Hidden Champions

Recently, we’ve enjoyed learning a bit about Hidden Champions – a moniker given by Professor Hermann Simon to a group of globally successful but relatively small and unheralded companies.?Many of these businesses are headquartered in Germany, remain family owned and form a core part of the German Mittelstand and economy.?

Over many years, and frequently successive generations, these companies have developed into outstanding businesses with global market shares in the range of 70% to 90%.?The industries and markets served by these companies vary hugely – from gym equipment to tabasco sauce from church organs to ballet shoes.?Interestingly, Simon’s research shows that while their products and services are diverse, these companies share many traits including:

1. Focusing on a very narrow market niche and achieving scale by selling and expanding globally - rather than by diversifying;
2. Choosing executive management, many of whom remain in position for decades, who have generally progressed through the business and have a deep understanding of it;
3. Making long term investment in people and teams to create outstanding in-house technical skills and expertise.?This competence strengthens customer relationships and loyalty by enabling them to target product improvements and development at what the customer values the most.

While it would be fair to say that we have a bit of catch up to do in terms of global market share (!), we’re pleased to find many of these traits in our own portfolio of businesses.?The Hidden Champions have encouraged us to think big about the success smaller niche companies can achieve with the right focus, people and attitude.

We look forward to learning more about the Hidden Champions and continuing to support our businesses as they look to follow this path to greater success.