The Risks That The World’s Hidden Champions Avoid
The Risk Perspective
Book Review: Hidden Champions of the Twenty First Century: Success Strategies of Unknown Market Leaders by Hermann Simon
This review looks specifically at the discussion of risk in Hermann Simon’s Hidden Champions of the Twenty First Century.
Simon identified 450 Hidden Champions and studied over 200 of them in detail.
His definition of Hidden Champion was a company that was first, second, or third in their global market or first on its continent, had revenues below $4 billion as well as very low public awareness.
These companies had a tendency to be family owned and operated. They were located in regional areas and a large percentage were based in Germany.
They exhibited significant growth and were successful across most metrics.
This book is an engaging read as Simon explains the lessons that he has gleaned from his study of these very successful corporations that most people have never heard of.
He concluded that these successful companies consciously avoided significant mistakes often made by others:
- Short term profit maximisation for example cutting R&D expenditure
- Frequent change of direction in the strategic course of the company
- Diversification that results in a drift away from core business
- Risky financial activities and excessive leverage
- Overhasty or oversize acquisitions
- Unreflected outsourcing
- Disproportionate reliance on external managers
- Distracted by activities that do not benefit the business
In the interests of learning from the mistakes of others rather than feeling the need to learn them ourselves, this list is a cautionary reminder and certainly worth a read.
Risk photo thanks to The Fayj’s photostream at Flickr Creative Commons.