Mark works for a German company in the U.S., a tier-one automotive supplier. His team discovered a serious opportunity. Detroit clearly stated its interest.
Mark’s team prepared the business case. Key departments were on board. They then got the green light from their otherwise very critical U.S. management.
With high hopes they were off to Germany to persuade the board. Four days of intense scrutiny. Then rejection. It wasn’t pretty. What went wrong?
Act 1 – Mark in the U.S. in a German Company
Mark works for a German company in the U.S. With a proud, one hundred year old tradition. Located in the Black Forest in the southwest of Germany. Roughly ten thousand employees, and about 1.75 billion Euros in annual revenue.
It is a supplier to the automotive industry in the U.S., and not just to VW and Mercedes Benz, but also to GM, Ford and Chrysler. The company has first-rate technology, a clear organizational structure, efficient internal processes, and an intense desire to innovate.
Mark has a mechanical engineering background and spent many years in development. He then went on to head up the supply chain organization in North America. Two years ago he moved into sales/marketing. After a year he became that area‘s Vice-President for North America.
Act 2 – A Serious Market Opportunity
Mark and his top people saw a serious market opportunity. In early discussions, Detroit – GM, Ford, Chrysler – showed high interest, while the German car-makers remained somewhat reluctant. The project requires modification of one of the company‘s best-selling products. And this means both significant investment and close collaboration across the Atlantic.
Mark’s sales/marketing organization had first to get a high level of clarity about the potential market demand. They held many discussions with their customers. From there they went to their colleagues in engineering who evaluated the technical challenges. Engineering recognized the potential immediately and identified both what was feasible technically and what might present a challenge. Engineering was on board.
A product innovation does not always translate into financial performance, however. So they refined the business case and took it to their commercial-financial colleagues. Initially not convinced, the numbers-folks requested additional information. Mark‘s team worked three straight days on their calculations and were able to convince even the most skeptical ones on the financial side of the organization. Finance was on board.
Act 3 – Game-Day in the U.S.
Finally, they had to get approval from the board of the North American organization. This was not going to be easy, regardless of their level of support from the engineering and business sides. Not every product innovation is necessarily good for the overall business longer term.
Mark assembled his team of presenters. They formulated their line of argumentation very carefully. Each knew exactly what message they had to get across and how. They worked for four straight weeks, coming together on Saturdays to tighten up and practice their team presentation, recruiting other colleagues to play the part of skeptical board members. It was intense, but also great fun for all, going out for pizza dinner on each of the four Saturday days.
When it came to „game day“, they got approval. The critical questions were asked, and there were several moments where it seemed that they would fail at getting the support of one powerful member of the board. The presentation and discussions took them well over the budgeted time.
During the breaks Mark and his team huddled together with their laptops re-doing calculations, moving slides around and pulling in images from their server. A few subject area experts had to be brought in quickly to respond to detailed questions. At times the tension was very high, but they remained consistent in their message and cohesive as a team.
That was convincing to the board. A few, not unimportant, issues remained unsolved, but that was ok for all in the room. Innovation always involves risk. At the end of what seemed to be a marathon meeting, the CEO of the North American organization broke out a big smile and said:
„Great work, team. We‘re behind you 100% on this. I‘ll talk to the big boss in Germany and get a date for you to present to them. But remember, our German colleagues will be do their best to find the weaknesses in your plan. You‘ll need to dress warmly as they would say!“
Mark and his colleagues glanced at each other, smiled, stood up. Mark thanked their board members for affording them so much time. Once out of the conference room they broke into cheers, laughter, back-slapping. Mark pumped his tight-fisted right arm into the air: „Yes!!! Let‘s go celebrate!“
Act 4 – Why Game Day in U.S. succeeded
With each round of analysis, presentation and critical review the team became more confident of the project‘s potential. More and more they identified with it personally. And Mark can really sell, balancing emotion and inspiration with facts and analysis. He is a firm believer in the motto „sell yourself first, then your product or service“, something his father preached time and again.
But he also made sure that the analysis was close to airtight. Sure there were risks involved, but he and the team never saw them as problems, in fact, they very consciously phrased problems as opportunities. Mark asked his team to always speak positively, to be optimistic. „Always look for the silver lining in a dark cloud!“ he would say.
Whenever they communicated the status of the project – whether in a formal presentation, a written report, in face-to-face meetings – the team made sure to have a good mix of hard facts and analysis along with stories and anecdotes. They believed that professional experience – past projects as „war stories“ – were just as relevant.
And the team had a few members who could tell those stories so that they really came alive. One of them, an engineer, was particularly good at explaining the most complex technical aspects so that the „man on the street“ could understand them. They called him the „Great Simplifier“.
But Mark made sure that no one spent too much time talking about the past. For him it was all about the future. He would even go through the respective presentations slide for slide counting how many were devoted to the future, to the present context, and to the past.
Innovation was key. They had to sell their ideas as something really new even if much of it was incremental in nature. It had to come across as a leap forward. The team thought long and hard about how to speak to the imagination of those they were trying to persuade. Some would joke that Mark should have gone into either politics or advertising, comparing him to the character Don Draper in the U.S. television series Mad Men.
He did not have a problem with leaving out certain facts which argued against what he was selling. He took an American approach to the weakpoints of whatever his team was presenting: „Hey, if our audience doesn‘t ask the critical questions, we‘re not obligated to voluteer information about the weaknesses of our plan. They need to pull those out of us. Caveat emptor. Let the buyer beware!“ he would tell his team with a hint of a smile on his face.
Act 5 – Game Day in Germany
The presentation to the company board, as well as the meetings thereafter with engineering, quality, sales/marketing, and commercial did not go well, in some cases they went very poorly. By noon of their second day they were quite unsettled, not knowing what had gone wrong. They even began to suspect that the Germans were against the project just because it originated in the U.S.
As they had in the U.S., they worked day and night, responding to the questions they had not anticipated. Mark and his team reached out to all possible supporters in the key disciplines, and on both sides of the Atlantic. And although their German colleagues listened patiently and sincerely, none felt comfortable with committing in any way.
By the time Thursday had rolled around, Mark and his team were physically and emotionally exhausted. They had presented, discussed, debated with more people and groups than they could count. Every meeting seemed to be a battle. Argument, counter-argument. Facts, counter-facts. Experiences, counter-experiences.
Their flight was scheduled for Friday morning from Frankfurt. They had had no time to do any sight-seeing, something the Germans always encouraged their Americans colleagues to do. Only a few meetings were scheduled for Thursday, and with folks who were not influential in terms of the project.
At breakfast Mark asked his colleagues for their assessment. Did the project have a chance? The team put their prospects at fifty-fifty. They could not have been more disappointed, dejected, almost despondent.
Friday late morning Mark and his team flew back to the U.S. They knew that their meetings and presentations were going to be difficult. But, they had underestimated just how difficult. They felt defeated. Did the project have a chance?
The answer came two weeks later. Their German board thanked them for a motivating, and at times very interesting, presentation. They saw many positive aspects. The proposed project, however, would be not be funded.
Act 6 – Why Game Day in Germany failed
What Mark & Co. did not know is that game day in Germany is not the same as game day in the U.S. And that Germans persuade differently than Americans. Which, in turn, means that they are persuaded differently, allow themselves to be persuaded differently.
The Germans reacted ambivalently. On the one side, Mark and his team came across as energetic, personal, as believers in their mission. They put themselves on the line, meaning they put heart and soul into the project. This all was seen positively. For the Germans also have strong emotions, identify themselves intensely with their work, especially when it comes to technology. And they often want to show these emotions to each other, to their customers, and to the world.
But they are taught to be objective, unemotional, to separate self from substance. Only seldom do Germans put themselves front and center. For them „arguments should speak for themself,“ which is the exact opposite of „sell yourself, then your product or service.“
So in the end their reaction to the sell-yourself-first approach was more negative than positive. Germans become wary and skeptical. They view Americans as putting on a show, as substituting form for substance. In some cases, they suspect that Americans intentionally try to distract their audience from the weakness of their arguments.
Also, Germans reject any attempt to play on emotions, to „push the buttons“, in the sense of identifying the emotional drivers of the audience without that audience realizing it, and then manipulating those drivers.
Nor were the German convinced that their U.S. colleagues had truly penetrated the complexity of the subject matter. Several potential problems were not even addressed, much less in detail. Again and again the Americans used euphemisms. If there is a problem Germans expect to hear the word problem and not challenge or issue.
They zeroed on contradictions, also. Germans are taught to look for illogical statements, for gaps in reasoning. They‘re very proud to be known as Schwachstellenanalytiker, literally weak-point-analysts. They expect the stringent methods of analysis.
The bottom-line is that Mark and his team did not come across as competent. They did not meet the high standards which their Germans colleagues set for themselves, therefore for the Americans. In some instances they found their American colleagues to be rather naive. The picture they painted was too positive, too hopeful.
In addition, the Germans did not recognize any kind of systematic approach. Individual questions and factors were analyzed, but not wholistically. The pieces of the puzzle were there, but no understanding of the entire puzzle. It was what Germans call Stückwerk or patchwork.
And all the talk of experience, war stories etc. was interesting, at times even entertaining, but not relevant. Where is the data and analysis explaining the experience, they wondered. And a lot of over-simplification. The Germans felt that their U.S. colleagues did not question critically enough the fundamental operating assumptions of the project.
The overall thrust of the presentations, as well as in the talks with the various departments, was future oriented. This was expected. Germans, too, know how to envision a future. But Mark and his team failed to convince them that they had a clear definition of the starting point, of the status quo. The Germans feared that they would find themselves rushing in the wrong direction.
Especially in terms of market trends and customer developments they sensed strongly that their American colleagues did not do enough thinking about what the changes would mean longer-term for the overall product portfolio. The Germans were anxious about changes moving the company off the path of the last two decades. Germans value continuity very highly, preferring careful, incremental change instead of big jumps.
In the German business context Mark and his team‘s job was to inform their German colleagues in depth and in breadth. Instead they gave a total sales presentation, pushing for a decision. The Germans purposely did not react. They felt it was far too early to give any indication. Germans seldom make important decisions based on presentations. Instead, the presentations kick off the internal decision making process.
In addition, they sensed that the Americans did not always tell the full story. They recognized certain weakpoints rather early, but expected Mark and his team to address them. They waited, then probed a bit. A few of the Germans began to suspect that the Americans might be holding back critical information.
Act 7 – The Cost of Cultural Misunderstanding
Mark & Team had failed. What did it cost the company?
Time and Effort
Mark & Team invested serious time and effort into the development of their project proposal, as well as into selling it internally. Many folks were involved. Not only Mark’s sales/marketing organization, but also engineering and finance. And, of course, the U.S. board and the German board, who invested valuable time to listen, deliberate and decide. Please estimate these time and effort costs.
In the overall scheme of things travel costs are very minor. But they are costs and they can be calculated. Assume that Mark and four colleagues made the trip to Germany. They were there for five days: flights, hotels, transportation, meals. Please estimate those costs.
The American OEMs were clearly interested in the project. Had Mark & Co. been given a green light to develop the project, and had they teamed up with their German colleagues, there may have been a good chance that they gained interest among the German OEMs, also.
This would have been the big payoff, the sought after return-on-investment. Although this is not a detailed case study of the company, the nature of the technical innovation proposed by Mark’s team, or the market parameters, we know that the company does about 1.75 billion in Euros per year in revenues. Please estimate conservatively the potential lost revenues.
The American OEMs were interested, but saw that the German board said “No.” Will the American OEMs now expect less innovation from Mark’s company? If yes, what impact will that have on their business relationship? In other words, was the business relationship damaged? Can that damage be estimated? Please give it a try.
Mark and top people felt defeated. The U.S. board was fully supportive. But the German board rejected them. How will Mark and his top people react?
Will they be less motivated to search for new business opportunities? Will their personal work productivity decrease due to lower motivation? Will the defeat influence their desire to continue working for the company? The cost of these are all very difficult to estimate. Please give it a try, nonetheless.