Interview with Prof. Dr. H.C. Hermann Simon | German business leader & author
First published in M+V’s India Insight in September 2011
“Using agencies, importers and distributors does not help companies to achieve their goals!”
M+V: You came up with the concept of the Hidden Champion — how do you define them?
Simon: Hidden Champions are among the top 3 companies in their global market, they have revenues of less than 3 billion euros, and they are relatively unknown. They are defined by two distinctive features of their strategy: their focus and their globalisation. On the one hand, focus is a prerequisite for achieving world class, but makes a market small. Through globalisation, even small markets become sufficiently large. In this respect, the twin pillars of focus and globalisation are inextricably linked.
M+V: What do Hidden Champions have in common in terms of globalisation?
Simon: Hidden Champions do not delegate entry into new markets to importers, distributors or agencies, but instead establish their own presence in the target markets. Many of them have more than 50 subsidiary companies in other countries and more than half of their staffs are employed outside the companies’ home markets. Not only production but also research and development are increasingly being relocated to the target markets. The BRIC countries are playing a key role for the Hidden Champions.
M+V: Why is it that Germany plays a leading role in the global economy?
Simon: There are a multitude of medium-sized German companies which have long been much more internationally positioned than equivalent firms in France, the USA or Japan. But, we should also bear in mind that the establishment of an international market presence requires enormous resources and long time periods. In this respect, the bottleneck is most often not the financial side, but qualified personnel. Hidden Champions have very autonomous corporate cultures and require specialist expertise, so they usually have to develop their own executive personnel from within. This process takes many years and in this respect the establishment of subsidiaries in the target markets cannot proceed as quickly as one would like.
M+V: You called a chapter of your book “The Economic Trends of the Future”