Facts & Figures
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)
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)
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)