Enercon Enercon GmbH is a wind turbine manufacturer based in Aurich, Lower Saxony, Germany. It has been the market leader in Germany since the mid-1990s. Enercon has production facilities in Germany (Aurich, Emden and Magdeburg), Brazil, India, Canada, ...

(wind turbines) * EOS GmbH (

rapid prototyping Rapid prototyping is a group of techniques used to quickly fabricate a scale model of a physical part or assembly using three-dimensional computer aided design (CAD) data. Construction of the part or assembly is usually done using 3D printin ...

systems) *

Essel Propack EPL Limited (formerly Essel Propack Limited) is a global tube-packaging company owned by The Blackstone Group headquartered in Mumbai, India. It is a specialty packaging manufacturer of laminated plastic tubes for the FMCG and Pharma space. In ...

(tubes for toothpaste) * Friwo Gerätebau GmbH (charging devices, power supplies, led drivers, battery packs) * Josef Gartner GmbH (facades for skyscrapers, subsidiary of

Permasteelisa Permasteelisa S.p.A. is an Italian company in engineering, project management, manufacturing and installation of architectural envelopes and interior systems. In 2011, Permasteelisa was acquired by Japanese Lixil Group for €575 million. In 2020 ...

) * Gallagher Group Limited (electric fencing, livestock, weighing equipment) * Hans Gerriets (single manufacturer of large stage curtains) *

Hamamatsu Photonics is a Japanese manufacturer of optical sensors (including photomultiplier tubes), electric light sources, and other optical devices and their applied instruments for scientific, technical and medical use. The company was founded in 1953 by Hei ...

(optical sensors including

photomultiplier tubes Photomultiplier tubes (photomultipliers or PMTs for short) are extremely sensitive detectors of light in the ultraviolet, visible, and near-infrared ranges of the electromagnetic spectrum. They are members of the class of vacuum tubes, more speci ...

) *

Heraeus Heraeus is a German technology group with a focus on precious and special metals, medical technology, quartz glass, sensors and specialty light sources. Founded in Hanau in 1851, the company is one of the largest family-owned companies in German ...

Electro-Nite (measurement, monitoring and control of molten metal processes) * HiFi-Tuning (developing, engineering of finest fuses, out of pure silver and gold) *

Höganäs AB Höganäs AB is a Swedish multinational based in Höganäs. It is the world's largest producer of powdered metals. It develops and markets powders for customers in metallurgical industries. The company's portfolio of products and services includ ...

( powdered metals) *

International SOS International SOS is a health and security services firm. The company takes around 4 million assistance calls every year and has close to two-thirds of the Fortune Global 500 companies as clients. Services International SOS focuses on helping ...

(medical assistance, health-care, security and risk management services) *

Jamba! Jamba (formerly Jamba!) was a German company, operating under the name Jamster in China, Armenia, Georgia, Saudi Arabia, Iran, Oman, France, Kuwait, Turkey, Switzerland, Kazakhstan, Austria, Brazil, Israel, United Arab Emirates, United Kingdom ...

/Jamster (cell phone ring tones) * Austrian Jungbunzlauer (

sodium acetate Sodium acetate, CH3COONa, also abbreviated Na O Ac, is the sodium salt of acetic acid. This colorless deliquescent salt has a wide range of uses. Applications Biotechnological Sodium acetate is used as the carbon source for culturing bacteria ...

) *

Klais Orgelbau Orgelbau Klais is a German firm that designs, builds and restores pipe organs. It is a family run company, founded in 1882 by Johannes Klais senior and is now run by his great-grandson Philipp Klais. The firm is based in Bonn, Germany, and has co ...

(large organs) * Swiss Lantal Textiles (cabins for passenger aircraft) *

McIlhenny Company McIlhenny or McElhenny is an Irish surname commonly found in Donegal and Derry. They are a Sept of the Cenel Eogain race, son of Niall high king of Ireland. In Gaelic the name translates "servant of Saint Canice". Notable people with the surname in ...

(

Tabasco sauce Tabasco is an American brand of hot sauce made from vinegar, tabasco peppers (''Capsicum frutescens'' var. ''tabasco''), and salt. It is produced by McIlhenny Company of Avery Island in south Louisiana, having been created over 150 years ago by ...

) * Molex (electronic components, including electrical and

fiber optic An optical fiber, or optical fibre in Commonwealth English, is a flexible, transparent fiber made by drawing glass (silica) or plastic to a diameter slightly thicker than that of a human hair. Optical fibers are used most often as a means to ...

) *

NetJets NetJets Inc. is an American company that sells fractional ownership shares in private business jets. Founded as Executive Jet Airways in 1964, it was later renamed Executive Jet Aviation. NetJets became the first private business jet chart ...

(

fractional ownership Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, usually a jet, yacht or piece of resort real estate. It can be done for strictly monetary reason ...

and

rental Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for al ...

of private

business jets A business jet, private jet, or bizjet is a jet aircraft designed for transporting small groups of people. Business jets may be adapted for other roles, such as the evacuation of casualties or express parcel deliveries, and some are used by pub ...

) * Nissha Printing (small touch panels) *

Nivarox Nivarox, also known as Nivarox - FAR SA is a Swiss company formed by a merger in 1984 between Nivarox SA and Fabriques d' Assortiments Réunis (FAR). It is currently owned by the Swatch Group. Nivarox is also the trade name of the metallic alloy fro ...

(regulating mechanism inside wristwatches) * Nordischer Maschinenbau Rud. Baader (supplier of fish processing systems) * Omicron NanoTechnology (scanning probe and tunnel-grid microscopes) *

Orica Orica Limited () is an Australian-based multinational corporation that is one of the world's largest providers of commercial explosives and blasting systems to the mining, quarrying, oil and gas, and construction markets, a supplier of sod ...

(industrial

explosives An explosive (or explosive material) is a reactive substance that contains a great amount of potential energy that can produce an explosion if released suddenly, usually accompanied by the production of light, heat, sound, and pressure. An expl ...

) *

PERI GmbH In Persian mythology, peris (singular: peri; from fa, پَری, translit=parī, , plural , ; borrowed in European languages through ota, پَری, translit=peri) are exquisite, winged spirits renowned for their beauty. Peris were later ado ...

(formwork and scaffolding) *

Petzl Petzl is a French manufacturer of climbing gear, caving gear, work-at-height equipment, and headlamps based in Crolles (near Grenoble), France. The company was created by the cave explorer Fernand Petzl in the mid-1970s. Their three specialtie ...

(climbing gear, caving gear, work-at-height equipment) *

Phoenix Contact Phoenix Contact, headquartered in Blomberg, Ostwestfalen-Lippe, Germany, is a manufacturer of industrial automation, interconnection, and interface solutions. The company develops terminal blocks, relays, connectors, signal conditioners, power s ...

(terminal blocks, connectors, interface solutions, industrial automation) *

PLANSEE Plansee is a lake in Reutte District, Tyrol, Austria, located at . Its surface is approximately 2.87 km² and its maximum depth is 78 metres. It lies on Austrian Federal Highway B 179, which crosses the Ammersattel into Germany. History ...

(high performance materials) *

Q-Cells Hanwha Q Cells (commonly known as simply Q CELLS) is a major manufacturer of photovoltaic (PV) solar cells. The company is headquartered in Seoul, South Korea, after being founded in 1999 in Thalheim, Germany, where the company still has its eng ...

(solar energy, solar cells) *

Radiall Radiall is a company that designs, develops, and manufactures connectors and associated components for use in electronic applications. The company offers interconnect components, including radio frequency/coaxial connectors and cable assemblies, a ...

(electronic interconnect components) *

Sachtler Sachtler is a manufacturer of film and video camera support products and reporter lighting equipment. The company was founded in 1958 and was bought by the United Kingdom's Vitec Group (now Videndum) in 1995. History Wendelin Sachtler was a cine ...

(tripods for movie cameras) * SAES Getters (

Getter A getter is a deposit of reactive material that is placed inside a vacuum system to complete and maintain the vacuum. When gas molecules strike the getter material, they combine with it chemically or by . Thus the getter removes small amounts of ...

producer) *

Sappi Sappi Limited, originally incorporated as ''South African Pulp and Paper Industries Limited'' in 1936, is a South African pulp and paper company with global operations. Products and operation South African Pulp and Paper Industries Limite ...

(coated fine paper) * Schwank (industrial heating) * SGS,

Société Générale de Surveillance SGS (formerly Société Générale de Surveillance (French for ''General Society of Surveillance'')) is a Swiss multinational company headquartered in Geneva, which provides inspection, verification, testing and certification services. It has ...

(inspection, verification, testing and certification services) * Tandberg and

Polycom Poly, formerly Polycom, a part of HP Inc., is an American multinational corporation that develops video, voice and content collaboration and communication technology. Polycom was co-founded in 1990 by Brian L Hinman and Jeffrey Rodman. In 2018 ...

(

videoconferencing Videotelephony, also known as videoconferencing and video teleconferencing, is the two-way or multipoint reception and transmission of audio signal, audio and video signals by people in different locations for Real-time, real time communication. ...

systems) * O.C. Tanner (

employee recognition Employee recognition is the timely, informal or formal acknowledgement of a person's behavior, effort, or business result that supports the organization's goals and values, and exceeds his superior's normal expectations. Recognition has been held to ...

programs) *

Technogym Technogym is a company selling equipment and digital technologies for fitness, sport and health based in Cesena, Italy. Technogym has been Official Supplier to eight Olympic Games including the Tokyo 2020 games. The company was founded in 1983 by ...

(fitness equipment) *

Tetra Terrestrial Trunked Radio (TETRA; formerly known as Trans-European Trunked Radio), a European standard for a trunked radio system, is a professional mobile radio and two-way transceiver specification. TETRA was specifically designed for use by go ...

(aquarium and pond supplies) * ULVAC Technologies (vacuum technology) * Universo S.A. (wristwatch hands) * W.E.T. (car seat heating) *

Webasto Webasto SE is a company based in Stockdorf, Germany which makes sunroofs, electric-car chargers and air-conditioning systems. Holger Engelmann is the CEO of the company. History Coronavirus outbreak Webasto owns 11 locations in China, in ...

(remote-controlled heaters for cars) * Worldwide.energy (green energy) *

Zimmer Holdings Zimmer Biomet is a publicly traded medical device company. It was founded in 1927 to produce aluminum splints. The firm is headquartered in Warsaw, Indiana, where it is part of the medical devices business cluster. In 2001, Zimmer was spun off f ...

DePuy DePuy Synthes () is a franchise of orthopaedic and neurosurgery companies. Acquired by Johnson & Johnson in 1998, its companies form part of the Johnson & Johnson Medical Devices group. DePuy develops and markets products under the Codman, DePuy ...

Biomet Biomet, Inc., was a medical device manufacturer located in the Warsaw, Indiana, business cluster. The company specialized in reconstructive products for orthopedic surgery, neurosurgery, craniomaxillofacial surgery and operating room supplies. In ...

, and

Stryker Corporation Stryker Corporation is an American multinational medical technologies corporation based in Kalamazoo, Michigan. Stryker's products include implants used in joint replacement and trauma surgeries; surgical equipment and surgical navigation system ...

(all implants, and located in the area of

Warsaw, Indiana Warsaw is a city in and the county seat of Kosciusko County, Indiana, United States. Warsaw has a population of 13,559 as of the 2010 U.S. Census. Warsaw also borders a smaller town, Winona Lake. Etymology Warsaw, named after the capital of P ...

)

References

External links

Whiteboard: guest article by Prof. Hermann Simon on the 13 management principles behind Hidden Champions, Dec. 2012

Whiteboard: guest article by Prof. Hermann Simon on the socio-economic factors that shaped the 'Hidden Champions', Jan. 2013
*The Korea Times

* ttps://web.archive.org/web/20110326135955/http://sciblogs.co.nz/stick/tag/hidden-champions/ High cost Germany shows how to succeed in exporting 11-01-31
Benchmarking and Hidden Champion to promote local development : Tools description and their application
Types of business entity