 TO: Patric Sullivan
FROM : Ed Postma
DATE: January 19, 1983
Subject: ANALYSIS OF THE BRITT/YAGER SYSTEM
There is no question that the system captioned is all
inclusive. It is the only system utilized in the Amway business which attempts to give
security to entrepreneurship. Although there are variations of this system dependent on
the personality of the Diamonds involved, there are certain underlying principals which
are used by all. Below are some of the methods of operations used by this system.
- Relationships.
When talking to Directs and Diamonds in this organization, it is
often heard that they are in the process of developing friendships downline.
Friendship-relationship is central to the building of the business in this line of
sponsorship since it develops a good deal of loyalty and dependency to the line. Loyalty
and dependency is the ultimate objective of the "system."
- Relationship within the line of sponsorship.
The line of sponsorship becomes
involved in developing friendships as opposed to immediate business relationships. When a
new distributor is sponsored to this line of sponsorship, the immediate upline Direct
Distributor becomes acquainted with the individual. This is done in two ways; first, often
times because of the business-building techniques, the Direct Distributor will have been
the individual who has shown the plan for the new distributor. The second method is that
the Direct Distributor is consistently help up in "edification." This makes him
someone who is to be trusted and emulated. There is constant reenforcement of this
technique in training situations, or in rallies. In addition, it is taught in the line of
sponsorship, that when a new Direct Distributor breaks, over 50% of his volume should be
in one leg. It is patterned for a new distributor to be assured that his upline will help
him to become a Direct Distributor. Technique used allows for upline direct Distributors
to work in one leg of this individual's group. They are consistently edifying the
distributor whose organization they are building, however, relationships are being
developed with the upline Directs. This is done to assure loyalty within the organization.
Should a Direct Distributor break, and decide to do his own thing, relationships which
have been developed upline would preclude any independence.
It is also customary for this line of sponsorship to consistently teach
that the relationships in a line of sponsorship are sacred. Distributors are taught that
they will not be able to build the business without the presence of an upline Diamond or
an upline support structure. Inevitably, if Direct Distributors break off from this
structure, their business begins to sag. In many cases, because they feel that they have
violated the love and trust of the line of sponsorship, their businesses will ultimately
disappear. We have had this occur at least three times in the Northwest in the last three
years. So, while friendships are being developed, a dependency is also being created. It
is this aspect of their methodology, that has allowed for charges of "mind control."
In all situations, within the line of sponsorship, distributors are
taught that they are to do all that has been requested of them by their line of
sponsorship. There is no room for individuality or creativity. They are taught
consistently that there is no need for creativity, since the line of sponsorship has the
answers for them. Decisions are made for distributors based on personality and the size of
the business. However, as time goes on, a distributor finds himself more and more reliant
upon the advice of the upline Direct, Emerald, or Diamond. In fact, after a Direct becomes
a Diamond, he is still not free to act on his wishes. In the area of finances, a new
Diamond in the Puryear organization recently confided that in order for him to buy a
house, it was necessary for him to receive the approval of Ron Puryear and Bill Britt.
Absolutely nothing is left to chance or creativity. There is always the chance of failure
if someone is creative, and in order for their business to be credible, no failure is to
be allowed.
- Relationships with other lines of sponsorships.
This section of the memorandum could
be summarized in the word--NONE. Distributors are consistently advised to have
absolutely no relationships with any other persons in the Amway business, with the
exception of his upline organization. They may read no other material except that provided
by their line of sponsorship. They may listen to no tape or receive any other information
from any source, other than their line of sponsorship. If they wish to receive information
from any other area, they are completely isolated by the line of sponsorship. The
rationale given for this attitude is simply that there are no other successful lines of
sponsorship in Amway. They are consistently taught that their line of sponsorship does
two-thirds of the volume that Amway does annually. To ensure that this sense of isolation
is reinforced, the line of sponsorship has provided alternative sources of information so
that the distributor organization is not dependent upon the corporation. It excludes from
the sources of information any reference to any other line of sponsorship or any achiever
in Amway. Although it may seem difficult for us to believe that people would acquiesce to
this type of pressure, there is a great deal if insecurity present in the new distributor
and his relationship to the business. In providing an organizational structure which gives
security to the new distributor, and assuring him he won't go no where else for
information, this line of sponsorship effectively isolates its distributors from others.
- Relationship with the corporation.
For most new distributors, the corporation is a
complete enigma. Although they have signed an application with the corporation
contractually agreeing to abide by certain principals, the line of sponsorship does not
allow communication between the distributor and the corporation. Since his source of
information is consistently upline, there becomes no necessity for the individual to
develop that relationship. Historically, this line of sponsorship has viewed the
corporation as an impediment to their growth. Because of the fiercely independent nature
of its distributors, Directs, and Diamonds, the corporation has become viewed as a
hindrance. There is insecurity about the way that the corporation deals with any
challenges in the distributor organization. First of all, this organization does not feel
that the company can understand the impact of building the business on a person. It is
their feeling that no one at the company completely relates to their efforts in attempting
to build the business and organization. This includes even Rich and Jay. It is their
feeling that Rich and Jay do not have an understanding of what it takes to build the Amway
business today. Second, this organization feels insecure about the direction the
corporation is taking. There is a constant feeling of competition with the corporation. In
addition, this organization, because of its structure method of doing business, looks at
the corporation as a rudderless ship. Every time that the company comes out with a change
in direction, they feel that this is confusing their new distributors. As a result, they
discourage their distributors from being involved in any corporation function or tape
program. In addition, the corporation serves to signal other success in other lines of
sponsorship. This system does no allow that success can be built differently than in the
method that they use.
It is also this organization's feeling that the corporation cannot show
the lover or concern that is required in building the business. This has to do with
relationships. It is their feeling that only on a one-to-one basis or in the building of
the business can this relationship be developed. They also feel that because of the size
of the corporation effective communication cannot always take place. They would prefer
that this communication be done between the company and Diamonds, since Directs may be yet
susceptible to confusion. They also feel encumbered by corporation paper work. Their goal
is to simplify the business as much as possible.
In the words of one Diamond from the Northwest, "The corporation
should manufacture products and get out of the way." This sums up the extent of the
relationship that these Diamonds wish to have with the company. Although this is an
extreme point of view for many of these distributors, this view is often times heard as
they honestly believe that the corporation is in no way motivating. It has been my
judgment on observations, that they do no do a better meeting than we do, nor can they
provide the same type of motivation as we do. However, in attempting to convince the
corporation to stay out of the motivation business, it allows them to do two things:
first, it further isolates the business, second, it allows them to operate a motivation
business with little or no competition. Another factor involved is that in some cases,
people are trained to do the business in an improper manner. Having a corporation
representative stop a Direct from doing certain practices causes confusion in their
organizations and a breakdown in the trust relationship that has been developed. In
evaluating the techniques that their business utilizes, it can be proven that their
isolation from the corporation has actually caused them difficulty.
In some instances in this line of sponsorship's association with the
company, where corrective matters have been take, the measures taken often cause animosity
as opposed to understanding. This has also caused a strain in the relationship.
- Summary paragraph.
In the area of relationships, this organization has continually
and consistently attempted to create an isolationist point of view with regards to all
facets of the business. This isolationism is a present danger, since the loyalty and trust
of the distributors and Directs lie with a few select individuals. As these select
individuals go, so will go their business.
- Motivation. If there are any discussion of any length
with the Diamonds utilizing this system, it becomes clear that although they realize that
they are Amway distributors, they consider their personal business to be the motivation
(tool) business. I think there is little question that is where the big money is made. The
motivation business is also where their primary allegiance lies. When asked, a Diamond in
this organization will tell you that he is in the motivation business and that his Amway
business would be impossible without his motivation business. So, there is developed a
peculiar relationship. The motivation business could not exist without the Amway business,
yet in all seriousness, these Diamonds feel that their Amway business is impossible
without the motivational business. It has been clearly stated to me by more than one
Diamond in this group that if anything is done that negatively affects the tools business,
they would leave the business. Their motivation business falls into five categories. Three
of these categories are unrelated to the business itself.
- Tapes and books.
When we observe these motivational businesses, the first area that
causes concern is the area of tapes and books. These products are sold through the line of
sponsorship with little regard to Rule 4. As on example, I would like to diagram the World
Wide Dream Builders in the Northwest.
Actual:
For Tools:
Each of these Diamond diagrammed deal with their downline Emeralds and
Directs. It is well documented as to the inner workings of the tape business. However,
each pin level gets a markup on the tapes with largest given to the Direct Distributor.
The reason for this is that the Direct becomes involved in buy backs and inventory. In
addition, -because he is basically one legged, he is not profitable in his Amway business.
So, at that level, the tool business subsidizes the Amway business.
- Rallies.
Although the corporation has decided that rallies are not products, this
line of sponsorship believes that they are as a portion of the motivation business. A
large portion of the money accumulated through the motivation business, comes from the
rally system. Although Diamonds reap the largest percentage of profits, Emeralds begin to
get a percentage of the receipts. In addition, Diamonds and Emeralds receive speaker fees
at these functions. It is not uncommon for the profits on these functions to exceed
$25,000 to $50,000 for a weekend or $250,000 for a Free Enterprise night.
In addition, this is another area of entry into the Rule 4 violation.
In all cases that distributors have become involved with other lines of sponsorship, it
has been done through an invitation to a major function.
- Accessories.
This area of the motivation business is not recognized as that.
However, in attendance at the major functions are vendors for other products to include
jewelry, clothing, and automobiles. These accessories are made available to distributors
so that they may appear successful. It is considered extremely important for Diamonds to
show material success in the business. Although I cannot be certain, it would seem
reasonable to assume that the individuals promoting the functions would receive a cut of
everything sold there.
- Counseling.
Counseling is a non-profit area of the motivation business although it
is an important one simply because relationships are developed. Counseling goes on
continually with the upline also causing dependency. It is a portion of the motivation
business because of the relationship of the counseling to the decisions made in the
motivation arena.
- Moving up.
Moving up in the Amway business is considered to be an important part of
the motivation area of the business. It is important to demonstrate success as the system
(not the Amway business) allows. In most cases, moving up is important, in the method
designed by the system, as opposed to the willingness to work the business. If a Diamond
sponsors a Diamond, that second Diamond should not go Double Diamond until the first does.
To do so is caused by egos as opposed to a desire to help others. It also causes anxiety
with the relation to the tools business. Although a formula has been developed so that
Diamonds in depth get their fair share, there is some concern about Double Diamonds in
depth.
Summary
There is a major economic force at work with the tool business. Anything that is done by
the corporation that will cause conflict or competition with this business could cause a
major split. This business will crumble under its own weight for the following reasons.
- Rights of the Directs.
People are becoming more sophisticated about the Amway
business. A lot of sophistication has to do with the fact that Amway is no longer a
"closet" business. A lot of people have heard of it and have talked about it.
The biggest fear that Diamonds have in this system is that the Directs will take Rich's speeches seriously, become "little
Napolean," and cut off their ability to move the motivation business downline. This
has happened in some cases already and could happen many more times.
- Greed
. A continuing promise to all Directs in this system is that they will do as
well (financially) or better than Diamonds in the system today. This may not always be
possible. There have already been challenges with Diamonds in depth, and now Double
Diamonds are going to break, which will further break up the continuity of the system. If
someone elected to do so, he could go off and do his own thing without the line of
sponsorship. The loyalty, trust, and love would already be built. Ego could destroy the
traditional system. The system has encouraged "sponsoring" up so much that in
many cases, the downline leader is smarter, more ambitious, and more ego bound than the
upline.
- The Tool business (motivation) is illegal. If I
understand the MLM system, there are certain parameters
that confirm its legality. Unlike the Koscot method of marketing, the MLM system moves
a product to an ultimate consumer outside of the business structure; i.e., a customer.
Although the Amway business is legal (no question), the tool business is not (my
conclusion).
- It is a pyramid. It sells only to those who involved in its structure.
- It may violate tax laws. It is hard to determine whether or not proper sales taxes are
paid (especially in the state of Washington).
- A real danger of inventory loading without the protection of a buy back rule exists.
This has already occurred (Mackey). It will happen again.
- It could be construed as an employer/employee relationship.
- It is not a free enterprise opportunity. A downline Direct is not to compete with an
upline Diamond.
The motivation business is getting larger than expected. None of the
major participants really wishes to deal with it in a detail sense. With proper prodding,
this business will fail. |
