The Hidden Champion concept was originally used almost three decades ago by a wise old German to help explain his country’s success as an exporter.
Though it often refers to an elite type of German Mittelstand firm dominating a certain global niche, such companies exist the world over.
According to META, the Manufacturing Excellence Taskforce of Australia, we have plenty of manufacturers who share qualities identified by the influential management thinker Professor Hermann Simon in his influential Hidden Champion model, which he has been researching since 1986.
“Here in Australia, there are already strong examples of companies operating who share a common set of values and leadership mindset, demonstrating a strong foundation to build a bright future for Australian manufacturing,” Albert Goller, META’s founding chairman, told Manufacturers’ Monthly.
Simon – who visited Australia late last October to discuss his popular concept – says Hidden Champions are in the top three in the world or dominate their continent in their particular niche, earn revenues under 5 billion Euro annually, and are generally unknown.
Their typical features within such a company include a deep value chain, an above-average R&D spend (which is also more productive, dollar for dollar, than that of other businesses), a high degree of specialisation, and a high level of closeness to their customers.
Importantly, their competitiveness is not based on cost.
“Strategies are value-driven, not price driven,” according to Simon.
Goller’s organisation has identified many Hidden Champion manufacturing firms right here in Australia as part of its META 500 project.
“The defining characteristics exhibited by these companies are ambitious goals and high growth targets; a global outlook; and customer intimacy and strong consumer insights,” he explained.
“These are key ingredients to their success and competitive advantage.”
These Hidden Champions also fit a modern concept of advanced manufacturing, detailed in CEDA’s Advanced Manufacturing: Beyond The Production Line policy paper, released this April and to which Goller contributed.
Their approach includes excellence throughout the value chain, rather than just simply product innovation or new technologies. They typically embrace globalisation, and feature a significant export component to their revenues.
This working week, Manufacturers’ Monthly will profile one of Australia’s Hidden Champion companies each day.
They are five of many, and they represent a range of industries, including medical, automotive, textiles and electronics.
The difficulties facing manufacturing are well-known and get regular attention. We believe it is also worth highlighting successes: there are plenty of them and they are, of course, also important.