1. Der Mittelstand (The German Middle Order companies)
© Robert Jones 2011, 2013

2. German Lessons The Economist 13th July 1996
Riled by the cult of American business methods, German management theorists
are explaining what Germany does best.
Take a look at this article in Lecture Part 2

3. Hidden Champions
– Lessons from 500 of the World’s Best Unknown Companies
Hermann Simon (1996)
Hermann Simon (2009)
Hidden Champions of the 21st Century
– Success Strategies of Unknown World Market Leaders

6. No. of firms
Turnover
Employed
SME
Large firms

7. www. bis. gov. uk/assets/biscore/statistics/. /bpe_2010_stats_release

9. 2010 Prof. Dr. Bernd Venohr

10. Professor Dr Bernd Vernohr
Germany's Mittelstand Champions - their secret recipe, Part 1

11. 2010 Prof. Dr. Bernd Venohr

12. Dr Vernohr’s findings
German companies are leading in 2/3 industrial sectors
Not just good products – it is a management model
Often B-2-B – 90% of the 1,500 firms studied
Mittelstand average €100 million, 600 employees, export 60% of revenues
70% are family companies
70% in rural areas or small cities, not large cities
Not start-ups, average 70 years old
Key elements:
1. Focus (Drucker)
2. Not monopolists – world class in key processes
3. Family-owned enlightened family capitalism

13. Strategy Focus on small segments but market dominant in their niche
Stay away from volume / mass markets where the elephants play
Compete on value
Close to customers
20 subsidiaries, 90% have subsidiaries in USA, feedback for innovation
Strong innovation, big spending on R&D, often in traditional areas
Incremental innovation
Good environment for innovation in Germany

14. World class Processes
Sophisticated production networks, not just outsourcing
All firms still manufacture
Flexibility in work arrangements, zero to 60 hours / week
Kaisen operational constant improvement, Toyota as benchmark

15. Governance - Corporate culture
Family values
Not just profits, mission is to generate something to pass to next generation
Drucker – profit is constraint, a bi-product
Stakeholder principle – based in community
(Drucker companies as communities)
Very long contracts
Leaders love their businesses with a passion
Leaders are engineers or scientists, no professional managers
Flat organisation structure, look at human beings not human resources
Solve customer problems better than other companies
But must import some professional outside managers

16. Summary
Common sense
Value to customers “the purpose of a business is to create
and keep a customer”
If you are small, focus and go for leadership
Continuous Improvement
Long term management basis
Motivate all stakeholders
Leadership with passion / love / knowledge
Treat employees as human beings
Grow structure in line with growth

17. Professor Dr Bernd Vernohr
Germany's Mittelstand Champions - their secret recipe, Part 2

19. Examples of British middle ranking companies

20. Examples of British middle ranking companies

23. http://www. gecapital. co

24. http://www. gecapital. co

25. Around 21,000 British businesses meet the study's definition of a “mid-market” firm: revenues of between €20m and €1 billion and a workforce of between 150 and 3,000
The main challenge for British firms, by contrast, is getting hold of workers with the right skills
Whereas big firms shed 1.5m jobs between 2007 and 2010 in Europe's four big economies, medium-sized ones added 192,000 to their payrolls. Small firms created 94,000 jobs in that time.

26. http://www. gecapital. co

28. Examples of British middle ranking companies

29. What is the position of middle-order companies
in your country ?