If you want to squeeze yourself into a market niche you have to remain lean and agile. And once in there you should fill it out as much as you can. This appears to be the recipe for success of those small and medium-sized companies that are seeing record successes as so-called hidden champions, and yet still remain largely unknown among the public.
There are around 1,500 of these industry success stories in Germany, Austria and Switzerland. 190 companies in Austria alone fulfil the criteria drawn up by Georg Jungwirth from FH Campus 02: they are among the top three in their market segment or at least market leaders in Europe; their annual turnover is no more than EUR 200 million, and they have their company headquarters “at home”.
The diverse range of products offered by these companies to reach their leading positions is astounding: traditional Viennese company Thomastik-Infeld for instance is a global market leader in the production of strings used in string instruments. Prior to the start of World War I the founders of the company began to investigate the materials that they would require for developing new string technologies. Today, strings for string instruments are truly hi-tech products based on materials like plastics from space technology and bio-compatible substances such as titanium. Fundamental research, their own development laboratory and a team of highly specialised engineers have all been necessary elements in producing these unique and special products that receive praise literally in the highest tones from musicians all over the world.
These products may not be so surprising given Austria’s musical tradition. The specialisation of the Teufelberger Group from Wels in Austria is less obvious. The Group produces ropes and cord material for extreme loads in industry, transport and shipping. Die you just see the start of the Extreme Sailing Series 2014 in Singapore? Although the Red Bull Sailing Team did not make the podium at the first stage, they may still come close to winning the trophy if their ropes hold up....
The firm M+C Schiffer from Neustadt near Cologne has remained fully focused. It is the largest independent producer of toothbrushes in the world, producing over a million toothbrushes for the global market on fully automated production lines in three shifts every day, seven days a week.
Or the company Poly-Clip System: the founding family of this Frankfurt-based company had the ground-breaking idea in the 1950s of sealing sausages using metal clips. Following a long series of innovations and patents, Poly-Clip System has for several years been one of Germany’s global market leaders with its packaging machines and closure technology for foodstuffs.
A real “insider’s tip” are the products that have been made by Innsbruck foundry Grassmayr for more than 400 years but which still set the tone in more than 100 countries around the world. The company produces bells and works of art made of bronze. Their bell calculations are a closely guarded secret. They are in continuous development and have been passed on from father to son for 14 generations.
The Swiss textile company Lantal is literally a high flyer that has been supplying fabrics for airplane seats since 1954. One of the latest innovations includes pneumatic (air cushioned) seats which airlines can use to provide their passengers with maximum comfort while reducing weight. There are thousands already in use worldwide.
The history of the company Schiebel Elektronische Geräte GmbH also sounds incredible. It started manufacturing micro switches for washing machines in Vienna in 1951. Today it is the global market leader in the area of mine detectors and develops surveillance drones that are in demand all over the world.
German company Gerriets provides a “drama experience” according to its own mission statement. It specialises in textiles for theatres and stages that now hang in all the world’s major opera houses. Whether at La Scala in Milan, the New York Metropolitan Opera or the Royal Opera House in London – the curtain goes up in all of them with Gerriets.
Tales of success such as these naturally evoke curiosity during times of economic hardship and retreat, and experts such as German strategic adviser Hermann Simon have detected clear similarities between them, despite differences in the products on offer.
As they say, the clever cobbler sticks to his last: Hidden Champions focus on one product that is often inconspicuous but develop it to perfection and make themselves irreplaceable in their segment. They invest up to five times more funds in research and innovation than large corporations. The issue is not always one of developing brand-new technologies, but of cleverly adapting existing ones, and finding new channels for distribution and marketing.
Exploiting globalisation: This focus does narrow down their available market; yet the companies make up for this with a resolute global presence. They frequently only have a few dozen customers, but these are often the most important players on the global stage, and can often be intensively managed with relatively few employees.
Strong leadership: the Hidden Champions are often family businesses that think in generations. They invest cautiously, preferably using their own funds, and consistently rely on the knowledge and skills of their loyal top employees. Growth based on credit and on hire-and-fire policies are alien to them. Continuity in their leadership also makes it easier for them to pursue their highest ambitions with purpose.
Staying below the radar: Niche market leaders generally tend to target other companies rather than the end customer. Being known to these companies is perfectly sufficient for their purposes. They are not interested in major publicity that might arouse the ambitions of potential competitors. When you are making good money, you keep quiet and enjoy it.
Lean structures for narrow niches: An SME that is well managed finds it easier to implement an efficient and clear-cut organisation and to focus on the tasks at hand.
One thing is clear: examples such as those provided above belong to the Economic Champions League. Most SMEs will find it difficult to implement these recipes for success and achieve the same results. Yet they can still gain by implementing them in part: e.g. by searching out their own core competencies using a lot of imagination and self-assessment, by not wasting their energies and by daring to exploit globalisation.
The importance of SMEs for the overall economy is simply astounding. Contrary to the impression that can easily be gained from the media that the European economy is dominated by large multinational companies, in reality more than 99% of all European companies are SMEs. “They create two out of every three jobs in the private sector and are responsible for more than half of the overall value created by all companies in the EU. Medium-sized business are also the real backbone of the European economy. They are to thank for prosperity and economic growth and they play a key role in the areas of innovation, research and development.”
“Even more astounding is the fact that nine out of ten SMEs are actually microenterprises with less than 10 employees. As such microenterprises with an average of two employees are the mainstays of the European economy.” (http://ec.europa.eu)
Any development in this sector is naturally important given facts such as these. We can also be quite sure that the next generation of global market leaders will grow where new technologies prevail: e.g. in the areas of software, mechanical engineering, sensor technology, biological engineering and even in the service industry.
In terms of new technologies: these are the reason for the international success of the company Durst Phototechnik AG based in Brixen in South Tyrol and its multiple branches. The company is one of the world’s leading suppliers for the manufacture of premium-quality systems for image production. It was one of the first to develop large-format inkjet printing for the photographic and graphics industries, and today is an inkjet specialist for industrial applications. At its own research centres Durst pursues the objective of promoting competitiveness, sustainability and profitability for its customers.
The fact that extraordinary goals can only be achieved by an extraordinary team is also part of its company credo. Social responsibility towards its employees and an awareness that a premium-quality working environment has a positive impact on work results are crucial parts of its company culture. There is a reason why Bene was able to win the company over in designing the offices for the new workshop in Lienz in Austria. The vision of the company’s management team of inspiring workplaces which are comfortable for every employee was successfully implemented using a furnishing concept that includes a workplace arrangement based around the windows, thereby giving every employee an external perspective, and including the compact CUBE_S workplace modules. Once again this just goes to show: an intelligent office concept is a crucial ingredient in a good recipe for success.....