Hidden Champions with Hermann Simon

Hidden Champions with Hermann Simon.

What can small business owners learn from the Hidden Champions – the medium-sized, relatively unknown companies that have quietly, under the radar, become world market leaders in their respective industries – with Hermann Simon.

Hermann Simon, the man who coined the term Hidden Champions, and has studied and written about these companies for decades.

Hermann Simon, PhD., is a world-renowned management thinker, consultant, pricing expert, entrepreneur and leading authority on the “hidden champions” business model. He is the founder and honorary chairman of Simon-Kucher & Partners, the world’s leading price consultancy with over 1,700 employees and 42 offices worldwide. Simon is the author of 40 books in 30 different languages, including worldwide bestseller “Hidden Champions”, first published by Harvard Business School in 1996. And Simon recently publishing “True Profit!: No Company Ever Went Broke Turning a Profit”.

Simon’s upcoming book, “Hidden Champions in the Chinese Century: Ascent and Transformation”, is an in-depth exploration of the ever-changing operating conditions, as well as the greater uncertainty and volatility, that will define global business over the next 10 years—with a particular focus on China’s impact.

Before committing himself to management consulting, Simon was a professor of business administration and marketing. During his academic career, he was a visiting professor at Harvard Business School, Stanford University and the Massachusetts Institute of Technology. Simon is an honorary professor at the University of International Business and Economics in Beijing, and the “Hermann Simon Business School” in China is named after him.

In 1995, Simon put his Hidden Champions blueprint into practice as an entrepreneur, founding his own consulting firm, Simon-Kucher & Partners, with Dr. Eckhard Kucher, his first doctoral student. Simon-Kucher & Partners is now the global market leader in price consulting.

Hermann lives in Bonn, Germany.

Please briefly share the story of your early life and how to you ended up a PhD and entrepreneur. What did you learn in those early days on a farm that you still apply to business today?
(Simon also released an autobiography, “Many Worlds, One Life: A Remarkable Journey from Farmhouse to the Global Stage” in 2021, which highlights the influences on his remarkable journey from humble origins on a German farm to advising and sharing the stage with global leaders in industry, academia and politics.)
Simon was a reserve officer in the German Air Force and a member of Fighter Bomber Wing 33, participating in NATO nuclear sharing deterrence program during the Cold War. He graduated from the Officer’s School in Munich ranked first in his class and was elected spokesman of his Air Force platoon.
What led to you launching Simon-Kucher & Partners in 1995?
Please briefly introduce the term, and who the “Hidden Champions” are. Please also introduce the Hidden Champions strategy and management concept.
(“Hidden Champions” are medium-sized, unknown companies with annual revenues under $5 billion that have quietly, under the radar, become world market leaders in their respective industries.)
- Why are German companies so successful at exporting?
- Why are there so many Hidden Champions in Germany? 42% of all Hidden Champion companies worldwide are German.
How does a company become a Hidden Champion?
- Ambition – to be the best in your market worldwide.
- Focus (Focus on what you best!) – only focus leads to world class.
- Globalization
- Depth
- Customers (closeness to customers)
- Competition
  - A competitive advantage must…
    1) be important to the customer
    2) be perceived by the customer
    3) be sustainable and hard to imitate.
Pricing: Hermann shares insights on how to price your produce or service.
- Cost-Plus Pricing is the wrong approach. Instead focus on perceived Value for the customers – Value=Price.
- How to increase prices:
  - If you have a 10% increase in supply chain and/or production costs, for example, then:
    - 50% is passed on to the customer in a price increase.
    - 20% saving through efficiencies (cost savings)
    - 30% you absorb.
  - Be agile, be fast!
  - It’s better to increase several times in small steps than to have a large increase.
Why is Germany such a great place for entrepreneurs?

Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of this episode of The How of Business podcast show – dedicated to helping you start, run and grow your small business.