The two-day conference “Hidden Champions in CEE and Dynamically Changing Environments“, presenting the outcomes of the first research on “Hidden Champions” in Central and Eastern Europe (CEE), Turkey and Kazakhstan – highly innovative, differentiated and specialized small to medium size companies holding lead market positions in their field internationally – successfully concluded.

The international event organized by CEEMAN international management development association, in cooperation with IEDC-Bled School of Management and Austrian Federal Chamber of Commerce (WKO), revealed 165 successful companies from the countries of CEE, Turkey and Kazakhstan, their business success trajectories and distinctive business and leadership practices.

The concept of Hidden Champions was initially identified and studied by Prof. Hermann Simon, world recognized expert in strategy, marketing and pricing, referred to as the most influential management thinker after the late Peter Drucker in German speaking area. According to the 1996 study performed on the German economy and the 2009 study extended from Germany also to Austria and Switzerland, Prof. Simon re-confirmed that Hidden Champion- type of companies present an important pillar of advanced economies of Germany, Austria and Switzerland.

The purpose of CEEMAN-IEDC 2010/11 research project, conducted in 18 countries by a group of over 50 researchers, from management education institutions under CEEMAN leadership and in cooperation with RABE-Russian Association of Business Education and Polish Association of Management Education FORUM, was to identify such companies in CEE, Kazakhstan and Turkey and examine the assessment prevalent in economic circles that some CEE countries are losing the significance in the globalization battle. The results of the research shall also help to find novel ways for Hidden Champion companies to develop and hence to contribute to the development of this region.

Prof. Danica Purg, President of CEEMAN and IEDC-Bled School of Management, stressed that “CEEMAN and IEDC would like to share research results about the ‘hidden champions’ in CEE with the western countries and continue this project also in the future in order to support the companies with the knowledge they need and to help them grow.” Dr. Christian Matznetter, Vice President of Austrian Federal Economic Chamber, explained that the Chamber brings together Austrian entrepreneurs, among them also numerous Hidden Champions, while he sees the CEE region has a large future potential. Dr. Wolfgang Waldner, Secretary of State at the Ministry of European and International Affairs of Republic of Austria, focused on the important role of Austrian Hidden Champions in the national economy, in CEE/ SEE, which he sees as regions with best opportunities for Austrian Hidden Champions, and called for a tighter collaboration between business and public sectors and civil society in order to set common standards and create the environment of more European Hidden Champions.

The keynote speaker Prof. Hermann Simon, Chairman Emeritus, Simon Kucher & Partners, and the author of the bestselling book Hidden Champions of the 21st Century, pointed out that initially he thought that Hidden Champions are a typical phenomenon in German speaking countries, while now, also based on the CEE Hidden Champions research, he is convinced that this is in fact a global phenomenon; they are big contributors to decentralization in an economy and should become key drivers of economic progress.

Dr. Melita Rant and Dr. Marek Dietl, Hidden Champions research project leader and co-leader, explained the scope and methodology of the extensive international research project and presented the researchers’ conclusions: “All of the 165 Hidden Champions, identified over the course of 16 months in countries of CEE, Kazakhstan and Turkey, are innovative either in product areas, production processes, or in business models; all of them have been growing over the last decade despite being in the midst of an economic recession. They are mainly originating from ICT and nano-technologies (35,7%), industrial machinery/equipment (18,4%) , as well as electrical/electronics industries (11,2%) and are generally unknown to the general public due to operating mainly in the B2B segment. In general, these companies are highly innovative, embedded firmly in clients’ business systems with their advanced technological solutions and consultancy. Their success can be viewed along several dimensions, like market positioning, innovation behavior and sustainability. Such companies present the core pillar of majority of open, export-oriented economies as they exhibit much lower export rate volatility to global recessions and financial shakeouts; they are the growth engine of the economies by creating new employments with an above average rate, and their sustainability of business growth and success is preserved over much longer period of time than that of average companies.” In their opinion, succession, financing and management of growth, and internationalization are three biggest challenges CEE Hidden Champions face, however, their future looks bright “as they have major, often high-tech products at early (growth) stage and still many foreign markets to conquer.” Full research report is available here.

The researchers’ panels with representatives of Hidden Champions like CASON (Hungary), DOK-ING (Croatia), Drevodomy Rajec (Slovakia), Eko Textile (Turkey), EXECOM (Serbia), and STiM (Belarus), focused on three issues relevant for companies identified as Hidden Champions: benefiting from sectorial advantages vs. creating new sectors (or improving the existing ones), leverages of innovation of HC from CEE and emerging economies, and business environment and context for hidden champions to grow and sustain, led by Dr. Irina Skorobogatykh of Plekhanov Russian University of Economics, Dr. Peter Baloh of IEDC and Dr. Nadya Zhexembayeva of IEDC respectively; the speakers agreed that clarity, speed, knowledge and leadership are key to becoming a Hidden Champion, while innovations as the crucial competences of Hidden Champions need to be done in a sustainable way both on the level of processes and culture.

The conference featured also three panel discussions, on the current and potential business cooperation of Hidden Champions, moderated by Dr. Kevin Desouza, Director of the Metropolitan Institute, USA, on leadership challenges, led by Dr. Ian Sutherland of IEDC, and on financing Hidden Champions’ growth and development, led by Pavel Lebedov of RANEPA; Russia. The panelists – researchers, financial experts and investors as well as representatives of Hidden Champions, such as BISOL Group (Slovenia), Studio Moderna (Slovenia), Tajfun (Slovenia), set out that Hidden Champions need to build strategic alliances based on a proper evaluation of mutual commitments in order to enable all parties to grow through relationships. The leadership of Hidden Champions is an essential component to their success; it has proven to be focused on vision, continuity and expert knowledge, however, the practice of Hidden Champions is also revolving around developing organizations of community both internally and externally. The way to proper capital structure is one of the most difficult issues of Hidden Champions, since investors appreciate understanding and transparency, while one of the patterns which build Hidden Champions’ success is being hidden and to a large extent being managed based on the leaders’ vision; however, common success greatly depends on the ability of the partners to understand each other’s positions and goals.

Available speakers’ presentations and other materials can be found at www.ceeman.org/hidden-champions