One of my favorite movie moments is a scene from the film Jerry Maguire. It’s where Jerry, a successful sports agent becomes inspired to write a critical “mission statement” for his industry. The business had been overrun by greedy agents and players who cared little about the game and mostly about making money (“Show me the money!”). Jerry stays up all night writing his statement, hands it out to his colleagues the next day and subsequently gets fired from his firm.
It is not easy to write down and share honest thoughts when something has gone very wrong, especially with so many entrenched interests at stake. Jerry’s mission statement is entitled “The Things We Think but Do Not Say”. I present here ideas that I know many in the direct selling industry are already thinking… but need to be said openly.
Direct selling is now at a decisive crossroads, and how we respond to the challenges facing us today will determine if the next decade is one of remarkable prosperity or one of yawning mediocrity for our industry.
With the ushering in of 2013, direct selling is being bullied by the greed of Wall Street hedge funds, accused of unethical and illegal pyramid schemes. We are challenged by the emerging social commerce, where companies outside our industry are incorporating elements of our business model and creating new and innovative hybrids. We are being accused of becoming stale and irrelevant to younger generations of prospects as fast growing companies declare that the old-school direct sales business model is in musty and in need a “modern day makeover”.
In Jim Collin’s landmark book Good to Great, one of the defining characteristics of the companies that made the leap from average performance to outstanding performance was an ability to confront the “brutal facts” of reality in their businesses. When we have the courage to stare down the good, bad and the ugly within our business instead of sugar-coating our perspective it opens us up to making positive changes. It is time for us to begin facing the “brutal facts” of our reality instead of ignoring the challenges that are threatening us as an industry.
BRUTAL FACT 1: We encourage criticism of our business model and nurture a negative image because we don’t cultivate enough transparency.
Why do we invite criticism from Wall Street hedge funds and magazine journalists who accuse us of being pyramid schemes? As one reads through some of the recent presentations made by hedge fund managers a common theme arises: mistrust and skepticism about whether we are being forthright and open about our business practices. “How much income is actually earned and by who? How much product is actually consumed internally? Is the company hiding something from us?” This mistrust is tragic because our businesses are clearly not pyramid schemes as the critics assert. Our problem is that we invite the criticism because we are afraid to be open and transparent.
Our business model, as defined by DSA is not a pyramid scheme but rather what we might call an “effort scheme”. It is not a lottery (based on luck) or chain letter (based on who got in first). It is system by which ordinary people are empowered to accomplish extraordinary things. Individuals invest effort: time and sweat equity and receive recognition and income. Why are we so afraid to clearly proclaim that only a few invest the amount of effort to get to the top of our sales organizations? Instead of being intimidated by our critics we need to be proudly upfront and open with them. Only when we have the confidence to be forthright will they back off and allow us to get back to doing what we do best: creating ever more opportunities for people to earn the supplemental income that they need.
BRUTAL FACT 2: Rapidly developing social commerce holds amazing possibilities for the direct sales industry, but only if we open our eyes and embrace it.
It seems as if every day, a new social commerce start-up is born. Facebook is now selling gifts and gift cards directly on their site. Kitsy Lane, a new start-up who describes themselves as a fusion of Avon and social networking just received $3m in funding. Are we paying attention? The backbone of direct selling is social networks, and suddenly it seems as if the entire world has figured out that there really is power in the concept of doing business person to person.
Are we going to sit here and let the entire world snatch this opportunity from our grasp or are we going to open our eyes to the possibilities and carpe diem (seize the day)? As companies outside our industry begin to do business socially, the old-fashioned direct selling concept runs the serious risk of becoming a dinosaur, left behind because we could not adapt to the rapidly evolving landscape. The unfortunate reality is that we were here first! We must wake up and embrace the new paradigm, welcome these new ideas and lead the process of innovation.
BRUTAL FACT 3: Direct selling is in jeopardy of becoming old school, musty, and irrelevant.
Chloe and Isabel, a fast-growing new company appealing to a younger generation of customers declares in their recruiting video that “The direct sales industry is in need of a modern-day makeover.” Do we understand what this means? The shifting attitudes and preferences within evolving generations of consumers are changing the way new businesses are approaching the very essence of what we call direct selling.
DSA Hall of Fame recipient Alan Luce wrote recently that many of the old tried and true strategies and tactics don’t seem to be working any longer with younger generations of direct sellers. There are tectonic shifts happening beneath our feet, yet we are too focused on making next month’s numbers and fighting off our critics on Wall Street to understand what is actually happening. The times are a’ changing and if we don’t change with them we will become yesterday’s mashed potatoes… not very interesting, not very exciting and oh so very bland.
The direct selling industry has the potential to lead and empower the world into a new era of prosperity and freedom.
Charles Darwin wrote: “It is not the strongest species that survive, not the most intelligent, but the ones most responsive to change.” Direct selling is poised to take advantage of the incredible opportunities that the social media revolution has handed it on a silver platter. Joe Mariano and the DSA are taking a leadership role in exploring and acting on these critical issues we need to face now.
If we have the courage to stand up and be proudly transparent about our model, embrace social commerce and be open to new ways of empowering individuals to do business, then no one can stop us. Direct selling is at a decisive crossroads, and the only question left is: “Are we going to look backward or look forward?”
Jeff Stroud is a direct selling industry consultant, entrepreneur, former CEO, DSA Board Member and Chairman of the DSA Strategic Planning Committee