"Hidden Champions in Flanders" review for Voka

1. "Hidden Champions in Flanders" review for VOKA
- Analysis of the survey findings -
Olivier Dallemagne
Brussels, 19 November 2013
Brussels Office
475 Louizalaan/Av Louise, Bus 15,
1050 Brussels, Belgium
Tel.: +32-2-6697710, fax: +32-2-6275686
kai.bandilla@simon-kucher.com
olivier.dallemagne@simon-kucher.com

2. Key question
Can Hidden Champions
drive growth in
Flanders?
-2-

3. Key learnings from the Hidden Champions in Flanders
A minority of companies create more value; their strategy is accessible to many
others
1.
1 8% of mid-sized companies apply the
Hidden Champions strategy and
create much more long-term value
2 Flemish Hidden Champions are
1.
stronger in four key domains
1.
3 Many more companies could
become Hidden Champions
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
-3-

4. Key learnings from the Hidden Champions in Flanders
A minority of companies create more value; their strategy is accessible to many
others
1.
1 8% of mid-sized companies apply the
Hidden Champions strategy and
create much more long-term value
2 Flemish Hidden Champions are
1.
stronger in four key domains
1.
3 Many more companies could
become Hidden Champions
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
-4-

5. Hidden Champions in Flanders
The Hidden Champions are 8% of companies – generating one-third of revenue
Hidden
Champions
Public
sector
companies
0.5%
8%
~33%
Private
companies
from all
sectors
99.5%
Other
companies
Hidden Champions
account for approx. 1/3
of the revenue of all
358 investigated
companies
Fulfill the Hidden
Champion traits
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
* mid-sized companies have revenues < €5bn
-5-
Revenue
A sample of 3,070
private mid-sized
Flemish companies*
with Belgian majority
shareholders, of
which 358 private
companies were
studied in detail

6. Key characteristics of the Hidden Champions
Hidden Champions in Flanders have the following traits which increase their longterm value:
Timing
Immediate value
+ 2.6% per annum above their sector
growth (weighted average)
+ 5% net operating profit on average
compared to the other companies in 2012
and a better resilience to crises
5 times more key patents and 13 times more
"world premieres" with less R&D spending
Long-term value
On average more than 2 x CAPEX
in Flanders (in last 10 years)
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
-6-
Higher
long-term
value!

7. Key learnings from the Hidden Champions in Flanders
A minority of companies create more value; their strategy is accessible to many
others
1.
1 8% of mid-sized companies apply the
Hidden Champions strategy and create
much more long-term value
2 Flemish Hidden Champions are
1.
stronger in four key domains
1.
3 Many more companies could
become Hidden Champions
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
-7-

8. Strategic gap between Hidden Champions and other companies
Hidden Champions are significantly more ambitious and innovative, and they
perform more strongly in general
Scoring on Hidden Champions strategy (4 key axes)
Other companies
Hidden Champions
Strong leadership
with ambitious goals
Hidden Champions are more
ambitious and motivate their
teams to perform much better
High-performance
employees
With less R&D spending, they
develop many more worldclass innovations
Persistent
innovation
Their products and services
are in more demand around
the world; they grow globally
Global marketing
and sales
Very weak
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
Very strong
-8-

9. Key question
What does more
ambition mean?
-9-

10. Strong leadership with ambitious goals
% of respondents
Hidden Champions aim to have the best technology and quality in the world in a
specific market
How would you describe your company?
85%
81%
81%
Hidden Champions in
Flanders
Other companies in
Flanders
38%
29%
21%
20%
10%
Qualitative leader
Technology leader
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
Most specialized
- 10 -
Quantitative leader

11. Key question
Stronger employee
performance?
- 11 -

12. High-performance employees
They create a competitive edge, even compared to German Hidden Champions
Importance
Index of competitive
strength
Product quality
Efficiency
Hidden
Champions in
Flanders
Punctuality of delivery
Closeness to customer
Aftersales service
Other
companies in
Flanders
Price
Distribution
Cooperation w./ distributors
Hidden
Champions in
Germany
Key patents
Marketing
Competitive performance
Source: Analysis by Simon-Kucher & Partners of 358 respondents,
30 face-to-face interviews and Hidden Champions of the 21st Century
- 12 -
Very weak
Very strong

13. Top performance and expansion
Hidden Champions grow faster than their industry, exceeding the 2% average growth
target
Hidden Champions
Examples of Hidden Champions
CAGR 10 years
Revenue in m
Additional % growth vs. industry growth
CAGR 10 years
+2,60%
Ateliers
Vlassenroot
90
80
Ø +7%
+22%
70
Christeyns
60
50
+11%
40
30
Other companies -0,25%
Baeten & Co
20
+11%
10
0
2003
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
*∆ is weighted average with revenue of company as weight, 2003–2012
- 13 -
2012

14. Strong and durable financial position
Hidden Champions are more profitable than other companies and are more resilient
to crises
Operating profit/operating revenue
2012
2003
15%
Maximum
10%
5%
75th percentile
Ø
0%
Median
25th percentile
-5%
-10%
Minimum
-15%
Hidden Champions Other companies
in Flanders
in Flanders
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
Hidden Champions Other companies
in Flanders
in Flanders
- 14 -

15. Key question
More innovative?
- 15 -

16. Stronger innovation productivity
Their productivity for one euro spent on innovation is much higher:
High
Hidden
Champions
67% had world premieres
"We need 6 people to develop a
world premiere; our competitors
have 100 employees on it"
35 patents on average
Innovation
output
"Weekly meetings of R&D,
marketing and logistics feed into
our large innovation funnel"
Other companies
5% had world premieres
Low
"The competition lags at least
three years behind us"
7 patents on average
< 6%
6%
> 6%
R&D investment as % of revenue
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
- 16 -

17. Key question
What is their global
footprint?
- 17 -

18. Go-to markets of Hidden Champions in Flanders
Sales distribution of Hidden Champions in Flanders and their key priorities for the
future
> 20%
> 10%
> 5%
< 5%
Top priority
Second priority
Third priority
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
- 18 -

19. Go-to markets of other companies in Flanders
Sales distribution of other companies in Flanders and their key priorities for the
future
> 20%
> 10%
> 5%
< 5%
Top priority
Second priority
Third priority
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
- 19 -

20. Key learnings from the Hidden Champions in Flanders
A minority of companies create more value; their strategy is accessible to many
others
1.
1 8% of mid-sized companies apply the
Hidden Champions strategy and create
much more long-term value
2 Flemish Hidden Champions are
1.
stronger in four key domains
1.
3 Many more companies could
become Hidden Champions
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
- 20 -

21. Hidden Champions per million inhabitants
Flanders has a large amount of Hidden Champions per million inhabitants – but we
see potential for many more
# of Hidden Champions per mill. inhabitants
Germany
Luxembourg
Switzerland
Austria
Flanders
Sweden
Slovenia
Denmark
Norway
Finland
Japan
Netherlands
Italy
USA
France
United Kingdom
Israel
Poland
Australia
Canada
South Korea
Spain
16,0
14,0
13,9
13,8
10,5
>>>>>>>>
5,4
3,5
3,4
2,8
2,7
1,7
1,7
1,2
1,2
1,1
1,1
0,9
0,7
0,5
0,5
0,5
0,2
Source: Analysis by Simon-Kucher & Partners of 358 respondents,
30 face-to-face interviews and Hidden Champions of the 21st Century
> 100 companies in
Flanders have the
potential to become
Hidden Champions
- 21 -

22. Key question
Bottom line:
Does Flanders have the
right fabric for growth?
- 22 -

23. Manufacturing sector in Flanders
Hidden Champions are needed to create a strong manufacturing sector
SMEs in Flanders
SMEs in Germany
Hidden Champions in Flanders
15%
Hidden Champions
32%
55%
89%
% of total revenue generated in manufacturing
Source: Analysis by Simon-Kucher & Partners of 358 respondents,
Hidden Champions of the 21st Century and Data base ECCBSO
- 24 -

24. Key question
The way forward?
- 25 -

25. Findings: Does Flanders have the right fabric?
Many more SMEs can grow to the next stage, as we have seen in Germany, Austria,
Switzerland and Scandinavia
Main findings





8% of Flemish mid-sized companies are Hidden Champions
They report better results with stronger innovation and a much more
international sales approach
By doing so, they contribute over-proportionately to growth in Flanders
By embracing the success factors of the Hidden Champion strategies,
many more Flemish companies have the potential to become Hidden
Champions and thus re-enforcing the Flemish industrial fabric
Framework conditions can accelerate this transformation
Source: Analysis by Simon-Kucher & Partners of 358 respondents
representing all industrial sectors and 30 face-to-face interviews
- 26 -