Innovation takes place within the global context. On a global scale there are few saturated markets. This is especially true with regard to the international exchange of goods. It took 80 years to bring global per-capita exports to $437 (1900 to 1980). In the following 20 years, they more than doubled, and since 2000 they almost tripled again to reach $2,634 in 2013.
This “explosion” has taken place in spite of a rapidly growing global population. In 1990 the world’s population was 1.6 billion, today we are 7.3 billion. We can assume that global trade will continue to grow faster than national GDPs. Each company and each country that is innovative and participates in this accelerated globalization can profit enormously.
There are some obvious questions: What makes certain countries strong in exports and others weak? What role do innovativeness and manufacturing play? And how does company size relate to export performance?
It should be noted that countries do not export; only companies export. An excellent export performance by a country proves that the country has strong, internationally competitive enterprises. Most people assume that export performance depends on the prevalence of large corporations. For most countries there is, indeed, a strong correlation between the number of large firms and exports. But there are two exceptions to this rule: China and Germany. And it is precisely these two exceptions that are the leading export nations in absolute terms. What do they have in common and what distinguishes them from the other countries? It is the share of exports contributed by mid-sized firms. Sixty-eight percent of Chinese exports come from companies with less than 2,000 employees. In Germany mid-sized companies (the Mittelstand) contributes 70 percent to exports.
This suggests that in order to achieve truly exceptional export performance, a country needs both large corporations that are strong in exports, and a broad foundation of small- and medium-sized exporters.
Research, undertaken by Simon-Kucher & Partners, shows that the export success in many countries is due to Champions. What is a Champion? It is a company that is one of the top three in its global market, has less than $5 billion in revenue, and is little known in public. And Champions are highly innovative.
The key question is: what can entrepreneurs, companies, academics and politicians learn from these Champions?
Champions set extremely ambitious targets for themselves related to market leadership and growth;
Champions focus (we only do one thing, but we do it right);
Closely connected with focus is a deep value chain; Champions are extremely hesitant about outsourcing core competencies;
Champions combine specialization in product and know-how with global selling and marketing. Globalization is the growth booster for them;
One does not become a world-market leader by imitation, but only by innovation. Innovation starts with spending on research and development (R&D). R&D spending by the Champions is twice as high as in the average industrial company.
Even more important is their output. Champions have five times the number of patents per thousand employees than patent-intensive large corporations.
Closeness to customer is the greatest strength of the Champions—even ahead of technology. Their strategies are value-oriented, not price-oriented. The Champions hold strong competitive positions. Advice and system integration are innovative advantages that create higher barriers to entry for others.
Champions have more work than heads, highly qualified employees and low turn-over.
The ultimate explanation for the unusual success of the Champions lies in their leaders. They are characterized, first and foremost, by a very strong identity of person and mission, meaning they totally identify with what they do.
Champions are true role models of innovation, strategy and leadership.