I have negotiated many contracts in my life. The biggest contract had a value of about 60 million Euros. In this blog I want to share some of my experience with you.
I want to start with a funny story. I start with a funny story because buying and selling has to be fun to both of the parties involved. If you don’t see it as a game you will never sell anything.
One day we wanted to make a world-wide deal with a big American Company. Because it was a deal between a Dutch and a US-company the deal was very complicated. We used legal advisors that knew a lot about US Law to help us. US Law is and was very different from Dutch Law. A US contract is ten times bigger than a Dutch contract because of all the liabilities the US-company wants to exclude.
When the contract was almost finished we had to make the Final Deal. To make the Final Deal an ESVP of the US Company came to Amsterdam with his private plane.
We prepared this meeting keeping in mind that we wanted to negotiate the lowest price possible. The first thing we did was to create the Magical Manager behind the scene. We were not the final decision-makers. Somebody, Our Boss, a very high level executive had to say Yes. He was not available to talk but when we were finished one of us could contact him.
The next thing we did was prepare a beautiful environment to eat. We knew the ESVP was from another time-zone so a little bit of alcohol (wine) could change his attitude.
The next thing we did was create tension. When he arrived we kept him waiting in a room for more than half an hour.
When the meeting started the ESVP was surrounded by five advisors. At that moment he was still not aware of ‘what the contract was about”. We knew every detail.
His first question was “What are we talking about”? His advisor whispered the amount in his ear. “Only twenty M?” he said (The contract was 20 million dollars). “Ok lets make a deal!”.
For some reason twenty millions dollars was nothing to him.
The fact that that he was not informed about anything gave us the oportunity to negotiate a dream contract. We asked him to have a talk in private and his advisors had to leave the room.
We took him to the beautiful restaurant in the Centre of Amsterdam and gave him a glass of wine. After some time the conditions of the contract changed in our favor. When we used our last “act”, the mystery manager, we even got a better price.
The ESVP left Amsterdam with a good feeling. He had negotiated the contract “on his own” and he never (!) heard about the effects of the contract because his plane left to another “important” meeting with an “important ESVP”.
What happened was something that is called “gunnen” in the Dutch language. “Gunnen” can be translated into “doing a favor” but this is not what “gunnen” means.
“Gunnen” means “I buy something from you because I like you and you like me” and “I buy something because you will do what you promise to do” and “I know that some how you will be buying something from me” and “you will tell your friends that it is a good thing to buy something from them” and “last but not least” “we have negotiated a fair price” and “we will never need the contract because when we will be in trouble we are able to sort things out” because ” I just have to phone you and you will solve our problems immediately”.
When you are a salesperson and you have a relationship with somebody that is able to “gun”, “to do you a favour” you are able to sell everything with ease.
For some reason “gunnen” is not possible anymore or better you have to “hide” “doing a favour” because “doing a favor” looks like “bribing”.
When I was responsible for big contracts salespersons tried to “bribe me” in many ways. I was invited to brothels, was offered presents (Christmas), was invited to have a beautiful and of course very interesting trip to a beautiful place, visit a concert etc… I was put under high pressure by using the “we know the big boss-trick” and some people even tried to block my career by telling dirty stories about me. I never gave in to these tricks.
Because others accepted bribes things went wrong. The others that accepted bribes were not removed out of the company. They staid and slowly the limits of what was “acceptable” were widened. In the end things went really wrong and to prevent (!) that these things would happen again the buying process was “formalized”.
We had to write RFP’s (Request for Proposal) and the Vendors had to respond to the RFP with a very detailed document. In the end one vendor was chosen and the other lost a lot of money because they had to spend a lot of time to write the proposal.
Sometimes the whole process was a fair process but many times it was already clear who would get the deal because “behind the scene” the process of “gunnen” just went on.
Now we are in the Final State called Compliance. Everything You are doing has be registered to show that You are doing the Right Thing. This is blocking almost everything Activity in a Big Company. It certainly blocks Innovation.
Believe me If People want to Bribe they always find a new trick. The only people that are the Victims of this almost Paranoid reaction are the people who were HONEST.
Strange how Honest people are always the Victims.