vokacongres 2013 - presentatie olivier dallemagne

Brussels Office

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"Hidden Champions in Flanders" review for VOKA

- Analysis of the survey findings -

Olivier Dallemagne

Brussels, 19 November 2013

- 2 -

Key question

Can Hidden Champions

drive growth in

Flanders?

- 3 -

Key learnings from the Hidden Champions in Flanders

A minority of companies create more value; their strategy is accessible to many

others

1. 8% of mid-sized companies apply the

Hidden Champions strategy and

create much more long-term value

1

1. Flemish Hidden Champions are

stronger in four key domains

2

1. Many more companies could

become Hidden Champions

3

Source: Analysis by Simon-Kucher & Partners of 358 respondents

representing all industrial sectors and 30 face-to-face interviews

- 4 -



others




Hidden Champions strategy and

create much more long-term value

1



2



3

- 5 -

Private companies

from all sectors

Public sector

companies

99.5%

0.5%

Hidden Champions in Flanders

The Hidden Champions are 8% of companies – generating one-third of revenue

8%

~33%

Fulfill the HiddenChampion traits

Revenue

A sample of 3,070

private mid-sized

Flemish companies*

with Belgian majority

shareholders, of

which 358 private

companies were

studied in detail



* mid-sized companies have revenues < €5bn

Hidden

Champions

Other

companies

Hidden Champions

account for approx. 1/3

of the revenue of all

358 investigated

companies

- 6 -

Key characteristics of the Hidden Champions

Hidden Champions in Flanders have the following traits which increase their long-

term value:

+ 2.6% per annum above their sector

growth (weighted average)

Immediate value

Long-term value

Timing

+ 5% net operating profit on average

compared to the other companies in 2012

and a better resilience to crises

5 times more key patents and 13 times more

"world premieres" with less R&D spending

On average more than 2 x CAPEX

in Flanders (in last 10 years)



Higher

long-term

value!

- 7 -



others




Hidden Champions strategy and create

much more long-term value

1



2



3

- 8 -

Strong leadership

with ambitious goals

High-performance

employees

Persistent

innovation

Global marketing

and sales

Strategic gap between Hidden Champions and other companies

Hidden Champions are significantly more ambitious and innovative, and they

perform more strongly in general

Other companies Hidden Champions

Very weak

Scoring on Hidden Champions strategy (4 key axes)

Very strong

Hidden Champions are more

ambitious and motivate their

teams to perform much better

With less R&D spending, they

develop many more world-

class innovations

Their products and services

are in more demand around

the world; they grow globally



- 9 -

Key question

What does more

ambition mean?

- 10 -

Strong leadership with ambitious goals

Hidden Champions aim to have the best technology and quality in the world in a

specific market

85% 81% 81%

38%

29%

21% 20%

10%

Qualitative leader Technology leader Most specialized Quantitative leader

Hidden Champions inFlanders

Other companies inFlanders



How would you describe your company?

% o

f re

spondents

- 11 -

Key question

Stronger employee

performance?

- 12 -

Product quality

Efficiency

Punctuality of delivery

Closeness to customer

Aftersales service

Price

Distribution

Cooperation w./ distributors

Key patents

Marketing

HiddenChampions inFlanders

Othercompanies inFlanders

HiddenChampions inGermany

High-performance employees

They create a competitive edge, even compared to German Hidden Champions

Source: Analysis by Simon-Kucher & Partners of 358 respondents,

30 face-to-face interviews and Hidden Champions of the 21st Century

Very weak Very strong Competitive performance

Importance

Index of competitive

strength

- 13 -

Hidden Champions

Other companies

0

10

20

30

40

50

60

70

80

90

2003 2012

Top performance and expansion

Hidden Champions grow faster than their industry, exceeding the 2% average growth

target

Examples of Hidden Champions

CAGR 10 years

+22%

Ø +7%



*∆ is weighted average with revenue of company as weight, 2003–2012

Additional % growth vs. industry growth

CAGR 10 years

+2,60%

-0,25%

Reve

nu

e in m

Ateliers

Vlassenroot

Christeyns

Baeten & Co

+11%

+11%

- 14 -

2012 2003

-15%

-10%

-5%

0%

5%

10%

15%

Strong and durable financial position

Hidden Champions are more profitable than other companies and are more resilient

to crises



Maximum

75th percentile

25th percentile

Minimum

Median

Ø

Operating profit/operating revenue

Hidden Champions

in Flanders

Other companies

in Flanders

Hidden Champions

in Flanders

Other companies

in Flanders

- 15 -

Key question

More innovative?

- 16 -

Stronger innovation productivity

Their productivity for one euro spent on innovation is much higher:

Hidden

Champions

67% had world premieres

35 patents on average

"We need 6 people to develop a

world premiere; our competitors

have 100 employees on it"

"Weekly meetings of R&D,

marketing and logistics feed into

our large innovation funnel"

"The competition lags at least

three years behind us"



> 6% < 6%

Low

High

Other companies

5% had world premieres

7 patents on average

6%

R&D investment as % of revenue

Innovation

output

- 17 -

Key question

What is their global

footprint?

- 18 -

Go-to markets of Hidden Champions in Flanders

Sales distribution of Hidden Champions in Flanders and their key priorities for the

future

> 20%

> 10%

> 5%

< 5%

Top priority



Second priority

Third priority

- 19 -

Go-to markets of other companies in Flanders

Sales distribution of other companies in Flanders and their key priorities for the

future



> 20%

> 10%

> 5%

< 5%

Second priority

Third priority

Top priority

- 20 -



others




Hidden Champions strategy and create

much more long-term value

1



2



3

- 21 -

0,2

0,5

0,5

0,5

0,7

0,9

1,1

1,1

1,2

1,2

1,7

1,7

2,7

2,8

3,4

3,5

5,4

10,5

13,8

13,9

14,0

16,0

Spain

South Korea

Canada

Australia

Poland

Israel

United Kingdom

France

USA

Italy

Netherlands

Japan

Finland

Norway

Denmark

Slovenia

Sweden

Flanders

Austria

Switzerland

Luxembourg

Germany

Hidden Champions per million inhabitants

Flanders has a large amount of Hidden Champions per million inhabitants – but we

see potential for many more

# of Hidden Champions per mill. inhabitants


30 face-to-face interviews and Hidden Champions of the 21st Century

>>>>>>>>

> 100 companies in

Flanders have the

potential to become

Hidden Champions

- 22 -

Key question

Bottom line:

Does Flanders have the

right fabric for growth?

- 24 -

89%

55%

32%

15%

SMEs in Flanders

SMEs in Germany

Hidden Champions in Flanders

Hidden Champions

Manufacturing sector in Flanders

Hidden Champions are needed to create a strong manufacturing sector


Hidden Champions of the 21st Century and Data base ECCBSO

% of total revenue generated in manufacturing

- 25 -

Key question

The way forward?

- 26 -

Findings: Does Flanders have the right fabric?

Many more SMEs can grow to the next stage, as we have seen in Germany, Austria,

Switzerland and Scandinavia

Main findings

8% of Flemish mid-sized companies are Hidden Champions

They report better results with stronger innovation and a much more

international sales approach

By doing so, they contribute over-proportionately to growth in Flanders

By embracing the success factors of the Hidden Champion strategies,

many more Flemish companies have the potential to become Hidden

Champions and thus re-enforcing the Flemish industrial fabric

Framework conditions can accelerate this transformation



vokacongres 2013 - presentatie olivier dallemagne

Education