Page 113 - MYM 2015

Especially pronounced is the closeness to top customers. Grohmann Engineering makes systems for the assembly of micro-electronic products.
CEO Klaus Grohmann says, “My market are the
top 30 customers in the world.” Asked why he so desperately wants these leading companies as customers, he responds that it’s because they are never satisfied. “They are extremely demanding and, thus, are driving us to ever higher performances.” Using top customers to drive your teams to
higher performance is a very interesting view of a company’s customer relationship.
6. Loyalty and Highly-Quali ed Employees
Hidden Champions have more work than heads, highly quali ed employees and low turnover. They invest 50% more into vocational training than the average German company. The share of university graduates has more
than doubled, from 8.5% of the workforce ten years ago
to roughly 20% today. And competitiveness in Globalia is more and more about quali cation. If you hire, educate and train quali ed people and top talent it is very important to retain them. The Hidden Champions have extremely low turnover rates: only 2.7% annually as compared to the average for Germany of 7.3% or for America where almost
The strategies of the Hidden Champions are value-driven, not price-driven. They usually command
a price premium
of 10 to 15%
over the average market price,
which also tells us something about the importance of price versus quality. Value remains the most important factor
in most markets. Price comes into the game only if you don’t offer differentiated value (Simon, 2015).
Germany is one of the main pro teers. It’s unknown, mid- sized world market leaders, the so-called “Hidden Champions” dominate thousands of niche markets.
20% leave their companies per year. They take with them, of course, their know- how, their experiences and their customer relationships. Low turnover rates are more important than low sickness rates.
Lesson 6: The Hidden Champions have “more work than heads” and high performance cultures. Employee quali cation is top. Turnover and sickness rates are extremely low.
Another outstanding
competitive advantage of the Hidden Champions is product quality. Two relatively new advantages with the biggest increase in importance are advice and systems integration. From a competitive point of view they are different from advantages integrated in the product. They cannot be easily re-engineered because these advantages reside in the brains of the employees and in the capacity of the organization to manage complexity. As a consequence the barriers to entry are probably higher today than they were ten years ago.
Lesson 5: Closeness to customer is the greatest strength of the Hidden Champions – even ahead
of technology. Their strategies are value-oriented, not price-oriented. The Hidden Champions hold strong competitive positions. Advice and systems integration are new advantages which create higher barriers to entry.
7. Strong Leadership
The ultimate explanation for the unusual success
of the Hidden Champions lies in their leaders. They are characterized, rst and foremost, by a very
strong identity of person and mission, meaning they totally identify with what they do. Their leadership
is ambivalent. There is no discussion regarding the company’s principles and values, but the employees enjoy great latitude and exibility in the details of carrying out a job. The Hidden Champions have more women in top positions and very high continuity of the CEOs. The average CEO tenure is 20 years. In large companies it is only 6.2 years (Booz and Company, 2013, p. 12).
Lesson 7: The secret of the success of the Hidden Champions lies in their leaders. They are characterized
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