In the business world, Germany is known as a powerhouse manufacturer of high-quality, higher-end goods – particularly in the Business-to-Business markets. The key to this success is exceptional efficiency and productivity – two critical keys to success in a developed country that needs to pay developed-country wages to their workers.
However, that's only the stereotype and in today's feature, Bill Drake attempts to drill down deeper into the classic German business and management mentality. Even if you don't have any need or desire to establish a business in the Vaterland, understanding some of the basics about its people and way they instinctively approach business (and life in general) could prove to be quite useful – regardless of whether it's in Frankfurt, Nairobi, or Baku.
Surviving & Thriving in Business in Germany
German management, as it has evolved over the centuries and has established itself since World War II, has a distinct style and culture. Like so many things German, it goes back to the medieval guild and merchant tradition, but it also has a strong sense of the long-term future.
The German style of competition is tough but not cut-throat. Although companies might compete for the same general market, as Daimler-Benz and BMW do, they generally seek market share rather than market domination. German companies generally feel that price competition is uncouth. Instead, they engage in what is called Leistungswettbewerb, or competition on the basis of excellence in products and services. They compete on a price basis only when Leistungswettbewerb is irrelevant, as in the sale of bulk materials like chemicals or steel. Even there quality is important, as is customer service.
German 'Bottom Line' Different
German managers concentrate intensely on two objectives: product quality and product service. They want their company to be the best, and they want it to have the best products. Managers and their entire team are strongly product oriented, confident that a good product will sell itself. But managers also place a high premium on customer satisfaction, and Germans pay close attention to a valued customer's wishes. The key principles for most German managers and companies are quality, responsiveness, dedication, and follow-up. They cannot understand managers in the United States who want only to see financial statements and “the bottom line” rather than know a plant's production processes inside and out.
A German manager believes deeply that a good-quality production line and a good-quality product will do more for the bottom line than anything else. Relations between German managers and workers are often close, because they believe that they are working together to create a good product.
10 Keys to German Success
So, given the management culture just outlined, how would a non-German go about making a successful selling pitch to a group of German managers and executives, or simply presenting themselves in a good light in any business situation? Here are a few suggestions to keep in mind.
- No matter how well known your company is, always begin any serious presentation or meeting with an appropriate review of your company, citing its expertise and performance in the market without bragging. Even though the Germans have access to the most sophisticated business information network in the world (save possibly the Japanese), they still like to confirm what they already know about you.
- Be able to back up all you say, with high quality citations when appropriate. The Germans are great respecters of information which is footnoted and thoroughly cited. Likewise, when you propose a deal, be ready to deliver. The Germans don't like buying a pig in a poke, and will question you about your readiness to perform as proposed.
- Be thorough and be efficient with time. It is difficult to impose information overload on Germans in business dealings, but it is possible to over-elaborate. In Germany time is just about the only thing more important than money. Do not be late. Stick to any schedule you set, whether in delivery of product or pace of meeting.
- The German opening position regarding prices is typically very close to their intended final position. They respect numbers and take them seriously.
- Terms and conditions in German contracts are typically less detailed than in U.S. purchase agreements and other commercial contracts. Once a contract is made it Germany, it is expected to be honored to the letter, and therefore the constraints and sanctions typical of U.S. commercial contracts are not seen as necessary.
- Avoid direct comparisons which imply similarity between the U.S. and German markets, such as, “This system has worked extremely well in the U.S. and we're certain that it will do even better here.” It is also not effective trying to sell a German customer by showing how well your product has done for others (unless the “others” are chosen very carefully, such comparisons are either dangerous or futile.) It is almost always effective if you can demonstrate how well your product works for the German customer's UNIQUE needs and requirements.
- It is very hard to steal a German customer from a long-term supplier. And it is almost impossible to steal a German customer from a long term GERMAN supplier. If you can buy the supplier, so much the better. If not, try adopting a very humble approach, such as, “we only want a little piece of your business, to show how wonderfully we can serve you.”
- It is important to orchestrate negotiations with a rising crescendo. Start with your competent but middle level people, and move on to your more prestigious. Top Germans prefer to work with highly placed, preferably titled or degreed individuals.
- German companies like to shop the market thoroughly. They are rarely so taken with a deal that they conclude there is no need to look further. Managers have to demonstrate that they have shopped around as part of selling a proposal to their superiors, so be sure to give them data comparing and contrasting your product with others – without denigrating the competition. Let the facts speak for themselves.
- Germans often turn and whisper to each other during business meetings, and occasionally there will be a deep chuckle. They pride themselves on making observations of others, and display this behavior in many situations (including some which Americans would consider inappropriate.) This 'sotto voce' commentary is probably not directed at you – although if your fly is open, or your purple tie clashes with your orange suit – beware.
Keep these key points in mind whenever you are dealing with Germans and adapt them to your situation – in business, in dealing with a bureaucrat, in negotiating a lease on an apartment, or almost anywhere else you may find yourself in this sometimes frustrating, but nearly always rewarding and delightful culture.
Hals- und Beinbruch! (Break a leg!)