Years ago I studied Hermann Simon’s book Hidden Champions. During these days I am spending in Germany, the subject came back to mind. I asked myself a simple question: how many hidden champions are there in Germany today? Following that question, I came face to face again with the more important issue behind the number. What exactly makes a company strong on a global scale? And once we have built that strength, how can we protect it?
In an interview published in April 2025, Simon states that he counts 1,602 Hidden Champions in Germany and around 4,000 worldwide. These are companies that have reached leading positions in their own narrow markets but are little known to the wider public. So it is possible to speak of roughly 1,600 hidden champions in Germany. What is truly interesting here is how important a place companies whose names we never hear in daily life can hold in the way the world works. [1]
The effect of deepening on growth
The appeal of this model lies in the way it makes us question our common assumptions about growth. A company can keep adding new products to reach more customers. It can try to spread its risk by entering different industries. Of course, these are the right choices under some conditions. But every expansion takes a share of management attention, engineering capacity and cash. After a while, the company has many businesses, yet it becomes hard to say in which one it is exceptional. This is exactly where the hidden champion idea invites us to think about the effect of deepening on growth.
Focusing on a narrow field does not mean being unambitious in that field. When you clearly choose the customer group, the conditions of use and the problem to be solved, you can investigate whether the same problem exists elsewhere in the world. That way, your area of expertise stays narrow while the geography you can reach widens. Still, you need to prove that the niche you defined at the outset is really a market. It is easy to invent a category special enough to keep competitors out and declare yourself number one. Being chosen again and again among the alternatives the customer compares is a much harder test.
What economic outcome does the customer achieve?
For me, the question at the heart of the model is this: what economic outcome does the customer achieve thanks to what we do well? Engineering excellence turns into strategic value when it finds a counterpart in the customer’s world. Less unplanned downtime, lower cost of errors, faster commissioning or more reliable delivery can be different forms of that counterpart. There is a considerable distance between describing a feature and showing the outcome achieved. Closing that distance requires, in addition to the sales team’s presentation, understanding the customer’s operation, measuring it and agreeing on the outcome.
Let us consider an entirely hypothetical example. If your solution can prevent 20 hours of downtime a year at a production site and the verified loss per hour is 5,000 euros, the annual gross benefit is 100,000 euros. If the additional costs of installation, maintenance, integration and use add up to 30,000 euros, the economic benefit remaining before your price is deducted is 70,000 euros. This calculation does not say that your product is automatically worth 70,000 euros. You also need to know which part of the outcome you create, how much risk the customer takes on and what the alternatives offer. The quality of the price discussion rises with the answers you give to these questions.
Putting the customer’s problem at the center of focus
That said, focus should not be romanticized. Being very good at serving a shrinking demand does not guarantee growth. Today’s strong position is the result of right decisions made in the past. It does not show that the same decisions will be right again in the future. In his 2025 interview, Simon also points out that companies in fields undergoing transformation, such as internal combustion engine parts, need to rethink themselves. [1] That is why I suggest placing, as far as possible, the customer’s important problem at the center of focus. Product, technology and revenue model can then be renewed according to the changing conditions of that problem.
For example, a company that specializes in manufacturing a particular part may notice the threat posed by a new design too late if it defines itself only by that part. If it can read the customer’s need as providing reliable motion or uninterrupted production under specific operating conditions, it can build a bridge between its knowledge and new solution areas. Care is needed here. Not every adjacent market fits existing competence. As well as the attractiveness of the new field, one must also assess which competence needs to be acquired or developed to establish superiority there. If renewal turns into unlimited diversification, the know-how that focus has accumulated can dissipate.
AI adds a new layer
Artificial intelligence adds a new layer to this discussion. It can help with tasks such as comparing market documents, finding recurring patterns in service records or speeding up the preparation of quotes. The OECD study conducted in 2024 with more than 5,000 SMEs in seven countries and published in 2025 reports that generative AI is used in 31 percent of the participating companies. However, this study does not specifically examine hidden champions and does not show that such use leads to global leadership. [2] We have no evidence of this kind that would allow us to equate AI use with strategic superiority.
My suggestion is to link AI investments to the promise made to the customer. If your promise is that the production line runs more reliably, an application that makes service knowledge accessible faster can make sense. You can then assess its value not by the number of answers it generates but by the resolution time verified by experts and the rate of recurring failures. Moreover, your competitors can access the same tools. A more lasting difference may come from combining company-specific know-how with the right data and being able to use that knowledge reliably under the customer’s conditions. This is a strategy thesis that needs to be tested.
The dimension of international reach
Then there is the dimension of international reach. Selling a product in a country does not mean you can be there for that customer’s problem when needed. Distributor incentives, service capacity, spare parts, language, certification and collection arrangements together determine the economics of growth. If service cost per customer rises faster than export revenue, growth may not strengthen the company. That is why managements working toward global niche leadership need to track not only market share but also the return on capital and the real cost of reaching the customer.
The limits of success stories
When reading success stories, I also keep another limit in mind. The common traits of champions offer us valuable questions, but they do not prove that every company with these traits will become a champion. Without seeing similar ventures that failed, it is not right to derive a definitive recipe for success from past results. For the same reason, the honest promise of a masterclass cannot be to create a world leader in two days. What two days can produce is a better choice about the niche in which a company can establish superiority, and a work plan to test that choice in the field.
This is why I find the Hidden Champions idea valuable again today. It leads companies to ask more precise questions about their own future. In which problem of which customer will we go deeper? With which outcome will we prove our superiority? Which businesses will we give up in order to grow? And how will we know that our current solution is beginning to lose its validity? A management that regularly produces answers to these questions can develop its ability to learn along with its focus.
For your next management meeting
My question for your next management meeting is this: if you chose a single customer outcome that could make your company the preferred choice worldwide, with what evidence would you test that claim over the next 90 days?
Sources
- Stefanie Hütz, interview with Hermann Simon, 23 April 2025. On the count and on specialist fields undergoing transformation. Open the source.
- OECD, Generative AI and the SME Workforce, 5 November 2025. Survey period 2024. Open the source.