“Trust is the lubrication that makes organizations work.” — WARREN G. BENNIS
“When a train goes through a dark tunnel and it gets dark, you don’t throw away the ticket and jump off. You sit still and trust the engineer.” – CORRIE TEN BOOM
“Trust your own instinct. Your mistakes might as well be your own, instead of someone else’s.” – BILLY WILDER
When I originally created this blog this past April my primary motivation was to encourage candid dialogue among IBOs about topics and issues that concerned me in the business. The company was in the early months of a global business transformation and I hoped that open discussion of challenges that I and others perceived in the business would potentially lead to real world solutions and change. I was also hopeful that Amway and Quixtar’s executives would listen in on our discussions — and even participate in our discussions when appropriate — and that has happened from time to time. From day one this blog was intended to be a collaborative effort, open to original posts by other IBOs, and not centered around one IBO’s point of view or a particular business direction or outcome. That intention has been realized with frequent posts by “rdknyvr” and post-like comments by “Big Apple,” “IBOFightback,” and others.
My approach to posting about our business was different than anything that I had seen online to that time. Posts were theme- and issue-based; and initiated dialogue on numerous topics rather than only responding to issues after a problem had emerged publicly, or simply reporting business news. The approach has been highly effective, has led to hundreds of comments on many topics, and was eventually copied by other sites.
But you might ask, why was creating this blog so important to me? And that’s a good question. So if you don’t mind, allow me to answer it.
It was important simply because in my heart of hearts I didn’t believe in the business anymore. I didn’t believe I personally could honestly promote our business model to potential prospects in its state at the end of 2007 — as much as I wanted to. (As an aside, allow me to add that my challenges with the business had little to do with the issues that the TEAM debacle raised. In fact, I thought the TEAM approach was a big part of the problem.) Even though the company was in the first months of its global business transformation, I had heard the promise of “change” in the business before, and had been disappointed each time, so I had little real hope it would follow through. In short, I knew that if I was ever going to be able to confidently and honestly build the business there would have to be substantial changes in the business at a foundational level — the company would have to come through and prove to me it was serious about real, lasting change. I knew it was going to take a lot to bring me back into the fold, and in all candor, I held little hope it would happen. A lot had transpired over the years to undermine my belief in the company, its leadership, and the IBO leadership. There was a lot to overcome.
What were the challenges that disturbed me the most? What were the issues that would have to change for me to be able to honestly and confidently pursue building the business? They primarily fell into three areas:
The first area of concern was the lack of balance in the business in relation to the tool systems. I believed the tool systems had become the tail that wagged the dog. It is interesting to note that Orrin Woodward recently revealed that he never made more than $750,000 in Quixtar at the Executive Diamond level, yet Forbes.com stated a month ago that Orrin told it that he was on schedule to make $4 to $5 million this year alone from the tool support side of his MonaVie business, and that’s after lowering the price of his system tools when he joined MonaVie! So which business was he really in when he was in Quixtar?! Quixtar, or tools? It appears Quixtar was little more than a receptive host that the parasitic TEAM used to feed itself. And by the way, TEAM was not alone. Many tool systems had evolved far beyond their original purpose and now ruled the roost, particularly in terms of income, and often treated the company like a second class citizen. Rest assured, not all tool systems were equally culpable, but all were culpable on some level.
The second area of concern was the mismanagement of the Amway/Quixtar businesses by corporate leadership and the effect its mismanagement had had on its IBOs, its business opportunity, and its product lines. I held the company leadership personally responsible for allowing the tool systems to usurp so much business territory and to hijack the business far off its original course, often for reasons that allowed the company to be lazy in the marketplace and to serve its own interests. In all honesty, I’m still disappointed the company leadership has not apologized for its failure in this area. The company’s failure at this point was more than a “mistake” in my opinion (as they’ve often called it). One simple example (there are many others) was the retail customer price of most products in 2007 and the company’s retail customer sales volume. The figures revealed during the TEAM court case revealed that only 3.5% of the company’s U.S. volume was retail customer volume. But why should the company care? It was getting its billion dollar plus sales revenue from the IBOs and that was all that mattered. Otherwise wouldn’t they would have taken steps to initiate change in this area well before mid-2007? And why should the system leaders care? They were deriving a substantial portion of their income from the IBOs participating in their systems and that was what mattered most. Besides it was far easier to generate income from business support materials and functions than to earn income from developing business sales volume with downline IBOs.
The critical role of tool income to IBO leaders in the business was driven home to me in the summer of 2007 when numerous business leaders quickly left the business as soon as it became clear their substantial tool incomes were being threatened. They saw the writing on the wall. Knowing it was far easier to generate substantial tool income quickly than business income, they just weren’t willing to get back to having to truly build the business they said they were building all along. I sometimes think tool purchases by new IBOs are just the tool systems’ back door version of product front loading, but with tools the only ones who benefit are the tool system leaders. Interestingly, the word on the street from Amway/Quixtar corporate insiders is that the corporation has been shocked to see how resistant the tool systems have been to having their role in the business reevaluated and somewhat diminished, and I’m sure much of that resistance has been due to the tool income issue. But recent events in the UK and the US have made it clear to Amway Global that the tool system dynamic and the retail customer dynamic had to change — dramatically and soon. As the Alticor Media Blog put it, “Never Again!” I agree.
The third area of concern was the IBOs themselves. I believed that many IBOs, myself included, had acted irrationally, irresponsibly, and immaturely by allowing the tool systems to sell us a bill of goods on their so-called “proven” systems; and the company to sell us overpriced products with limited customer potential. If an airline had a proven safety record comparable to the tool systems’ proven success record in developing profitable IBOs, it would have been shut down long, long ago. And the company’s retail customer development with its products and retail pricing was no better. The attitude of many IBOs, often encouraged by system leadership’s “Are you a team player?” mantra, appeared to be “Question nothing, believe everything.” I’m convinced a far better approach for IBOs would have been to “Trust, but verify.” No one should blindly follow anyone anywhere. By the way, if you only read a couple of books a year (hopefully more), this year I’d recommend making one of those books Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely. It will convince you of the importance of “trust, but verify.” All IBOs would be well-served to read it at the earliest opportunity.
Another new book offers some interesting insights along similar lines to Predictably Irrational. Ori and Rom Brafman, in their new release Sway: The Irresistable Pull of Irrational Behavior, make a number of intriguing points. For example, why would a seasoned pilot, the head of KLM’s safety program, ignore his co-pilot and attempt a takeoff in dense fog with 55 tons of fuel (far more than the allowable limit for his intended flight) at an unfamiliar airport, Tenerife — causing the worst air disaster in history? And why would the co-pilot, who had followed procedure exactly when he reminded his captain that the flight had not been cleared for takeoff, fail to repeat his warning when the pilot pressed ahead anyway? The collision at Tenarife airport cost the lives of 583 people. Using that accident as their starting point, the Brafman brothers explore the psychological forces that cause people to take large risks to avoid small losses, to judge people and situations by first impressions despite subsequent inconsistent evidence, and to ignore objections from dissenters.
One of the most interesting aspects of the book is the most reassuring in regard to the purposes of this blog. Research reveals that groups often make better decisions when there’s a “blocker” or “dissenter” present — even if that person dissents for the wrong reasons. The authors describe a classic experiment in which test subjects are led to believe they are being tested for their visual skills: three lines of different lengths are to be matched to a fourth line. The differences in line length are clearly obvious, so there is plainly only one correct answer. However, if you put the real test subject in a room with several actors who pretend to be test subjects, but actually have been instructed to give an obviously wrong answer, most subjects in the experiment will behave in a completely irrational manner and agree with the other test “subjects” that lines that are clearly different in length are exactly the same. But if an actor playing “blocker” is added to the mix and points out that the group is wrong, the subject then feels free to disagree and usually makes the right choice. Interestingly, this is true even if the “blocker” makes a different “wrong” choice by picking two other lines of plainly different lengths. What this experiment says to the business and political world is that organizations that allow no dissent, or demean dissenters, are likely to perform about as well as that ill-fated flight at Tenerife. It also implies that the mass mind is often intimidating, a good reason for strong checks and balances in this business. As an aside, pilots at Southwest and other airlines are now trained to avoid the disaster that happened at Tenerife. Pilots are taught to listen to objections from other crew members, and crew members are trained to communicate those objections in a way that enables the pilot to respond quickly and correctly.
But back to my three areas of concern. Obviously, there was plenty of blame to go around in mid-2007, and it wasn’t limited to one part of the business or any one group of people or IBOs. Everyone, and I mean everyone, myself included, was culpable. Fortunately, last summer the company promised that big changes were coming and a complete business transformation was in the works. Having heard that unfulfilled promise before, I began to shape my vision for a blog like this one, an online “coffeehouse” to discuss my perception of what shape IBOs like me might want that business transformation to take if in fact the company was truly serious this time.
So where do I stand today in relation to my 2007 concerns?
Today I am convinced that the company is serious about taking its business back and creating a more appropriate balance between the corporation and the tool systems (although I would not be surprised if somewhere down the road the systems’ role is limited to motivation only — or they no longer exist at all). As I stated earlier, the UK and US issues (and those in other countries) have made it clear that the status quo was unworkable. Where that unworkability takes us all long-term remains to be seen. However, there is absolutely nothing going on in the corporate training arena for product knowledge and retailing (Quixtar University and related) that is not easily transferable by the corporation to the training arena for building a network of IBOs — and it could likely be offered at far less cost to IBOs. Important factors such as “identification and association” would still be best served by upline IBOs, but would not require the costs associated with them in the current system approach. Years ago when the company offered business training materials they were dramatically less expensive than system produced BSMs, over 50% less. I look forward to a return to those days and enhanced new IBO profitability. The current state of the business in the tool system and business support materials area generates confidence in me that things are going to be positively different in the months and years to come.
Today the focus on new product offerings in health and wellness — for example, Simply Nutrilite — and the pricing that goes with them are all customer driven. The new Gensona offerings are leading edge and can be expected to be even more diverse over time. The Ribbon Gift program is nothing less than terrific. The above-mentioned Quixtar University puts a foundation under every product offering the company has. In addition, the continued sponsorship of top-notch professional athletes will lead to even greater awareness of our company and our products in the public at-large.
Today the public “coming out party” of Amway Global in print and media ads and other venues has convinced me the company is serious about building, maintaining, and monitoring its public and internet image and reputation — and this will serve the needs of IBOs increasingly well. Everything the company is doing in this arena is first rate and bodes well for the future of all IBOs. But it is important for IBOs, and myself in particular, not to waste the opportunity Amway Global is giving us in this area today. This is a real opportunity for all of us, not just a pig in a pretty dress.
I’ve said all that to say this: Today I believe I could honestly promote our business to prospects without any serious reservations — and I intend to do just that. There are still a few areas where I’d like to see some changes implemented, but they are not deal breakers for me. Thus, in the coming months and years I intend to work diligently to build a Diamond level business outside of a system context. At the same time I intend to keep the company’s hand to the fire from time to time regarding those few critical issues that I still consider important and worth reevaluating. Those issues still critical to me are:
1. The curiosity approach (or as some call it in other variations, the Professional Business Approach). I personally believe the curiosity approach should be banned outright. It creates far more issues than it solves — and none of them are positive. Lack of trust, the potential for deceit, misrepresentation, half-truths, and worse, all come into play with the curiosity approach, and the general public hates it. It is time to do away with it once and for all. Amway needs a clear and upfront image and reputation, not one based on how much information we can hide from a prospect while we dance away in doublespeak. I have no problem with explaining the business in full at an appropriate time when it can be explained properly, but I have a big problem with an opaque response to a direct question. In his recent autobiography/success tome Get In The Game, highly respected baseball Hall of Famer and former Baltimore Oriole Cal Ripken, Jr. wrote:
“Both my parents were as honest as the day is long. My mother just wouldn’t tolerate dishonesty of any sort. Dad [Note: Cal Ripken, Sr. was a former manager of the Baltimore Orioles] was also as straight a shooter as they come. If you asked him a question, you got a direct answer. He had a strong sense of right versus wrong. And if he thought something was wrong, believe me, you heard about it. Dad also tended not to mince words. Nor would he stay quiet just to avoid telling you bad news.
So, just as with the values of hard work and excellence, my parents raised me to be honest and to have integrity. Because of them, I believe I grew up to be a sincere and serious-minded adult. But how do honesty and integrity help a person persevere? Personally, I think it has something to do with trust.
Honesty breeds trust in others. Straight shooters get more work, are appreciated more, and are almost always respected. On the other hand, dishonest people almost never garner universal respect. As with honesty, integrity also breeds trust. If people believe you have strong principles, are sound in mind and body, and are incorruptible, they’ll choose to work with you over others.
You cannot persevere in any organization without the trust of others. If an executive doesn’t trust you, you can be out of a job in the blink of an eye. If coworkers don’t trust you, they’ll complain about you behind your back. And too much of that can also lead to a loss job. It’s far better to be trusted by the people with whom you work and associate. But, as the adage goes, trust has to be earned. Only over a sustained period can people come to count on you. You have to demonstrate your honesty and integrity over and over. And you can’t slip up — not even once. If you do, you’ll have to start all over again. In that case, it’s doubly difficult to regain a person’s respect and esteem. Therefore, it always wise to start out being straight with people from day one. Let them know right from the start that you can be counted on…“
2. Selective openness, honesty, and transparency. When Steve Lieberman announced the global business transformation he stated the company was committed to “openness, honesty, and transparency.” Yet certain outcomes since his announcement have led me to believe Steve should have said “selective” openness, honesty, and transparency. I’ve posted numerous posts on this topic in the past so I won’t rehash them here, but let it suffice for me to state the company could do a better job in the areas of openness and transparency. When Amway Global gets these areas right I honestly believe it will be on the doorstep of getting everything right.
3. The arbitration clause. I believe in the arbitration clause. It can benefit both sides in a dispute, but not if its a one-sided arbitration process in which the company holds all the cards. A one-sided arbitration process is just what the several courts have said it is: unconscionable. Amway Global’s owners are Christian men who hold to Christian principles of fair and equitable dealing. They should know better. Fix it guys. Now. Enough said.
4. The non-compete clause. I understand and accept some of the solid reasons for the non-compete clause, and can see its value in protecting the integrity of our businesses, particularly in relation to IBOs at a certain level in the business, say Platinum and above. But in its current form it is nothing less than overkill, and it creates a lot of ill will. Reevaluate it and apply only it to those who really have something at stake in the business, as I said, perhaps IBOs at Platinum and above. And like the arbitration clause issue above, do it now. I’m not particularly excited about asking my new IBO to sign an IBO agreement with these two clauses in their current form. So fix it and ask all IBOs to sign a new contract. The sooner the better.
5. The pricing of core line products. The company clearly needs to reset the price of some of its existing core line products to a more competitive retail market price. Current pricing assumes IBOs are the paying customer and real target market. Yes, incomes might drop as the BV drops. However, with the increased emphasis on retailing in the business, and the increase in retailing that should occur with reasonable price adjustments, over both the short term and intermediate term, incomes should actually rise — particularly for those actively building balanced businesses that include a strong customer component. Quality, overpriced products don’t create any buzz in the market; but quality, competitively priced products do.
6. The pricing of logo clothing and other items used to promote the business. While this is not nearly as important as the other issues as a general matter, it is an important philosophical issue for me. If the company wants the tool systems to reduce the price of tools (and it does), the company should also reduce the price of clothing using the company name or logo, and other items and literature used to promote the business to customers and prospects. As a philosophical matter I do not believe materials or items used to promote the business should be a high margin profit center. If an IBO can only earn income through the personal and downline sale of products, the company should make the same commitment. IBOs are the company’s partners and its wholesale customers. We should not be treated as retail customers on any level, particularly when we are purchasing clothing with the Nutrilite or Artistry logos to promote and personally advertise our business and its products, for which Amway Global benefits as well. I don’t believe an IBO should have to pay a premium to purchase a company hat, shirt, or jacket to promote his or her involvement with the business. In the most recent “Achieve” magazine Steve Van Andel and Doug DeVos asked IBOs to make their friends and acquaintances aware of their involvement in the business. To that end the company should be going out of its way to offer clothing and literature that allows us to do just that as inexpensively as possible. Brochures that IBOs use to present the business and promote the products should not be retail priced items. The Quixtar Business Opportunity Brochure is priced very well. But the price of most of the Nutrilite logo clothing is not. (XS Energy’s clothing is full retail as well.) In Steve Van Andel’s recent talk at Diamond Club he stated that the company recognizes that it is really our “upline.” That should mean that the company and IBOs make money the same way, the “old-fashioned way,” moving products to customers. Let’s keep it that way.
As I look back at it, that’s a pretty short list of issues. That tells me the company has come a long way since mid-2007. It also tells me that it’s time to get to work.
When I first heard Steve Lieberman’s promise of a global Amway business tranformation in the summer of 2007 my first thought was that I had heard all this before — and it was always an empty promise. But today it has become clear that Steve Van Andel, Doug DeVos, and Steve Lieberman really meant it this time, that the promises of 2007 are real. Recently the company began a series of print and media ads around the “Now You Know” theme, geared toward creating awareness of our brand, products, and our business in the mind of the public. For IBOs like me though the company had to go much further than brand awareness, for as I stated at the start of this post, I personally can’t promote a business model that I honestly don’t believe in. Thankfully, the promises of real change that the company has continued to keep over the past year have begun to restore my belief in the company, its leadership, and its future. I am beginning to believe the company is going to follow through and create a business we can all be publicly proud of and place our trust in. And that leads me to my final thought.
Amway Global: “Now I Know.” I not only know what the company is doing today, I also have a better sense of why the company is doing it and how the company is going about it. More importantly, today I believe more deeply in the company and can more readily embrace it and its goals.
So folks, it’s time for me to get to work. You’ll be hearing from me.
Speaking of Amway, how have the recent changes in Quixtar North America and Amway Global affected your belief in the business and your future in it?
written by Chuck Lia
\\ tags: Amway Global, arbitration clause, Business Transformation, Cal Ripken Jr., core line products, curiosity approach, Doug DeVos, Gensona, Get In The Game, logo clothing, non-compete clause, Nutrilite, Predictably Irrational, Quixtar, Quixtar Business Opportunity Brochure, Quixtar University, Ribbon Gift, Ronaldinho, Steve Lieberman, Steve Van Andel, TEAM, tool income, tool systems, Transparency, XS Energy
