3B Scientific is
the world’s leading manufacturer of anatomical and biological teaching aids for
science, training and patient education. The excellent quality of 3B Scientific®
Products, manufactured by skilled and trained personnel, the extremely
competitive value plus the uncompromising flexibility of processing the global
customer requirements are the essential factors accounting for steadily
increasing success. And that is what 3B stands for: Best Quality, Best Value,
Best Service.
Extracts from Hermann Simon's book "Hidden Champions -
Lessons from 500 of the World's Best Unknown Companies", Harvard Business School
Press, Massachusetts, 1996:
Intellectual foundations of Globalizations
While, from a superficial viewpoint, achieving global business scope may appear
to be easy, it was anything but easy for the hidden champions. Not a short-term
result, it must be built on cognitive and behavioral foundations that transcend
the narrow boundaries of business. Corporate culture and social factors play an
important role in overcoming barriers to globalization. Some have an exceptional
proactive approach to the language problem. (Page 90)
Some, even learned
Japanese, as did Otto Gies, sales director of Paul Binhold, world leader in
anatomical teaching aids (skeletons etc.), which cracked the Japanese market.
Binhold's market share in Japan is about 50%. Binhold's catalog is available in
fifteen languages - the catalog of the next best competitor is printed in only
three languages. (Page 91)
There are also differences between the hidden
champions and large German corporations. The latter's employees often find it
hard to switch to foreign languages at meetings, seminars, and conferences, but
hidden champions, whose international management meetings are almost always in
English, do it more easily. (Page 92)
Internationalization also involves
the clever use of symbols. People often feel insecure when they visit foreign
counties, and small symbols can offer them comfort. Tracto-Technik, a leading
company which makes machines that dig horizontal subterranean holes like a mole
without an open trench, welcomes foreign customers by flying their county's
flag. Many other hidden champions practice this and similar symbolic actions.
One CEO, who offers a choice between a Japanese and a German restaurant to his
Japanese guests, finds that they frequently prefer the first alternative. During
a business negotiation in a foreign country, they feel more comfortable in a
familiar environment. In the same vein, products have to be adjusted to a
country's preferences. Paul Binhold offers torsos with Japanese features in
Japan and with African features in Africa. Such simple amenities are often
neglected in international business. (Page 93)
Summary:
The discussion has shown that the hidden champions are true global firms. They view the whole world as their market and act accordingly. Their global success contains important lessons for any company. A narrow focus on product, technology, and customer need is combined with a global perspective in marketing and selling. This two-pillar strategy is based on the perception that customers in the same industry tend to be more similar across countries than customers across industries within the same country. A global scope can make niche markets large enough to allow for sufficient economies of scale and experience curve effects. Successful globalization can originate from different motives, but it should start as early as possible and proceed rapidly. It seems preferable to establish direct customer contacts through owned subsidiaries in target markets; customer relationships should ideally, not be delegated to third parties. Globalization can moderate the risk associated with a narrow market focus because a company can sell in many countries. But at the same time, globalization introduces new risks owing to an increase in complexity. A company that globalizes should closely observe competitive aspects both with regard to avoiding head-on collisions with strong local competitors and with regard to keeping competitors at bay in their local strongholds. The Japanese market can be cracked, but accomplishing it requires excellent performance, including high commitment and superb service. In emerging markets, companies should recognize the importance of arriving first. Language ability, travel, educational exchange, and international experience form the intellectual and psychological foundations for global business success. Companies can create these foundations, but they depend to a certain degree on the international orientation of their societies. (Pages 96, 97)
Price, Value, Service
While the hidden champions adjust performance to customer requirements, their main selling point is superior value, not price. Service also plays an important role in the value they deliver. The strategies of a number of them are set forth in the following statements:
Our sales are not based on price.
Our message is the value, not the price.
Quality remains, long after price is forgotten.
Our strategy is value-, not price-driven.
Our products, though expensive, are economical.
Customers return 100 percent loyalty for value received.
We don't exploit our position because customer loyalty is more important than short-term profit. (Page 113)
Nevertheless, Paul Binhold, world leader in anatomical teaching aids, has a worldwide price guarantee: if a product of comparable quality at a lower price is available, Binhold absorbs the difference. And Fielmann, the European leader in eyeglasses, has built its strategy on aggressive pricing and heavy advertising of its price advantages. But even these atypical hidden champions offer good quality. (Page 114) In addition to fending off aggressive price cutters, Binhold considers the action a worthwhile way to gather information on competitors' pricing practices from around the globe. (Page 159)
Summary:
Closeness to customers is a
pivotal element of the hidden champions' strategy. It's their behavior rather
than lip service that contains valuable lessons for every type of company.
Customer relations are complex and often involve mutual dependence. The
unique quality of hidden champions' products makes it difficult for customers to
replace them, and their narrow focus induces hidden companies' strong dependence
on their customers. Such a situation creates strong commitment on both sides. A
good customer-supplier relationship is not built on friendship and emotion alone
but on sound economic rationale. If trust and long-term orientation prevail in a
relationship, both sides can substantially reduce their transaction costs. While
the hidden champions are very close to their customers, they are not marketing
professionals. Ideally, a company should be both close to the customer and
professional in marketing. Closeness to customer comprises performance and
interaction; a company should be good in both dimensions. Closeness to customer;
particularly in interaction, is best achieved through direct distribution, a
flat organization vis-à-vis the customer; and much contact of non sales
personnel. Customers should and can be extremely valuable sources of
information. Gathering market information should both reliance on surveys and
direct personal experience to achieve behavioral impact. Direct and regular
contacts of top management with customers are extremely important. From the
success of the hidden champions, it appears advisable to build strategies on
superior value and service rather than on price. The firms pay strong attention
to customer loyalty and do not exploit their short-term dominant position or
their temporary pricing latitude. Excellent service is an indispensable aspect
of closeness to customer. Especially in an international context, service must
be worldwide and feast. While the spatial closeness of customers still plays an
important role, the hidden champions have begun to transcend this limitation. A
global competitor must achieve closeness to its customers regardless of their
location.
Again, although these lessons are essentially based on common
sense, they are difficult to implement. Customer relations form an essential
part of each economic transaction. Mutual dependence and trust develop only when
both parties derive their long-term fair share from a business relation.
Excellent service requires the closeness to customer of every member of a
company; from those in non sales functions to top management. The hidden
champions, having achieved this closeness to an extraordinary degree, are
excellent role models. (Pages 116, 117, 118)
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