What Are Hidden Champions?

The famous management master Herman Simon first defined them as "hidden champions" in "Hidden Champions: Who is the best company". It is clear that hidden champion companies refer to the majority of the domestic or international market, but SMEs with low social awareness.

Invisible champion

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The famous management master Herman Simon first defined them as "hidden champions" in "Hidden Champions: Who is the best company". It is clear that hidden champion companies refer to the majority of the domestic or international market, but SMEs with low social awareness.

Chinese name

Invisible champion

Foreign name

The hidden champion

Nature

enterprise

Types of

Modern words

1. Clear goals. ^[1]

1. Focus on strategy. Focus is the "killer" of the success of the "invisible champion" company. Focus is the strategy of the "invisible champion" company to continuously win the market. The result of focus and focus will inevitably make it into the track of all eggs in a basket. But focusing on the world, most The "basket" of China's "hidden champions" is far from full. The risks in this area are mainly reflected in whether the specific products they engage in will be subverted by more advanced and cheaper products. ^[1]

As the so-called "Koma-Koma Road, Ma-Koma Road", Chinese companies need to be such "potentially dark" marketing rules if they want to become champions. Like Mao Zhu, the key moments can be sky-high. So, what are the growth rules of the invisible champion: ^[2]

Burning ambitions ^[3]

Michael Porter has proposed three basic competition strategies, namely cost leadership strategy, differentiated business strategy and focus strategy. However, the invisible champion companies seem to be beyond the scope of the three basic competition strategies. One of their common characteristics is the combination of business specialization and geographical diversification. Interactive integration of internal capabilities, interactive integration of customer-oriented and technology-oriented, interactive integration of cost advantages and characteristic advantages. ^[3]

In general, successful companies often have many similar characteristics. However, invisible champions have shown a unique personality in their pursuit of excellence. As mentioned earlier, the biggest feature of stealth champion companies is the combination of business specialization and regional diversification. This feature largely determines the business model of stealth champion companies, and the business model is that they can become stealth champion companies. Important foundation. In the modern market competition, it is not easy for an invisible champion to become a "champion" and be able to achieve "invisibility." Therefore, analyzing the business model of an invisible champion is a very meaningful question. ^[3]

Invisible champion companies can succeed in a highly competitive global market, and there must be many unique qualities that many large enterprises and ordinary SMEs do not have. In the development process of many large enterprises, with the continuous expansion of business scale, the division of labor is becoming more and more clear, and the interaction with customers is weakening. They have more emphasized their own business quality, such as enterprise-led technological innovation. Gulati and Oldroyd's research also supports this view. The general situation of small and medium-sized enterprises is the opposite. According to Greiner and Quinn and Cameron research, in the early stage of development, general SMEs, due to their small size and weak market dominance, have paid more attention to the speed of response to changes in customer demand. Comparatively speaking, invisible champions are better than large companies in terms of interaction with customers, and better than ordinary SMEs in improving their business quality. In short, invisible champion companies have performed well in both focusing on their own business quality and strengthening their interaction with customers, and have thus achieved great success. ^[3]

(I) Focus on the pursuit of own business quality

Invisible champions are able to achieve global success, which is inseparable from their extreme focus on their own business quality. The so-called self-management quality mainly includes the performance in terms of technological innovation, market position, and cost reduction.

First, invisible champions have a paranoid enthusiasm in improving the quality of their products and services. These companies often focus on developing a niche market, and such markets usually have high requirements for product quality. Therefore, they need to invest a lot of resources to make this type of market a "super niche market" and ensure that they are in this niche market. Hegemony in the market. Of course, superior product and service quality can be reflected not only in basic factors such as quality, technology, durability, and price, but also in supporting factors such as delivery, sales / distribution, information, advertising, customer relations, and customer training. The quality of superior core products and services is often an important basis for companies to gain a competitive advantage, because the quality of core products and services affects customer values and behavioral codes to a large extent. The hidden champions believe that the competitive advantage of a company depends first and foremost on the quality of its products and services. It is the unremitting pursuit of product and service quality that has made the hidden champions a significant competitive advantage.

Second, the business strategy of the invisible champions has always been to combine technological innovation with global market development. They believe that the market is not inherent, but created by the company. For all hidden champions, technological innovation is a central task. Invisible champions often gain the leading position in the world market through technological innovation in their market areas. But they do not blindly take breakthrough innovation as their main goal, but rather prudently pursue incremental innovation. From the perspective of invisible champions, the secret of sustained success is that the company can continuously make many small but brilliant progress under the guidance of clear and ambitious goals. This is also the Japanese company's business philosophy of "continuous improvement for the benefit of customers." In these enterprises, technological innovation activities are a day-to-day product improvement process, which requires each production of a different product to be improved over the previous product. This business philosophy is more suitable for the strength and characteristics of invisible champions, and is particularly prevalent in the fields of mechanical engineering and system engineering. The guidelines of many invisible champions clearly stipulate that technical innovation must be vigorously promoted and corresponding organizational support is required. This has become a widespread consensus among invisible champions.

Third, under normal circumstances, invisible champion companies intend to implement a clear-cut competition strategy, that is, the pursuit of distinctive advantages rather than cost advantages, which can effectively carry out differentiated operations and dislocation competition. Earn development space and market position for enterprises. However, many invisible champion companies usually operate in an extremely competitive oligopoly market. Therefore, the market position of invisible champion companies is bound to be threatened by competition. Especially when the price advantage of competitors is very significant, it can often offset the characteristic advantages of hidden champion companies. Of course, once an invisible champion is attacked, it will often spare no effort to defend its market position. In general, they use two basic methods of competition: first, to vigorously reduce operating costs while ensuring the quality of products and services; and second, to attract or retain customers by creating new features. They do not exclude new competitive ideas and strategies, such as time-based competition, total quality management, and business process reengineering. But they believe that the art of competitive strategy is to do a few things better at the same time, rather than to do something better. In this way, they can often win a leading market position and even form a "psychological market leading position."

Fourth, hidden champion companies attach great importance to cost reduction, often introducing target pricing and target cost systems into their development plans. Especially when these companies are disadvantaged in market competition, they usually use cost reduction as a powerful weapon to win competition. In the long run, no company can afford the cost of neglecting costs. In fact, even if the important cornerstone of a competitive strategy is outstanding performance, costs are equally important. The hidden champion company knows that customers will never buy a high-end product at all costs. Therefore, cost reduction often becomes an important means in the management process of the hidden champion company. The best principle of competition is to regard performance and cost as two parameters of equal importance, or only to be slightly biased towards one party, and not to lose sight of the other. Invisible champions often do better than their competitors in dealing with the depression. This is the result of efforts to reduce costs. They do not first create perfect products and then determine their costs, but they are increasingly inclined to determine the target costs of products and services before starting a project. Products produced in this way are often cost Has a strong market competitiveness.

(II) Emphasize the interactive relationship with customers

In the practice of business operations, truly outstanding companies can maintain a positive interaction with customers. Because the hidden champions adopt a professional management strategy and their unremitting pursuit of their own business quality, they always maintain a close and interdependent relationship with their customers.

First, the survival and development of stealth champion companies must depend to a large extent on their customers. According to the survey, 77.7% of invisible champions believe that they are actively dependent on their customers, and 50% of invisible champions believe that customers can exert tremendous pressure on them, and losing an important customer may even threaten their survival. Most invisible champions face a narrow focus market, with the result that many invisible champions are completely dependent on orders from a few customers. At least 1/7 of the invisible champions said that 50% of their sales were purchased by 5 customers, and another 1/4 of the invisible champions admitted that about 20% -50% of their total product sales were from 5 Biggest customer purchase. The above situation shows that companies relying on a narrow market often have to rely on a small number of customers to survive to a large extent. It is precisely based on this recognition that hidden champion companies have a persistent pursuit of their own business quality.

Second, the leading market position of invisible champions has also created a considerable degree of customer dependence on the company. The survey shows that 69.7% of the invisible champions believe that the customer's evaluation of the business transaction is important or very important. 68% of the invisible champions believe that their customers want a lot of information. The vast majority of invisible champions Businesses believe that buying their products is not a routine business for customers. 75% of hidden champions believe that their customers find it difficult to buy the products they need from other companies. These customers find that the products they need are other companies. An irreplaceable unique product. The supply-demand relationship between invisible champions and customers is based on economic rationality, not on emotional friendship. Therefore, many invisible champion companies not only focus on the production and sales of products, but also emphasize how to increase the customer's dependence on the company, which has a direct and important impact on their relationship with customers. In terms of business strategy, companies often strengthen customers' dependence on the enterprise through certain methods and approaches. For example, many invisible champions often consciously control product production or market launch, resulting in a relative shortage of product supply to increase the value of products in the minds of customers.

Third, the invisible champions fully realize that there is an interdependent relationship between enterprises and customers. When an enterprise wants to establish a sustained and stable business relationship with customers, it must strive to provide customers with quality products and services, and it must also make its products and services unique and irreplaceable products and services. However, with the continuous changes in customer needs and the increasingly fierce market competition, the systemic, complex, and dynamic characteristics of enterprise production and operation activities have become increasingly obvious. The invisible champion believes that the relationship between supply and demand contains substantive content such as market power, and makes every effort to tilt the balance of market power in a direction that is beneficial to itself. For example, strive to increase the self-sufficiency ratio of product parts to increase customer dependence on the enterprise; deepen the degree of vertical integration of product production, enhance the incompatibility of parts, and reduce the scope of customer choice. Of course, it needs to be emphasized that while stealth champion companies take measures to enhance their status, they may also create favorable conditions for customers. This is because, as long as one company guarantees to provide comprehensive and systematic services, customers can be freed from the heavy burden of dealing with multiple suppliers.

Fourth, invisible champions focus on establishing long-term cooperative relationships with customers. Business and customer are two aspects of one thing: on the one hand, the customer needs the company to provide them with high-quality products and services; on the other hand, the business also needs customers with behavioral loyalty and continuous relationships. Therefore, the establishment of a long-term and stable cooperative relationship is of extremely important strategic significance for the survival and development of both supply and demand sides. For any company, the contribution of a customer in its life cycle is greater than the sum of the contributions of all customers now. Therefore, establishing long-term cooperative relationships with customers has significant economic significance. When customers increasingly rely on a certain company, and this company does not overemphasize the role that others cannot replace, the cooperative relationship between the supply and demand side can be maintained and developed. The professional management strategy of the invisible champion company and its unremitting pursuit of its own operating quality provide customers with a credible and high-level commitment and lay the foundation for maintaining a long-term and stable business relationship between the company and customers. As a result, the transaction costs and transaction risks of both the supply and demand sides are reduced, so that this long-term, interactive cooperation relationship established on the basis of mutual trust and mutual respect has a strong momentum for development.

The existence and development of invisible champions is a unique and common phenomenon. Its uniqueness lies in its strong competitiveness in the international market, but it is not widely known; its universality lies in its large presence in many countries and regions. The success of hidden champions can be summarized as follows. First, clear and consistent strategic logic. The important feature of the invisible champion company is to combine business specialization with regional diversification, and carry out a series of interactive integration based on this. Management capacity. Second, a unique and effective business model. Based on the management strategy of professional specialization and regional diversification, the hidden champion companies generally have three business models: "building models", "exclusive" and "alliance". These unique business models are an important foundation for the hidden champions to gain a competitive advantage. Third, focusing on their own business quality and emphasizing their interaction with customers are two indispensable key success factors for invisible champions. Compared to many large enterprises and small and medium-sized enterprises in general, invisible champion companies have performed well in both focusing on their own business quality and strengthening interaction with customers, and have achieved great success.

Economic globalization Market internationalization has become an irresistible trend in today's world. However, many enterprises in China have not performed satisfactorily in terms of strategic logic, business models, and key success factors. In particular, they still lack rapid and sensitive responses to industrial division of labor, market structure, and trends. Although most of them have formulated global business strategies, their products are still mainly limited to domestic or regional markets. Even when neglecting overseas markets may mean that these markets will be lost forever, they also lack effective countermeasures. The successful experience of invisible champions shows that for many large enterprises in China, decentralized management is a correct development direction. Highly autonomous strategic business units are more likely to adopt specialized business strategies, strengthen interactive relationships with customers, build a dynamic equilibrium that can be continuously improved between technological innovation and market demand, and so on, and these are exactly what modern enterprises have gained Necessary conditions for sustainable competitive advantage. For many small and medium-sized enterprises in China, they should learn and learn from the strategic logic of invisible champions, interact and integrate in technological innovation and market development, and take leading market position in the process of global operation as an important strategic goal of the company, because The scale effect brought by the globalized market is enough for enterprises to recover their investment in research and development, and control costs within a certain limit. Therefore, China's small and medium-sized enterprises must correctly strategically position in the new global division of labor system, choose or create a suitable business model, and strive to cultivate key success factors with corporate attributes in order to improve their international market competitiveness.