Vienna, November 19, 2009
Hidden Champions of the 21st Century
Role Models of Druckerian Leadership
Prof. Dr. Hermann Simon
1st Global Peter Drucker Forum
Vienna Office
Rotenturmstr. 16-18/301, A-1010 Vienna
Tel. +43/1/512 29 79-0, Fax +43/1/512 29 79-99
e-mail: [email protected]
Internet: www.simon-kucher.com
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What is “Druckerian Leadership”?
Leadership based on concrete values:
Closeness to customer
Loyalty of employer and employee
Long-term orientation/continuity
Clear vision/purpose
Creation of new value: Innovation
Exemplary conduct of leaders
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Where do we find these values?
In large corporations?
In small/mid-sized companies?
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• China
• USA
• Japan
Who is no. 1 in exports?
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Exports in 2008 (billion US-$)
Source: 2009 CIA World Factbook
109
146
163
190
458
462
469
471
538
566
630
777
1377
1429
1463
Hungary
Czech Republic
Austria
Poland
Korea
Canada
United Kingdom
Russia
Netherlands
Italy
France
Japan
USA
China
Germany
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Exports 2000-2008 (US-$ billion)
1.428
762
438
593
1.220
972
1.463
1.322
1.109
971
910
752
1.377
1.037
1.148
904
819
725
400
600
800
1.000
1.200
1.400
1.600
2003 2004 2005 2006 2007 2008
Source: WTO Trade Statistics
in billion US-$
Germany
China
USA
Year
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What is a Hidden Champion?
Top 3 in the world or no. 1 on its continent
Revenue below 3 billion €
Not well known in general public
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Hidden Champions
Delo
Baader
Brainlab
Lantal
Jungbunzlauer
Tetra
Belfor
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Key facts of 1200 Hidden Champions
1 million new jobs in last ten years
Annual growth of 10% p.a., revenue 2.5 times
larger than 10 years ago
More than 100 new €-revenue billionaires
Sharp increase of world market share
Massive wave of innovation
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Why are the Hidden Champions successful?
How do they differ from large firms?
What can we learn from them?
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Goals
Peter Drucker:
“Every enterprise requires simple, clear and
unifying objectives. The goals have to be clear,
public and often reaffirmed to provide a common
vision. What we really mean by this is the
commitment throughout an enterprise to common
objectives and common values. Management‟s job
is to think through, set and exemplify those
objectives, values and goals.”
Source: Peter F. Drucker, Management and the World’s Work, Harvard Business Review, 66, September 1988, p. 76.
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Chemetall
“The goal of Chemetall is the worldwide
technology and marketing leadership.”
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3B Scientific
“We want to become
and stay no. 1 in the world.”
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Market share of Hidden Champions
Relative
market share
Absolute
market share
1.56
10 years ago
2.3433.0%30.2%World
TodayToday10 years ago
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GrowthMid-sized Hidden Champions
CronimetClaasEnercon
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1995 2008
Re
ve
nu
es
in
US
D m
illio
n
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GrowthSmall Hidden Champions
Rational
Brainlab
Bartec
0
100
200
300
400
500
600
1995 2008
Re
ve
nu
es
in
US
D m
illio
n
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Lesson 1
Success always begins with ambitious goals. The
Hidden Champions of the 21st century go for growth
and market leadership. This is the fuel that drives
them forward.
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Focus and depth
Peter Drucker:
“To know one‟s strengths, to know how to improve
them, and to know what one cannot do.”
“The single-minded ones are the only true
achievers. They carry out a „mission‟. Whenever
anything is being accomplished, it is being done
by a monomaniac with a mission.”
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Uhlmann
“We always had one customer and will only
have one customer in the future: the
pharmaceutical industry –
we only do one thing, but we do it right.”
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Flexi
“We will do only one thing,
but we do it better than anyone else”
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Deep instead of broad: A focused strategy
The case of Winterhalter
Dishwashers
for
Hospitals
Dishwashers
for
Schools
Dishwashers
for Hotels/
Restaurants
Dishwashers
WaterConditioners
Detergents
Service
Dishwashers
for
Companies
Dishwashers
for
Organisations
Broad
D
e
e
p
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Deep value chain
No outsourcing of core competencies
Strong outsourcing of non-core activities
Own machine shops
Very secretive in R&D
Avoidance of strategic alliances
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Lesson 2
Only focus and concentration lead to world class.
The Hidden Champions see the market definition as
part of their strategy. They are highly focused and
deep rather than broad.
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Globalization
Peter Drucker:
“Every institution in the knowledge society has to
be globally competitive.”
“There is only one economic unit, the world.”
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- Specialization in product und know-how -
Global selling and marketing
The Hidden Champions strategy
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Globalization has only just begun
1900 1950 1980 2000 2007
6 23
437
Word exports per capita (US-$)
985
2150
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Founding year of subsidiaries
Nu
mb
er o
f su
bsid
iarie
s
Globalization: KaercherWorld leader in high pressure water cleaners
61 subsidiaries since 1962
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Lesson 3
The Hidden Champions combine specialization in
product and know-how with global selling and
marketing. Globalization is the growth booster for
them. They serve the target markets through their
own subsidiaries.
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Marketing and innovation
Peter Drucker:
“Business has only two functions: Marketing and
innovation.”
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Innovation
Peter Drucker:
“If innovation does not aim at leadership from the
beginning, it is unlikely to be innovative enough.”
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R&D as % Index
of revenue
Industrial firms with R&D 3.0% 100
Booz (Global Top 1000 in R&D) 4.2% 120
Hidden champions 6.0% 200
R&D intensity
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Patents per Cost per patent
1,000 employees in 1,000 $
Patent-intensive
large corporations 5.8 3,717
Hidden champions 30.6 725
Patents
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Driving forces of innovation
Large corporations Hidden Champions
market technology market &
technology
market technology market &
technology
19
31
50
65
14
21%
%
%
%
%
%
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Marketing/closeness to customer
Peter Drucker:
“Marketing is the whole business seen from the
customer‟s point of view.”
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Marketing/closeness to customer
Closeness to customer is seen as the greatest
strength (88.7%)
Five times as many employees (25-50%) have
regular customer contacts compared to large
companies (5-10%)
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Value and pricing
Strategies are value-driven, not price-driven
Price premium 10-15%
Avoidance of price wars
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Competitive advantages
Peter Drucker:
“Any institution has to measure itself against the
standards set by each industry‟s leaders anyplace
in the world.”
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Competitive advantages of the Hidden Champions
Competitive performance
Importance
weaker strongerthan the strongest competitor
Product quality
Price
Economy
Closeness-to-Customer
Systems Integration
Advice
Service
Punctuality
Flexibility
Advertising
Distribution
Cooperation with suppliers
Made in Germany
Patents
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Lesson 4
The Hidden Champions are highly innovative and
very close to their customers. They hold strong
competitive positions. They deliver true value to
their customers.
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Family businesses
Peter Drucker:
“The majority of businesses everywhere are
family-controlled and family-managed.”
70% of the Hidden Chmapions are family-owned.
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On profit
“A company behaves socially responsible if it
makes profit.”
Heinz Dürr
German Hidden Champion-entrepreneur
Return on equity: 13.6%
Equity ratio: 41.9%
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Employees
Peter Drucker:
“The basic task of management is to make people
productive.”
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Employees
“More work than heads”
High performance cultures
High qualification
Low turnover
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Higher qualification
10 years ago Today
University
graduates (%)
8.5%
19.1%
In the last ten years, the share of university graduates has more than
doubled.
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Turnover rates
2,7%
5,3%
7,3%
8,8%
9,0%
15,0%
Austria
Switzerland
Daimler
Hidden
champions
Germany
Source: Hernstein-Institut/US Department of Labor
9.0%
8.8%
7.3%
5.3%
2.7%
USA 30.6%
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Leaders
Identity of mission and being
Leadership
- authoritarian in the principles
- participative, flexible in the details
Young into power
More women in top positions
High continuity (average CEO tenure 20 years)
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Lesson 5
The ultimate secret of the Hidden Champions‟
success lies in their leaders. They lead
authoritarian in the principles, but flexible in the
details. Young CEOs and women play a more
important role than in large companies. Continuity
is very high.
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The three circles of the Hidden Champions
Focus
Leader-
ship with
ambitious
goals
Closeness to
customer
Co
mp
etitiv
e
ad
van
tag
es
Glo
bal
ori
en
tati
on
High performance employees
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The ultimate lesson
The “Hidden Champions of the 21st Century”
go their own ways
– more decisively and successfully than ever.
They are true role models of leadership in
the best sense Peter Drucker had in mind.
More on hermannsimon.com
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The new book