Do you know where the value is?

Whilst it could be interesting to investigate the trade conflict being driven by tariffs in more detail, a different story has emerged this week that tickled me somewhat. Spoiler alert: it involves cars (and sausages). My degree involved me being in Germany for a year, which involved 6 months at a University in one of the least interesting parts of the country followed by 6 months working for Unilever in Hamburg, which I then joined after graduation.

This was at a time when the Berlin Wall was still intact - Berlin was the one city everyone wanted to visit. A close friend was placed there and for anyone who visited him, the main attraction was of course a visit to East Berlin - then part of the German Democratic Republic, better known as East Germany. My clearest memory was having to exchange 25 West German Marks for East German at an exchange rate of 1:1 a Checkpoint Charlie and then not being able to spend it, due to a lack of decent restaurants (admittedly at much lower prices) and I distinctly recall going to the East Germany’s equivalent of John Lewis in a desperate attempt to spend the money and there being next to nothing on the shelves.

As part of the degree, we studied the differences between the capitalist economies in Europe and the communist planned economic model that dominated Eastern Europe at the time. Much was made of the (then West) German post-war economic miracle, which was similarly rebooted in the reunification of Germany in 1990. Whilst Economists have estimated the cost of unification at €2 TRILLION, the outcome has proven to be hugely successful.

For much of this time, Germany was the most successful economy in Europe and the biggest in the world behind the US and Japan, however more recently their crown has slipped somewhat. There has been talk of trains not arriving on time (you could set your watch to them when I lived there) and some of their biggest multinationals are underperforming. One of these is Volkswagen - one of the businesses responsible for the miracle. An article in The Guardian states that the 10-brand group’s latest company report has shown net profit down 30.6%, mostly due to a ‘challenging environment characterised by political uncertainty, increasing trade restrictions and geopolitical tensions’.

However, it seems that the company can rely on the performance of its sausages! The ‘VW Currywurst’ is available in all the company’s 30 canteens and nearby supermarkets having been introduced in 1973 and is produced by their own butchers. The snack has become the company’s most popular product having sold 8.5 million units last year. There is no sign of how this compares to the direct sales of their cars, but why let the data get in the way of a good story?

This got me thinking about this in the context of negotiation. When parties negotiate there is often an understandable focus on the big-ticket items - it is often the case that it is difficult to create value through trading these (think price & volume) as they often have similar value to both parties. We define negotiation as trading items of lower value for things that are of higher value in return, as this is where most value will be created. So, in your planning don’t just address the big-ticket issues - give yourself time to think about all of the other variables you can trade – either against any movement you might be prepared to make on a main issue like price, or in exchange for something of value that sits outside the make or break issues. For those of you who’ve been on a Scotwork course will know how important this is in the Preparation phase. There’s gold in them there variables.

Just ask Volkswagen.