An Empirical Case Study of Applying the Sixth Force Model on a German Hidden Champion

Abstract

By the end of 2015, PETER/LACKE (PL), based in Hiddenhausen Germany, was aspiring to continue on the path of success in the 5th generation under family control. The medium sized transnationally operating SME-group of global companies had successfully managed a change in generation recently. The PETER/LACKE industry paint-system has a tradition of quality with a history of over 100 years.

David Peter, who recently succeeded his father as the CEO of PL, was conducting a general review of the company’s policy, its strategic direction, innovativeness and international operations. The late CEO of PL, Andreas Peter had been able to have the right intuitions for the right innovations and the right strategic moves at the right time which helped the company to rise from an ordinary small painting company to be an industry leader in delivering paint-systems and being a coating solution provider for diverse industries, as the automotive industry, household appliances, consumer electronics, general plastics and also glass. The company had a tradition of investing in pioneering new ventures and technologies. This possibility of exploiting the first mover advantage brought the company very high profile clients listing from Gucci to Audi to BMW & Rover to Chanel to Gillette to P&G and Vodka Absolute, just to name a few. PL also heavily profited from the notion of co-creation with the customers and also the innovation and R&D oriented national and global organization.

As the global world of business has brought many merits it also would cause many challenges and disruptions for a German SME by making it possible that either the companies bring competencies in-house via vertical integration or switch to lower price oversized companies. The notion of disruptive innovation, something that he heard some days ago and high supplier power within the high-quality paint-system and producing industry in B2B sector, which seemed very large, was occupying his thoughts. PL, although being a very successful SME, was suffering from very high supplier and customer power. While the former dictated the industry on the grounds of possessing very high cost machinery resulting in a stronghold of market barriers, the latter dictating the clearance and release of paint-system to be integrated for their product line.

Keywords: Family Business, Viable Systems Model, Cybernetics, Ashby’s Law, Fix Forces Model, Holism