Exceeding Your Authority

I had a deal I was once trying to push through in Argentina.  The country was one with a lot of potential, but also one where we'd made our mistakes over the years.  We seemed to be perpetually stuck in the number two position in the market.

But there was an opportunity to turn it around.

I was negotiating a joint venture with the country's largest and best distributor -- one who was currently working for the competition.  The project would give us greater market coverage, strong service and support capability, and besides, I liked the guys we would be working with.  The deal was already approved, authorized and supported by the CEO and the board of directors.

There was one obstacle standing in the way -- a current distributor who had an overly large territory, and no ability to really cover it.  Trouble was, he had a father who was an attorney, and he was nearly impossible to negotiate with.  I was willing to buy the distributor out of his contract, but he couldn't seem to name a price.

So I sent in a Brazilian -- a man who ran our factory in that country, and was a much more patient and persistent negotiator than I was.  I figured if he couldn't bring this distributor to heel, no one could.

But the deal was extremely frustrating -- even for my patient negotiator.  Finally, after three days of hard talks, my representative called me.  It was eleven at night, and I could tell he was exhausted.

"I've got him to agree to take a much smaller, more reasonable territory surrounding his office, but it's going to cost us.  He wants a quarter of a million dollars to agree.  And I need an answer now -- if we hesitate, he'll likely reverse himself, and it will be back to square one."

The larger deal was worth at least ten times that quarter million, but I didn't have any room to spare in my board approval to bury the this expenditure.  And I could only authorize twenty thousand dollars (an absurd amount for a guy running a $300M business, but, regardless, it was the case).

I could have called my boss or the CEO or CFO at home, to seek the authorization.  The situation was complicated, and would have taken a lot of time to explain.  And all of them would have probably tried to alter the terms of the deal, which likely would have sent everything back into chaos.

"Ask for forgiveness, not permission."  We've all heard this rubric, and sometimes it even seems wise.  I wanted the deal, and with this final step, it would be sealed.  "Get it signed," I told my guy, figuring I would smooth things over tomorrow with the powers that be.

But asking for forgiveness, particularly where the rules are quite clear (like what you are authorized to spend) might not be such a good idea.

The next day I spent a very uncomfortable hour in the CEO's office, trying to justify why I didn't call him.  Then I got the same treatment from the CFO.  It wasn't until later, however, that I realized how close I came to getting fired over this flagrant disregard for the formal delegation of authority.  Luckily, my performance had been good enough up to that point, that it outweighed my offense -- but just barely.

So when faced with your own version of this situation, tread carefully.  It's nice to bravely assert you should "ask for forgiveness, not permission," but doing so is likely to put your career at risk.

Other Recent Posts:

Time Kills Deals

Control the Venue, Control the Law

Dealers & Distributors

Managing Country Risk

One Design Partner can be Worse than None


If you enjoy the ideas presented in my blog posts, then check out my novels. Corporate Thrillers LEVERAGEINCENTIVIZE, and DELIVERABLES all present extensions of my basic experiences in the world of business.