The System

The System

In the context of Amway®, the "system" is used to describe non-Amway® produced materials that Amway® distributors use to assist them in building their Amway® businesses. These materials include cassette tapes, video tapes, books, seminars, meetings, computer programs, literature, and the like. These items are also referred to as the tools which are used to build the business. The Amway® Corporation refers to the system or tools as Business Support Materials (BSM's). So, from this point forward, any reference to tools, the system, or BSM's will be referring to a non-Amway® produced material or event.

Many credit the Amway® distributor Dexter Yager with the creation and organization of the system as we know it today. As I know it, the story goes something like this. In 1964, Dexter and his wife Birdie became Amway® distributors. After two months, they reached the level of Direct Distributor. Dexter worked hard at building the Amway® business, sponsoring many other distributors, but to his dismay, the distributors were only motivated when he was around. Basically, after three years of effort, his business was no farther along than it was a month after he started. I have heard him describe the process of motivating his group as "spinning plates."

This perplexing atmosphere persisted until he came across some tools that could assist him in training and motivating his group. These materials were motivational recordings and books. Dexter found that tools could be used to motivate his group when he wasn't around, thus leveraging his time. From that point, there was no looking back; with the tools, Dexter was able to build a network of thousands of distributors around the world. Today the Yagers are one of the largest and most profitable Amway® Distributors.

Somewhere along the line (as Dexter would say), Dexter decided it would be a good idea to start manufacturing the tools himself. Some of the tools that Dexter sold were generic recordings and books from existing sources (i.e., How To Win Friends & Influence People.) The remaining tools were from successful Amway® distributors. Basically, Dexter would put on a training meeting where he or another distributor would talk about their experiences in the Amway® business. These meetings would be recorded, and from these recordings, Dexter would make tapes and sell them to his downline organization. This was a way to get the information to those who weren't able to make it to the meeting. The value of this process is readily apparent.

Wishing to duplicate the Yagers' success, several other high-level distributors began to manufacture and sell tools to their distributor organizations. However, this was not true for all Amway® distributors; some organizations had a system, and some didn't.

While it is possible to build an organization the size of Dexter's, without a system it would be more difficult to do. In fact, I don't know if it has been done. So, is it better to be in an organization with a system or without one? At the end of this section you can decide for yourself.

Amway® and the System in the Early 1980's

The whole tools discussion came to a head in the early 1980's. The catalyst was a less-than flattering 60 Minutes segment about Amway®. This prompted Amway® to investigate the tools and system more thoroughly. To put it lightly, the Amway® corporation was less than thrilled with what it found. Essentially, many of the distributors who produced and sold tools were taking advantage of their distributors. For some, the primary purpose of tools was no longer to help Amway® distributors build their businesses; rather, tools became a significant source of income for these distributors. It was not uncommon for some of the higher level distributors to make more from the tools which they produced for their distributors than from the Amway® business itself. To add insult to injury, the masses of the distributors purchasing these tools were oblivious to the fact that their money was lining the pockets of the higher-level distributors.

Things were so out of hand that Rich DeVos, co-founder of the Amway® Corporation, decided to step in and have Amway® manage the tools business. Basically, distributors would no longer be allowed to independently produce and sell BSM's. This task would be taken over by Amway®. There would be a set price for tools and there would be Business Volume attached to the tools. For example, a tape would cost $2.50 and would have 2.50 Business Volume (BV) attached to it. Forgoing the lengthy explanation, by assigning BV to tools, everyone would be able to profit on the tools equitably. Amway® was set to clean house. For a much more detailed account of this era, click here to view an excerpt from the AUS Site.

Present Day

Now, to fast forward to the present day. How have things changed after Amway® "cleaned house?" Unfortunately, THINGS ARE WORSE NOW THAN EVER BEFORE! Amway® never "cleaned house", and I am not exactly sure why. I have a theory, but that is all it is. In order to explain this theory, I have to take you back to the early beginnings of Rich De DeVos and Jay Van Andel, the co-founders of Amway®.

Rich and Jay used to be distributors in another multi-level marketing company called Nutrilite. One day, Nutrilite decided to change their marketing strategy. Nutrilite decide to make its product line available to the public, which meant that a customer didn't have to know a Nutrilite distributor to purchase Nutrilite vitamins. Obviously, this new plan wasn't favorable to Rich and Jay. This change would be financially devastating to all the Nutrilite distributors. Unable to dissuade Nutrilite from this course of action, Rich and Jay decided to take some of their distributors and jump ship.

They decided to form their own company, which would eventually become the Amway® corporation. Ironically, when Rich and Jay set up their corporation, they enacted measures that would make it difficult for the same thing that happened at Nutrilite to happen again. In other words, it would be difficult for Amway® to enact any major policy changes without the consent of the distributor organization. This fail-safe mechanism was the Amway® Distributors Association (ADA Board.) The ADA Board, by its own description, is an elected group of distributors who advise and consult with Amway® on all aspects of the business, taking an active role in shaping Amway®'s future. For all practical purposes, the ADA Board is a union for distributors.

It is my speculation that the policy change and Rich and Jay's departure were devastating to Nutrilite. Eventually, Rich and Jay ended up buying Nutrilite.

It is my belief that in the late 1980's Rich and Jay found themselves in the same situation that Nutrilite had been in earlier. Rich and Jay were getting ready to drastically change the way many of the Amway® distributors conducted business. Do you think Dexter Yager, Jim Dornan, Ron Puryear, Jody Victor, or Bill Britt (all extremely successful distributors,) wanted anyone telling them how to run their tool businesses? Remember, a system is what what Dexter believes made the difference in his business. Further, this change would be financially devastating to many of Amway®'s top distributors.

So what would you do, if all of a sudden, after many years of doing business a certain way, someone was going to tell you what you could or couldn't do? Furthermore, what if these changes were going to cut your income in half? Would you do what Rich and Jay did to Nutrilite?

It is my opinion that when it came down to actually pulling the trigger, Rich and Jay couldn't do it. Maybe it was because they didn't want their top distributors coming back a few years later and buying them out. Maybe it was because cleaning house would have meant starting over after over twenty years, and they weren't willing to take that risk. Maybe it was because enough top distributors got together and decided not to approve the change. We will probably never know, but I think it a safe bet that the answer lie somewhere in this paragraph. Did Rich and Jay make the right decision? You be the judge. They are routinely listed near the top of the Forbes 400 index of wealthy individuals.

So, how are things worse today than ever before? In order to find out, click here to go to the System Part II.

The System

Amway® and the System in the Early 1980's

Present Day

Last modified: July 14, 1998