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The Leadership Secrets Of The Hidden Champions

This article is more than 4 years old.

Hermann Simon

There are about 2,700 extremely successful companies around the world that are referred to as “hidden champions” and roughly half of them are German. In contrast to large, publicly listed companies, most people have never even heard their names. Within their own industries, they are known, admired or even feared, but they are rarely the subject of media reports. Nevertheless, they often have global market shares of over 50%. In order to qualify as a hidden champion, a midsize company needs to be among the top three in its global market or number one on its continent.

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The Secrets of Germany’s Most Successful Exporters

Professor Hermann Simon coined the term “hidden champions” almost thirty years ago: “Many extremely successful companies escape the attention of those whose business it is to know everything (media), understand everything (scientists) or improve everything (consultants). This is the sphere of the world’s best midsize companies, the world of the ‘hidden champions.’ Deeply hidden under the headlines of sensational business successes lies a completely unnoticed source of leadership wisdom.”

Professor Simon is Germany’s leading management expert and is one of the two dozen leading management thinkers in the world. He was attempting to explain Germany’s success as one of the world’s leading export nations and stumbled across these hidden champions. Looking at a chart of ten-year per capita exports (2009–2018), Germany ranks first ($163,519), ahead of South Korea ($108,702); by comparison, the United States ranks eighth ($40,483). Germany also has more hidden champion companies than any other country in the world. Germany leads the way with 16 hidden champions per million inhabitants, followed by Japan’s 1.6. The United States is in fourth place with 1.2.

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The Mindset Of The Hidden Champion Leaders

Whenever Professor Simon is asked about the secrets of these companies’ success, he answers with one word: leadership. On the basis of his research, he has defined five leadership characteristics that distinguish the leaders of successful hidden champions:

  1. Unity of Person and Purpose
  2. Single Mindedness
  3. Fearlessness
  4. Stamina and Perseverance
  5. Inspiration of Others

Of course, it’s also possible to single out the leaders of large companies who combine all these qualities. Overwhelmingly, these are the founders and owners of massively successful companies, exceptional individuals such as Steve Jobs, Bill Gates, Jeff Bezos and Mark Zuckerberg. But when it comes to the CEOs of major corporations—most of whom are not the founders or major shareholders of their companies, but are employed as salaried managers on behalf of the shareholders—these five characteristics are, on average, rarer and less pronounced than in the case of the hidden champion leaders.

Monomania

Unity of Person and Purpose: The CEOs of large corporations are rarely so deeply and personally intertwined with their companies as the leaders of the hidden champions described by Professor Simon. While the CEOs of large corporations remain loyal to their companies for an average of just six years, the leadership continuity of hidden champions is much stronger, with leaders staying at the helm for 20 years or more. This is also why “single mindedness” is far more pronounced among the leaders of hidden champions. They are absolutely committed to their mission, vision and companies. In this respect, they are “monomaniacs,” leaders who would probably not be able to identify with or “burn” so intensely for any other company. And because the leaders of these hidden champions have wedded themselves to their companies, merging with their companies to form single, inseparable units, they have more in common with missionaries than they do with dispassionate, objective and rational CEOs.

Inspiration

With their 100% enthusiasm, they inspire their followers—just like Steve Jobs did. “Unless you’ve got a lot of passion for this, you’re not going to survive. You’re going to give it up. So you’ve got to have an idea, or a problem, or a wrong that you want to right that you’re passionate about otherwise you’re not going to have the perseverance to stick it through,” said Steve Jobs. Jobs was a prime example of persistence, somebody who stubbornly clung to a product for years, although there was no indication that it would ever make him any money. If he’d been motivated by money, he would have given up much sooner. But he was driven by passion, and so he carried on in the face of countless setbacks and obstacles. Success is frequently seen as a result of great stamina. But stamina itself is primarily a consequence of sustained passion. And the leaders of hidden champions have this characteristic in spades.

The Courage To Take Risks

The leaders of hidden champions are fearless. As entrepreneurs, their personal fortunes are often inseparably tied to the success of their companies: if their companies fail, they stand to lose everything. Clearly, they possess the courage, the fearlessness, to take risks. Entrepreneurial research has shown that a pronounced willingness to take risks is one of the most important characteristics of successful entrepreneurs. Salaried managers do not take the same personal risks as entrepreneurs and—despite all the public criticism that comes their way—that is perfectly fine. The CEOs of large corporations may receive enormous salaries, but their remuneration is still nowhere near as high as the money earned by the personally liable owners of a company. This is only logical. After all, salaried CEOs are not liable to the same extent as independent entrepreneurs. It is therefore not surprising that fearlessness is more pronounced among hidden champion leaders.

Swimming Against The Current

Entrepreneurs also demonstrate their fearlessness by swimming against the current and doing things in a completely different way to their peers. The Austrian economist Schumpeter described this type of entrepreneur as someone who swims against the current: “The fact that something has not yet been done is irrelevant to him as a counterargument. He does not feel the inhibitions which otherwise constrain the behavior of economic agents.” This type “draws other conclusions from the data of the world around him than those drawn by the mass of static economic agents” and is “quite indifferent … to what his peers and superiors would have to say about his business.” The characteristics highlighted by Schumpeter—just like all of the other characteristics above—can of course be exhibited by the CEOs of large corporations but they are far more frequently found in the leaders of hidden champions. And it is clear why: “Many of the most successful leaders of hidden champions could never have made careers for themselves in large corporations. They simply wouldn’t have been able to toe the corporate line. To climb to the top and become the CEO of a large corporation, you need to be far more adaptable than the leaders of most hidden champions,” explains Professor Simon.

Long-Term Perspectives

Stamina and Perseverance: Hidden champion leaders often spend their entire lives, or at least decades, with a single company. This distinguishes them from the CEOs of large corporations, who typically move from company to company every few years. Thus, the plans and goals implemented by the leaders of hidden champions are often shaped by extremely long-term strategic thinking. Since most hidden champions are not listed on the stock exchange, their leaders do not chase the kind of short-term results that stock market analysts tend to be so fixated on. As a result, hidden champions spend on average twice as much on research and development as other companies. This reflects the long-term nature of their thinking.

“The leaders are the ultimate source of the success of the hidden champions. They are characterized by unity of person and purpose, single-mindedness, fearlessness, stamina, and inspiration to others. Not many people combine these personality traits. Leaders are a rare breed,” concludes Professor Simon.

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