“It just seems to me you aren’t going to be credible if all you talk about is your successes.” — JAMES CANALES, President and CEO of The James Irvine Foundation, one of California’s ten largest foundations
“A real leader learns ways to promote and reward truth-telling, demands honesty from his or her crew, and never punishes messengers with bad news.” — C. MICHAEL ABRASHOFF, former Commander of the “Best Damn Ship in the Navy, the U.S.S. Benfold,” and the author of three New York Times bestsellers on leadership, including It’s Your Ship
Amway is currently in the first year of a major business transformation. It goes almost without saying that all businessmen understand that turning a company like Amway North America around is no easy task and takes tremendous skill and expertise. Well, Steve Miller is affectionately nicknamed “U.S. Industry’s Mr. Fix It” by America’s business leaders for his unparalleled success in turning around failing companies. In 2002 the Wall Street Journal asked Miller if he would share with the Journal’s subscribers his thoughts on the most important aspects of turning a company around. That request resulted in an article in the WSJ by Miller that same year titled “Tips From A Turnaround Specialist.“ Allow me to note that Steve Miller is the former CEO of Delphi Corporation and the author of the recent book release The Turnaround Kid: What I Learned Rescuing America’s Most Troubled Companies. As Amway Global is in the midst of its transformation today, its turnaround if you will, I thought after reading Miller’s book that looking at Amway’s North American business transformation today in light of Miller’s seven tips might be a worthwhile online exercise. Below is a list of Miller’s seven tips with my comments added after each tip. I would be interested in hearing your comments about these seven tips as well.
TIPS FROM A TURNAROUND SPECIALIST by Steve Miller
1. Tell everyone the truth, especially if the truth hurts.
This is the one issue I find most disappointing about Amway’s public image. As James Canales says in the quote leading off this post, only bringing up the positive undermines your credibility. Publicly owning up to challenges adds credibility to the positive things a company says. A few weeks ago, Microsoft lost a court case. Within hours their media and PR folks (are you listening Amway/Alticor Media Blog?) released a statement saying “we still believe in our position and expect to appeal.” So, even when a current outcome isn’t positive Microsoft at least publicly acknowledges the current state of affairs. Every time Amway fails to acknowledge or comment on a recent negative court ruling or public event (as has been the case multiple times this year alone) it loses a little more credibility with me and others, and it will continue to lose credibility until its actions in this area become more transparent — or I and others no longer care about Amway enough to be concerned about its failure to be fully forthcoming. In my opinion, Amway’s failure to openly discuss negative news and outcomes shows weakness and frailty, not strength and resolve — and I believe the company is stronger and more resilient than that. It’s well past time to demonstrate it when it comes to truth telling.
2. Don’t study things to death. Most of the choices you need to make are clear, and decisiveness breeds confidence.
Would anyone say Amway has been clear and decisive over the last twenty-five years? While sometimes Tex can annoy people, one point that Tex makes is not refutable: Amway has had more than enough time to deal with several critical issues, some of which were clearly delineated by Rich DeVos over twenty-five years ago. The perception that Amway has failed to act decisively on those issues in the past has bred a lack of confidence in the company among many IBOs, and a general lack of credibility in the public at large. Regardless of what Amway is doing today, it is accountable for failing to act in the past.
Please understand, I am not saying that Amway is not dealing with these issues in several meaningful ways today, but it is important for Amway corporate to remember how long some of these issues have been on the table. It’s definitely time for Amway corporate to be very clear and very concise about where the company is headed. I do get a sense that some real changes are being implemented and that the corporation is taking serious steps to turn things around, but clarity and ongoing communication about those changes and steps are critical. The new national ad campaign is a meaningful step in the right direction on a public level, but there is much more that can be done on the IBO level. The North America Spotlight Tour is an important step in that direction, clearly demonstrating the change and innovation coming from the company today. This weekend the Tour stopped in Chicago, and bloggers Big Apple and Bridgett were both in attendance [as were AJ Gannon and bernsber!]. I’m looking forward to hearing from them online when they get home. The recently announced sponsorship of the Tina Turner Tour by Amway Global is another terrific step in the right direction. There is much positive to talk about in this area.
3. Listen to your customers. They know more about what’s wrong with your company, and what’s right, than anyone.
Who are Amway’s real customers? Based on recently revealed data from court cases I think we would have to say it’s Amway’s IBOs. Retail sales of only 3.5% of total volume can hardly be considered much in the way of true customer retail volume. So the question morphs into which so-called “customers” is Amway listening to? Better yet, which of its “customers” should Amway be listening to? It’s IBOs? It’s retail customers? Both? Neither, but “focus groups” instead? Often it appears Amway’s so-called “focus groups’ are made up primarily of IBOs. Think that one out, doing product marketing research with a captive clientele like starry-eyed new Platinums. What we need instead is marketing research done with our target audience, potential customers with whom we have no leverage.
Just who is Amway doing its market research with? I’d really like to know the answer to that question so I would have a better feel for the direction Amway is taking. For what it’s worth, I believe if Amway wants to know what is wrong with these aspects of its business perhaps it should listen to some of the people who have refused to buy our products or decided not to join our business. Ask them why, and then take their answers seriously. The bottom line is that products purchased by IBOs are important to our success, but products that retail customers are willing to buy because they find them compelling and attractively priced are even more important to our long-term success. We do not need or want discounted, low quality products. Discounted products often say the wrong things about a company and its products. (If you don’t believe that take a read of Chapter 10 “The Power of Price: Why a 50-Cent Aspirin Can Do What a Penny Aspirin Can’t” in Dan Ariely’s book Predictably Irrational.) At the same time, over-engineered (so-to-speak) products, expensively priced for our general clientele, also create serious credibility issues for us (think Tolsom Shaving Gel). Neither discounted products nor high end, expensively priced products are the right approach. Beyond that, developing products with the IBO in mind as the primary customer is borderline deceitful in regards to the marketing plan. Hopefully we have learned something from the past on this issue and are not going to travel further down this road.
As an aside, IBOs are customers of Amway in a different and rather unique way: We are asked to promote the business to other potential business owners. So in a very real sense we are “business” customers of Amway. We have to “buy” into the Amway business, and then effectively “promote” it to others. We have to believe it has real value, not only to us, but to others as well, if we are going to build profitable IBO business networks that move products to end users. How do you feel about the value of an Amway business in the marketplace today? Personally I’d say an individual Amway business is more valuable today than it was a few years ago, and it also has greater potential than ever. I’d also add however that it has some serious issues it needs to overcome if our company and our business opportunity are going to recapture their places as the industry leaders in North America.
4. Listen to your people. Consult everyone, from the boiler room at the plant to the executive suite so you become fully informed. Invite everyone to send e-mails, and answer them! (emphasis Miller’s)
My personal experience tells me that Amway does this decently on every level but one. The Opportunity Zone corporate sponsored blogs have been a terrific new approach and have demonstrated Amway’s willingness to listen to everyone and anyone with virtually no censorship. They are moderated by talented and interesting people like Robin Luymes and Beth Dornan, and have convinced me the company is open to hearing from us. However, what these corporate blogs have not done is convince me of Amway’s willingness to allow some of its employees to discuss the truly tough issues. It appears that when the topics get tough, Amway goes mute, and mutes its staff as well. On some level, this needs to change.
Another area where Amway falls down in my own limited experience is in responding to inquiries for clarification, particularly if the topic raised or the question asked has a negative connotation. This kind of goes back to Tip #1, Amway’s apparent unwillingness to speak openly about negative issues. A few weeks ago I sent an e-mail to Amway’s Rules Department requesting feedback on a specific issue, and was promised by e-mail reply that I would receive a prompt answer. Since then I’ve heard nothing, and it’s been over a month. There is tremendous room for improvement in this area. As Miller admonishes, “Answer them!”
5. Do a wardrobe check. If people gladly wear caps and shirts with the company logo, morale is good. If no one wants to be identified as your employee when they go to the mall, you’re in trouble.
This tip is true of IBOs in the field as well, and needs to be directed at both corporate and IBO leaders. I would say to Steve and Doug and the new Alticor and Amway corporate staff, if you don’t see any of your IBO leaders wanting to be identified publicly as your business owners, you’re in trouble. You tell me, have you seen any Quixtar or Nutrilite logos on the baseball hats of any Diamonds on the recreation fields of North America lately? Or on any of the apparel of your corporate staff on a Saturday afternoon? Have you seen any Nutrilite logo clothing on any Diamonds outside of an Amway sponsored function? Have you seen any XS Energy logo decals on any Diamond vehicles lately? (I have one on mine.) By the way, those XS Energy marketing folks really get it. They know how to promote their product and their brand. We should do half as well as they do.
Yes, I know, IBO leaders lead with the business (”Which business?” I might ask, but I digress), that’s why they don’t wear a hat or a polo shirt with Nutrilite’s or Quixtar’s logo on it, and why they don’t have an XS decal on their car. It’s the curiosity approach, stupid. Yeah, I get it, that’s the reason.
Sure it is.
Can you imagine a Nike executive having any problem wearing apparel with the company logo on it? Any Google exec having a problem with wearing her company’s logo on a sweater? A Celtic fan? A Harvard student? Been to a professional golf or tennis tournament lately? Seen any corporate logos around? Heck, as much as it annoys me, I’ve seen dozens of vehicles around Atlanta with large MonaVie logos and contact info on their back window. Do we want Amway to have a reputation that we can be proud of? Let’s start by putting ourselves on the line and have everyone go public about their affiliation with the business — and that means corporate staff and IBOs. Then we’d be forced to truly live up to the reputation we want the company to have.
I recently made a commitment to wear warm-up jackets, shirts, baseball hats, or something else with the Nutrilite logo on it whenever possible when I give tennis lessons to my students (I am a tennis pro), so I am going to purchase some clothing with company logos on it for myself. I have also made a commitment to tell anyone who asks me what I do for a living (and also those who don’t ask) that I am a tennis pro who is also building an Amway business, chips fall where they may. And I know that by doing so over time I will learn how to handle their follow-up questions appropriately, effectively, and winsomely. I’m not interested in any more “spinmeister” answers to simple questions from prospects and friends, answers that avoid providing transparent, honest, and relevant information. So far my commitment to candor hasn’t created a single problem for me. I am convinced one of the best ways to deal with the negative on the internet is to demonstrate the positive aspects of the business publicly on a personal level. If we can’t do that, then we really do have a problem. As I wrote earlier in this post, the recent national ad campaign by Amway is a great step in the right direction, but it’s time for all IBOs to come out into the open and put themselves on the line too. Right now Amway is investing huge financial and human resources trying to tell North America the real story of Amway. An important aspect of making that investment worthwhile to Amway is having IBOs become publicly visible as representatives of the business. Thus, when people are looking for Amway, they’ll know where they can find it and they’ll have a better feel for the quality of the people in the business. Clearly revealing our affiliation with Amway is one way to do just that.
6. Practice calm realism. The key here is to stay balanced. Truth telling can be scary, but if you let people know there are solutions for most problems, they’ll be less discouraged.
This goes back a little to my comments in point 1. Truth telling is scary, but it’s better than hiding the truth, and all of us know that from experience. In May, in a move unprecendented at a U.S. corporation, the top performing insurance giant, Aflac, decided on its own to give its shareholders the right to weigh in on the issue of executive compensation. Brian Cadman, an associate professor at Northwestern University’s Kellogg School of Management said, “This is going to be a peer-pressure issue and it’s going to be the better-run firms that are going to start down this path. Down the road, it’s going to be the type of thing to help Aflac signal that they are doing the right thing by their shareholder.” Interestingly, Aflac is taking this step while they are not suffering from any public relations nightmares that might have required a face-saving response. Aflac Chairman and CEO Daniel Amos at first said, “I was nervous [about the say-on-pay proposal]. I didn’t know what we were getting into.” But the company decided to that it had to allow the shareholder vote on executive compensation to live up to its “corporate philosophy of openness.”
We’re beginning to see a return to respect for the truth from a number of large organizations. After the Carnegie Foundation’s ill-starred efforts to help Zimbabwe overhaul its constitution and its government, for example, the foundation published a report that began, “This is the anatomy of a grant that failed.” In addition, the Army has begun a critical self-assessmentof the miscues in Iraq to make sure they will never be repeated. No company or institution can afford anymore to deceive itself about the truth about itself. And that includes Amway.
As D. Michael Abrashoff wrote in his new book, It’s Our Ship: The No-Nonsense Guide to Leadership,
“It is plainly suicidal today for any high stakes leader to reject bad news as is it were a live hand grenade and treat its messenger like a traitor…leaders in place or in training have an overwhelming incentive to encourage truth-telling by themselves and everyone who reports to them. Sure, honesty can be dangerous, but, in the long run, dishonesty always loses.”
7. You don’t need all new players to make a team into a winner. Even at companies in crisis you’ll find lots of people who know their job and do it well. Try to hold on to them.
I admit, this point falls outside my knowledge of Amway and Quixtar. I don’t know the corporate staff at Amway all that well. I’m sure several of you know them far better than I do and can comment on this point more intelligently than I can. I do know that the people I have worked with at the company regarding specific needs I’ve had in the business (outside of the previously mentioned ones) have been terrific. Everything I’ve read and heard about the new corporate leadership brought in by Alticor and Amway over the past year has been nothing less than stellar. I would say this bodes well for the company’s future on all counts.
Obviously, after looking down this list, it appears Amway is doing very well on several of Miller’s tips. It’s heartening to know that the company could easily rise to the occasion on a couple of the other points having to do with transparency and complete truth-telling. All it would take is a total commitment to the three dynamics Steve Lieberman recently stated that Amway Global was committed to: honesty, openness, and transparency. I hope Amway’s leaders will jump in with both feet and deliver on that promise no matter how scary it might be. I’m convinced doing so will pay off handsomely in the coming years.
Steve Miller obviously understands company turnaround dynamics far better than I do, so I take him at his word and his expertise that these are seven of the most important tips for turning around a company. It seems to me to be a reasonable list and one worth contemplating in relation to Amway. But, without wanting to be arrogant I would add an eighth tip to his list. Here it is:
8. If, at any time, you are not sure what to do next, refer back to Tip #1. Telling the truth is always the best place to start.
Speaking of Amway, particularly in regards to Miller’s seven points, what are YOUR thoughts on what Amway and IBOs could do collaboratively to truly transform our business positively over the next few years?
written by Chuck Lia
\\ tags: Alticor, Amway, Business Transformation, Opportunity Zone, Quixtar, Steve Miller, The Turnaround Kid, Transparency
