New study of Hidden Champions Institutes (HCI) at ESMT Berlin: German companies in the midst of digitalization

The study investigates the different levels of development during the process of digitalization in German corporations, small and medium-sized enterprises (SMEs), as well as hidden champions. Hidden champions are predominantly larger “Mittelstand” companies that are international market leaders, although less known to the public. The authors of the study found that, while most of the German economy is already in the midst of the digitization process, there are clear differences among the various forms of enterprise. Corporations are decidedly in the advanced stages of the process, while hidden champions have covered about half of the way. SMEs lagged behind.

Highlights from the report:

• Seventy-one percent of corporations and hidden champions are satisfied with the progress of their digital transformation, compared to only 51 percent of SMEs.
• Hidden champions estimate that their process of digitalization is more than halfway complete. Comparably, SMEs reported slower progress, while corporations were further ahead.
• Forty-two percent of all companies expect digitalization to have a major impact on their market position.
• Analytics are considered the most important area of digitization for all companies.
• The greatest challenges for hidden champions were reported to be organizational complexity, a pronounced silo mentality, inflexibility towards changes, and missing interfaces between different IT systems.

“Our study shows that the German economy as a whole is further along in its digital transformation than is sometimes claimed,” said ​​Prof. Johannes Habel, co-director of the Hidden Champions Institute. “However, there is still room for improvement.”

Co-director Bianca Schmitz added, “Hidden champions must continue to rise to the challenge of digitalization. Particularly alarming is the continued silo mentality among these market leaders."

Download the study here.

Watch video interview with Habel and Schmitz (in German): https://youtu.be/AsAHOcLMMVc

About ESMT Berlin

ESMT Berlin is a leading global business school with its campus in the heart of Berlin. Founded by 25 global companies, ESMT offers master, MBA, and PhD programs, as well as executive education on its campus in Berlin, in locations around the world, online, and in online blended format. Focusing on leadership, innovation, and analytics, its diverse faculty publishes outstanding research in top academic journals. Additionally, the international business school provides an interdisciplinary platform for discourse between politics, business, and academia. ESMT is a non-profit private institution of higher education with the right to grant PhDs and is accredited by AACSB, AMBA, EQUIS, and ZEvA. It is committed to diversity, equity, and inclusion across all its activities and communities.