How to turn your startup into a ‘Hidden Champion’

Hidden champions are little-known small and midsized world market leaders: companies that are largely unknown to the general public and the media, but which are extremely innovative and profitable, and who absolutely dominate their industry. In a recent article on Whiteboard, I defined hidden champions as companies that

  • belong to the top three in its global market or is number 1 on its continent
  • has less than $ 5 billion in revenue
  • and is little known to the general public.

I have identified about 3,000 of these global leaders, 1,300 of which are located in Germany. Germany has by far the largest number of hidden champions, and they are the true secret behind Germany’s ongoing export excellence. Most of the hidden champions have been leading their markets for a long time. So how is it possible for a start-up to become a hidden champion and how long does it take?

Ask Frank Thelen. The first hidden champion he created is ip labs, the global leader in software for digital photo albums. Founded in 2003, ip labs ascended to world leadership in its market within four years. It was sold to Fujifilm in 2008 and is now a division of this giant that leads the world’s photographic market.

Frank Thelen – 15 Years Of Founding & Hacking from HackFwd on Vimeo.

In 2012 Thelen started out with a new venture, With this company he is re-thinking documents to make the dream of a paperless life come true. His goals? Frank leaves no room for doubt: “My goal is to become a world market leader in 48 months. We are 100 percent dedicated to this goal.” When doo launched in the Apple App store in February this year, it was immediately ranked as top downloaded App in over 50 countries. And this is where all the hidden champions started out: with high ambitions to become the best in the world – a market leader in the truest sense.

The most promising way to achieve this position is, of course, to start a new market yourself and to offer something which nobody has offered so far. But how can you achieve this seemingly outrageous goal?

Lesson1: Apply relentless focus

Focus, focus, focus. You have to concentrate all your resources on the focal point: the customer. When Manfred Bogdahn invented the retractable dog leash in the 1970s, he gave up his job as an engineer and ever since he’s been focused on leashes, leashes, leashes. His company Flexi makes only one product: leashes. Day and night he thinks of leashes. Only focus leads to world-class status.

Lesson 2: Keep at it

An indispensable ingredient of becoming a hidden champion is never-ending endurance and stamina. Of course, each start up-entrepreneur needs endurance. But to build a global organization and world market leadership it often takes one or even two generations of continuous entrepreneurial energy.

Lesson 3: go global

Focus makes a market small. The market for dog leashes in each country is tiny. How do you make it big? By globalizing! On a global scale each market becomes big. Today Flexi is present in more than 100 countries, makes 12 million leashes per year and holds 70 percent of the world market. There’s no doubt that focus plus globalization is the success formula for the most ambitious start-up entrepreneurs. Of course continuous innovation, closeness to customers and enthusiastic employees are needed, but the two indispensable pillars are focus and globalization.

I personally know what I’m talking about. I have practiced the hidden champions strategy myself. In my first life I was a university professor with pricing as my research specialty. After 16 years at universities, I quit and together with my doctoral student Eckhard Kucher I founded the business consultancy Simon-Kucher & Partners. We started by focusing on price consulting – and globalized. Today we have 690 employees who work out of 25 offices all over the world. In 2012 our revenue was 145 million euros (189 million US dollars). We are regarded as the world’s leading pricing advisor and thought leader.

I can assure you it works. Have courage! Focus and globalize!

[Photo: jayhem, Flickr]

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About the author

Hermann Simon

Hermann Simon is chairman of Simon-Kucher & Partners Strategy & Marketing Consultants and an expert in strategy, marketing and pricing. In the German language area he was voted the most influential management thinker after the late Peter Drucker. Before committing himself entirely to management consulting, Simon was a professor of business administration and marketing at the Universities of Mainz (1989-1995) and Bielefeld (1979-1989). He was also a visiting professor at Harvard Business School, Stanford, London Business School, INSEAD, Keio University in Tokyo and the Massachusetts Institute of Technology. From 1995 to 2009 he was CEO of Simon-Kucher & Partners. Professor Simon has published over 30 books in 25 languages, including the worldwide bestsellers "Hidden Champions", and "Power Pricing", as well as "Manage for Profit, Not for Market Share". His book "Hidden Champions of the 21st Century, Success Strategies of Unknown World Market Leaders" (2009, also in French) investigates the strategies of little known market leaders. "Beat the Crisis" (2010) provides companies with practical advice against the crisis and for a quick recovery. He just published a new book: "Hidden Champions: Aufbruch nach Globalia".

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