Unconventional role models of strategy, leadership and fun

“Hidden champions“ are highly successful companies that the general public does not know about, but that are global market leaders in their area of activity. They focus on doing one small thing well with passion, not on managing complex processes; they do not compromise on principles, but are flexible in execution; they are innovative, tightly connected with their customers and retain lean organizations with high loyalty. They can teach us about strategy, leadership and fun.

It is usually the big companies that are in the media and economic reporting spotlights; they are well known and respected by the general public and constantly studied by management, strategy and leadership experts who look for learning’s to reapply. Yet there is an abundance of highly successful companies, vastly ignored by the public and seldom the subject of economic analysis, that achieve enormous success in their field in ways that significantly differ from most well know corporate standards.

Such “hidden champions” were first identified in the US by Harvard Professor Theodore Levitt (the one who also coined the term “globalization) and they were then thoroughly researched in Germany by Hermann Simon1 .

Typical “hidden champions” can be described as relatively small family-owned enterprises, that work with unique (innovative) products in small niche sectors, reach out to the global market for reasons of economic scale, gain and hold market leadership for reasons of quality and value superiority rather than for a cost advantage and are characterized by a lean organization, simple processes, focus and an “inner flame” at both leadership and employees level. By definition, “hidden champions” depend on tight relationships, a sort of co-dependence, with their customers.

At a recent Harvard conference – “Venture Investing in Germany“ – Dr. J, Friedrich reported how hidden champions were the foundation of Germany’s stability during the economic crisis and how their investments in innovation produced 8.8% growth and 33% increase in employment, pointing at the impotance for Europe to encourage and invest in these small innovative and global businesses.

What can we learn from hidden champions? According to Simon there are seven factors divided in three groups. I personally like to read the groups using Simon Sinek’s coding of WHY/HOW/WHAT.

At the core of the winning approach there is the WHY: the ambition that comes from the “inner flame“ of passion and that is shared by everyone.
The HOW has three elements: via engaged, competent and self motivated employees, a shared expectation of thoroughness and a dedication to innovate.
The WHAT’s are chosen carefully to be focussed on the key aspirations and needs of the customers (it takes intimacy to select what is essential), uniquely superior and distinctive and designed for the global market.

This approach contains an intrinsic optimism, the mentality that there is plenty of work for everyone invested in doing it well and that doing work well is a great collaboration of everyone who has the calling, wisdom and passion to achieve excellent results. Is it then surprising that in this climate of engaged optimism where both employees and leaders work with passion, autonomy and dedication, retention is not an issue? The best kept secret of hidden champions is to truly have fun at work.

1 Simon, Hermann: Hidden Champions of the 21st Century : Success Strategies of
Unknown World Market Leaders