www.simon-kucher.com

8th Global Peter Drucker Forum

Hidden Champions – The Vanguard of Globalia

Vienna, November 17, 2016

Prof. Dr. Dr. h.c. mult.Hermann Simon

Vienna officeSchubertring 14/Top 5. OG1010 Vienna, Austria

Bonn officeWilly-Brandt-Allee 1353113 Bonn, Germany

hermann.simon@simon-kucher.com

@HermannSimon

August 11, 2002

Claremont

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Per Capita Exports 2006-2015

Country

12 637

29 564

42 447

56 146

59 036

69 122

81 163

83 606

91 463

166 475

China

Russia

USA

Japan

Spain

UK

Italy

France

Korea

Germany

US-$

stats.oecd.org

4

Per Capita Exports 2006-2015: Small Countries

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658 111

385 268

352 840

237 073

190 941

156 000

Singapore

Belgium

Netherlands

Switzerland

Austria

Slowenien

US-$Country

5

USA (134)

Japan (52)Korea (15)Italy (9)

Spain (9)

China (103)

Belgium (2)Switzerland (15)

0

500

1 000

1 500

2 000

0 50 100 150

France (29)UK (25)

Germany (28)

Austria (1)

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Do Large Companies Explain Export Performance?

https://www.destatis.de

Fortune Global 500 Corporations (2015)

Exports 2015 in billion US-$

Russia (5)

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0,1

0,2

0,5

1,1

1,1

1,2

1,2

1,7

1,7

1,8

2,7

2,8

3,4

5,4

13,9

16,0

19,5

China

Spain

South Korea

UK

France

USA

Italy

Netherlands

Japan

Belgium

Finland

Norway

Denmark

Sweden

Switzerland

Germany

Austria

Hidden Champions per Million Inhabitants

Number of Hidden Champions per million inhabitantsCountry

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What is required for success in Globalia?

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Innovativeness (here measured by European patents)

Number of European patents 2006-2015 per million inhabitants

4

5

23

26

86

280

309

375

427

596

705

867

880

1 079

1 627

1 649

3 077

Russia

China

Greece

Portugal

Spain

Korea

United Kingdom

Italy

USA

Belgium

France

Austria

Japan

Netherlands

Germany

Sweden

Switzerland

Country

9

6

31

Largecorporations

HiddenChampions

Patents per 1,000 employees

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Patents of Hidden Champions vs. Large Corporations

10

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Innovation: Enercon E-Ship with Flettner rotors

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Innovation: Volocopter

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Is Germany behind in digitization?

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Innovation in Autonomous Driving

Patents registered worldwide since 2010

Source: Handelsblatt, November 9, 2016, p. 29

Total: 2828 Suppliers: 1035

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Innovation in Autonomous Driving

Patents from Germany registered worldwide since 2010

Source: Handelsblatt, November 9, 2016, p. 29

1646 (58%)

from Germany850 (82%)

from Germany

Total: 2828 Suppliers: 1035

15

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Strong Manufacturing Base

Source: Institut der deutschen Wirtschaft, IWD, Ausgabe 2, 12.01.2012

-15

-10

-5

0

5

10

15

5 10 15 20 25 30

Germany

JapanAustria

Switzerland

Italy

Belgium

Spain

Portugal

Denmark

USA

France

UK

Greece

Share of manufacturing in GDP in %

Trade balance (exports minus imports) in % of GDP

ChinaKorea

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Lesson 1

Business success in Globalia does not primarily depend

on large corporations but on mid-sized world-class

businesses like the Hidden Champions. Innovativeness

and a strong manufacturing base are the factors of their

success.

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The Strategy of the Hidden Champions

Focus

Strong leadership with ambiti-ous goals

Closeness to customer

Co

mp

etitive

a

dva

nta

ge

s

Glo

ba

l o

rie

nta

tio

n

High performance employees

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Chemetall

Chemetall is the world market leaderin special metals like lithium and cesium.

"The goal of Chemetall is the worldwide

technology and marketing leadership."

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Rosen-Group is the world market leader in pipeline inspection systems.

"It is our objective to be the world’s most competitive

provider. We go far beyond present market require-

ments. We envision the market’s future needs."

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Deep Leadership: Rosen-Group

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Uhlmann is the world market leaderin packaging systems for the pharmaceutical industry.

"We always had one customer and will only have

one customer in the future: the pharmaceutical

industry. We only do one thing, but we do it right."

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Uhlmann

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Flexi is the world market leader in retractable dog leashes.

"We only focus on one thing,

but we do it better than anyone else."

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Flexi

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Globalization: Kärcher

World market leader in high pressure water cleaners

107 subsidiaries

Number of company foundations and acquisitions

2016

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Closeness-to-customer: The Biggest Strength of the Hidden Champions

8 %Large corporations

38 %Hidden Champions

Closeness-to-customer

Employees with regularcustomer contact

88.7 %

- 24 -

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Competitive Advantages

10

8 8

Advice Systems integration Ease of use

Change in last 10 years

25

Lesson 2

Success always begins with highly ambitious goals.

There is no substitute for entrepreneurial ambition.

Only focus leads to world class. The Hidden Champions

combine focus with globalization, which is their primary

growth booster. Closeness-to-customer is their biggest

competitive advantage.

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Employees and leaders

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Employees

"More work than heads"

High performance cultures

High qualification

Low turnover

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Vocational Training

6%

9%

German industry Hidden Champions

Percentage of apprentices

29

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Higher Qualification

9%

19%

10 years ago today

Share of university and college graduates

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Employee Turnover Rates

Source: Hernstein-Institut/US Department of Labor/INSEE (Frankreich), Wall Street Journal Europe, 4. Juni 2013, S. 15

2,7%

5,3%

7,3%

8,8%

9,0%

11,0%

19,0%

Hidden Champions

Daimler

Germany

Switzerland

Austria

France

USA

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Leaders

Leadership

authoritarian in the principles

participative, flexible in the details

Leaders come young into power

More women in top positions

Very high continuity of the leaders

Hidden Champions: 20 years

Large corporations: 6 years

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Lesson 3

The Hidden Champions have "more work than heads"

and high performance cultures. Turnover is extremely

low. They have strong leaders whose leadership is

authoritarian in the principles but flexible in the details.

Continuity is very high.

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To conclude, in 2 minutes....

... my personal Hidden Champions story

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Simon-Kucher & Partners

Focus: Pricing, marketing, sales

Goals: Market leadership and growth

Presence: Global

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Best Consultancy in Marketing, Sales, Pricing

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1 Simon-Kucher & Partners

2 Boston Consulting Group

3 McKinsey & Company

manager magazin

Source: manager magazin survey of top managers in Germany, August 2007 and 2011/IMB

Source: brand eins Thema/Statista survey of 1,426 partners and project leaders from consulting firms and 1,300 C-level managers from German companies, May 2014

Marketing and sales

Simon-Kucher & Partners

Boston Consulting Group

McKinsey & Company«««

Marketing and pricing

««««

Simon-Kucher & Partners

Boston Consulting Group

McKinsey & Company«««

Sales

««««

brand eins Thema

.

.

.

.

.

.

«««««

«««««

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World Leader in Price Consulting

Simon-Kucher is world leader in giving advice to companies on how to price their products.

BusinessWeek

No firm has spearheaded the professionalization of pricing more than Simon-Kucher & Partners.

William Poundstonein Priceless

In pricing you offer something nobody else does.

Professor Peter Drucker

No one knows more about pricing than Simon-Kucher.

Professor Philip Kotler

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3 4 5 7 13 18 19 22 27 35 46 56 7190

112130

147165

187220

248283

354

436 446466

550

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694

750

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980

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/16

Employees

Revenue 2015: €209 million

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Growth

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Global Presence: 33 Offices

Germany,Bonn

Switzerland, Zurich

Italy,Milan

France,Paris

USA,San Francisco

GermanyMunich

Japan,Tokyo

Turkey,Istanbul

Germany,Frankfurt

USA,New York

Germany,Cologne

USA,Boston

England,London

AustriaVienna

USA,Atlanta

Denmark,Copenhagen

Netherlands, Amsterdam

Spain,Madrid

China,Beijing

Singa-pore

Australia,Sydney

Poland,Warsaw

UAE,Dubai

Chile,Santiago de Chile

Brazil, Sao Paulo

Belgium, Brussels

Luxem-bourg

Canada,Toronto

Spain,Barcelona

USA,Silicon Valley

Switzerland, Geneva

Germany,Hamburg

Sweden,Stockholm

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Hidden Champions Worldwide

Spain1997/2010

Hungary2010

Italy2001/2007/2011

Brazil2003

India2009

Egypt2008

Germany1997/2007/2012

USA1996/2009

Lithuania2009

Netherlands 1997/2009

Slovenia2010

Japan1998/2012

Sweden2013

Vietnam2013

Korea1997/2008/2014

Poland1999/2009

Serbia2007

Czech Rep.2010

Russia2005/2014

Turkey1999/2014

France1998/2012

Taiwan1996/2004/2013

China1997/2000/05/09/15

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Twitter

@HermannSimon

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Management Thinkers 2016

The most influential management thinkers in the German-speaking countries 2016.

www.managementdenker.de, Internet Survey, n=600

6%

7%

8%

15%

19%

26%

Fredmund Malik

Günter Faltin

Jack Welch

Michael E. Porter

Hermann Simon

Peter F. Drucker

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Hermann Simon

Professor Simon has published over 30 books in 25 languages, including the worldwide bestsellers Hidden Champions (Boston 1996, cover storyof BusinessWeek in 2004) and Power Pricing (New York 1997), as well as Manage for Profit, Not for Market Share (Boston 2006). His book HiddenChampions of the 21st Century, Success Strategies of Unknown World Market Leaders (New York 2009) investigates the strategies of little knownmarket leaders. His newest book is Confessions of the Pricing Man, published by Springer, New York. His Hirsch-Index is 49.

Simon was and is a member of the editorial boards of numerous business journals, including the International Journal of Research in Marketing,Management Science, Recherche et Applications en Marketing, Décisions Marketing, European Management Journal as well as several Germanjournals. Since 1988, he regularly writes columns for the business monthly Manager Magazin. As a board member of numerous foundations andcorporations, Professor Simon has gained substantial experience in corporate governance. From 1984 to 1986 he was the president of theEuropean Marketing Academy (EMAC). Simon is co-founder of the first Special Purpose Acquisition Company (SPAC) listed on the German StockExchange in Frankfurt, which acquired Exceet Group S.E. in July 2011.

A native of Germany, he studied economics and business administration at the universities of Bonn and Cologne. He received his diploma (1973)and his doctorate (1976) from the University of Bonn. Simon has received numerous international awards and holds honorary doctorates fromIEDC Business School of Bled (Slovenia), from the University of Siegen (Germany) and from Kozminski University Warsaw (Poland). He is ahonorary professor at the University of International Business and Economics in Beijing.

Hermann Simon is chairman of Simon-Kucher & Partners Strategy & Marketing Consultants with offices in Amsterdam,Atlanta, Barcelona, Beijing, Bonn, Boston, Brussels, Cologne, Copenhagen, Dubai, Frankfurt, Geneva, Istanbul, London,Luxembourg, Madrid, Milan, Munich, New York, Paris, San Francisco, Santiago de Chile, Sao Paulo, Singapore, Stockholm,Sydney, Tokyo, Toronto, Vienna, Warsaw and Zurich. Simon is an expert in strategy, marketing and pricing. He has anextensive global range of clients. In the German language area he was voted the most influential management thinker afterthe late Peter Drucker.

Before committing himself entirely to management consulting, Simon was a professor of business administration andmarketing at the Universities of Mainz (1989-1995) and Bielefeld (1979-1989). He was also a visiting professor at HarvardBusiness School, Stanford, London Business School, INSEAD, Keio University in Tokyo and the Massachusetts Institute ofTechnology. From 1995 to 2009 he was CEO of Simon-Kucher & Partners.

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