Key
to global success
10 CHARACTERISTICS OF THE WORLD MARKET LEADERS
The entrepreneurial success of our medium-sized global market leaders is based on the design and interaction of four fundamental areas of management: demanding leadership, customer-centric innovation, mental internationalization and operational excellence.
These design fields contain ten characteristics of hidden champions that significantly promote entrepreneurial success.
Challenging
Understanding of leadership
Medium-sized global market leaders have strong leaders at the top of the company who are characterized by a strikingly high degree of personal and mission alignment combined with entrepreneurial courage and focused determination. This means that they are not necessarily subject to management fashions and the spirit of the times. Rather, they are characterized by a conservative orientation and the demand for high performance. Shirkers are consistently held accountable by company management and employees. At the same time, it motivates employees to work for an industry leader that is regarded as a trendsetter and benchmark in the market. This is associated with both pride in what we have achieved together and a commitment to the future.
The top management of medium-sized global market leaders thinks and acts in terms of generations. In doing so, they demonstrate exceptional stamina, as the average managing director or board member has been in office for well over 20 years. This continuity in leadership demonstrates a high level of loyalty and solidarity, which is exemplified by the company's top management and radiates into the company organization. In such long periods of entrepreneurial generations in charge, there are both entrepreneurial successes and, inevitably, failures or even crises. Perseverance and familiarity within the company provide an important anchor of stability, even in times of rapid change and dynamic conditions.
Medium-sized global market leaders are becoming the No. 1 in their market. They define their market relatively narrowly and shape market development with their services and innovations. Their technological solutions often determine the regulatory and technical requirements and thus become the standard in the market. Global market leaders lead their market in the best sense of the word. The market definition and the market leader's self-image are decisive. They lead by setting the technological pace for their customers, continuously delivering top performance and thus becoming the benchmark for competitors worldwide in their sector.
Customer-centered
Innovation
Our medium-sized global market leaders are relationship champions. They focus on their customers and, in particular, their problems and the technical solutions to them. The depth of thinking when it comes to customer problems is impressive. The global market leaders maintain intensive and long-term relationships with their customers. This long-term approach is also reflected in the high level of continuity among the employees of the global market leaders. Both design engineers and technical sales staff have regularly worked together with their customers for decades and are familiar with their joint successes and failures. They therefore have a very precise understanding of customer requirements. As many customers undergo personnel changes more quickly, the global market leaders often know their customers better than the customers know themselves.
The understanding of innovation is holistic and affects all areas of the innovation process. This is reflected in a strikingly high intensity of research and development (R&D). On average, medium-sized global market leaders spend around 6% of their turnover on R&D, which is significantly higher than the average for medium-sized companies and even twice as high compared to the large German corporations in the DAX. The result of these innovation efforts can be assessed on the basis of successfully registered patents. The patent intensity in the world's leading SME sector is around 30 patents per 1,000 employees and therefore many times higher than that of large corporations, which achieve around 6 patents. This correlation indicates an exceptionally high level of efficiency in the innovation process. As a result, medium-sized global market leaders are technological leaders in many fields.
Innovation success is only decided in the market. The tension between market requirements on the one hand and technological developments on the other must be resolved again and again. The question "What is needed?" must be balanced with the company's internal world "What can and do we do?". Medium-sized global market leaders do not innovate purely with a love of technology because they are particularly good at something, nor do they chase after every trend just because a competitor is doing so. Rather, global market leaders "match" their skills with market opportunities on the basis of their exceptional customer relationships and market knowledge.
Mental
Internationalization
Becoming number 1 in the global market takes many small steps and therefore requires extraordinary perseverance. There is no correlation between company size and growth rate. The ability to grow internationally and the entrepreneurial result do not depend on the size of the company. The main reason for above-average growth lies in global market coverage. Therefore, internationalization activities are the complementary strategic growth driver to innovation efforts. While focused innovation in the market niche and genuine expertise narrow the market relatively closely, broad internationalization and global market coverage expand business activities to achieve a relevant company size.
8. Spezialisierung in technologischer Hinsicht mit globaler Vertriebs- und Marketingkompetenz vor Ort
The medium-sized global market leaders always market and sell their specific, technologically advanced and superior products themselves. They do not relinquish this essential basis for shaping customer relationships and this source of better customer understanding and innovation. They control and use this valuable market and customer access as a strategic competitive advantage.
As a result, internationalization takes up a lot of time and resources, as the development of an international market presence is achieved by setting up our own foreign branches with a qualified local team. The connection to the company headquarters and the mutual exchange of knowledge and experience are crucial here. International market access is not achieved at any price, but only if the staffing is right. It's the brains that make the difference. This makes the development of international business all the more learning-intensive and sustainable. On average, medium-sized global market leaders have around forty affiliated companies abroad. Of these, around one third are involved in production and two thirds in marketing, sales and technical service.
Operational
excellence
9. Spitzenleistung sowohl bei der Produkttechnologie und -qualität als auch im Service
Technological excellence and expertise in customer applications ensure the competitive superiority of medium-sized global market leaders. They therefore do not cover broad product fields and do not act as full-range suppliers, but offer specific and customized solutions in a niche. These include predictive maintenance and servicing as well as joint optimization of machines, systems or processes by in-house technical service personnel with extensive knowledge of nutrition. The medium-sized global market leaders regularly receive awards from their customers for particularly valuable services. These awards are proof of their outstanding product and service quality.
Competitive advantages are achieved and secured through uniqueness. The medium-sized global market leaders know that uniqueness is primarily created internally within the company and cannot be bought in cheaply through outsourcing. They know their own strengths and are continuously building on them. In doing so, they intensify their value-creating activities. As a result, many global market leaders achieve a strikingly high level of vertical integration of around 50%, which contradicts most management fashions and is well above the industrial average. The reason for the high vertical integration lies primarily in the high quality standards. Their demand for top quality prevents them from outsourcing the production of core components. At the same time, the depth of production and the associated closed nature provide particularly effective protection against loss of knowledge and imitation by competitors.
"Medium-sized global market leaders are successful role models for entrepreneurship worldwide and are synonymous with technologically strong growth companies. They stand for commitment and perseverance in producing technologically outstanding innovations, with which they achieve long-term market success worldwide despite all crises and changes. They achieve this through continuous adaptation and change. This gives them remarkable resilience, which should give them courage and confidence for the current transformations."
Prof. Dr. Jan-Philipp Büchler: Hidden Champions Case Compendium - Leading Global Markets; Heidelberg, 2024.
