The Free Enterprise Soul of Network Marketing
Posted by Orrin Woodward on December 3, 2009
Network Marketing was designed as one of the purest forms of free enterprise where anyone can achieve success based upon their willingness to dream and achieve. Free enterprise ensures that companies and distributors are free to serve the customers and if they are wrong the customer will freely choose to go elsewhere. This freedom allows anyone with a dream and work ethic to achieve. Superstars from all walks of life abound in this profession who took charge of their personal situations and rose through the ranks to achieve uncommon success. Competition between distributor groups force the best ideas to rise to the top and the best leadership to be rewarded with increased business. In the same way, competition amongst companies is good in that it drives compensation levels up along with product quality in a beautiful example of free enterprise at work. I am proud to be part of this wonderful profession and forever thankful for the changes that this profession forced me to confront, in order to grow.
A recent trend in Network Marketing has me genuinely concerned for the future of our profession. The trend in Network Marketing parallels trends that I see happening in the American Economy. A general principle of economics is that people will do the least amount of work possible to produce any given result. Big American companies are looking to do the least amount possible to secure their customers and seek government protection to lock in anti-capitalistic cartels and monopolies. If companies can reduce the amount of competitors in any given market, they reduce customer choices and thus secure markets and profits for themselves at reduced work levels. Some Networking companies have resorted to anti-competitive practices to lock distributors in, instead of innovation to serve distributors. The goal of these violators of free enterprise is to eliminate distributor choice and thus lock in a monopoly like market. It is easy to maintain a customer if the customer has no other options. Tyranny over customers is a much easier short-term solution than service to customers, but in the end, it always fails. Let’s review a few examples from history.
Think back to Major League baseball before free agency. Owners of the clubs could dictate player salaries since the players had no free agency options. It was either play with your existing team, even though your contract had run out, or not to play at all. The contracts had what was called the Reserve Clause and it protected the owners from the effects of free enterprise by eliminating choices of the players. Curtis Flood stood up to the corporate giants and stated he had a right to choose his own team and not be traded against his will. Here is what History.com had to say about Curtis Flood’s challenge to the Reserve Clause:
In 12 seasons with the Cardinals, Flood was a three-time All Star, won seven Golden Gloves,and batted over .300 six times, contributing to his team’s World Series wins in 1964 and 1967. His batting average slipped during the 1969 season, however, and on October 7, the Cardinals announced they were trading Flood (along with Tim McCarver, Byron Browne and Joe Hoerner) to the Philadelphia Phillies for first baseman Dick Allen, Cookie Rojas and Jerry Johnson. Unhappy with the trade, Flood consulted with a union representative and decided to write his historic letter to Kuhn challenging baseball’s so-called reserve clause, which prevented players from moving to another team unless they were traded.
“After 12 years in the major leagues,” Flood wrote, “I do not feel that I am a piece of property to be bought and sold irrespective of my wishes.” He wished to play in the 1970 season, the 31-year-old insisted, but not with Philadelphia, and he believed he had “a right to consider offers from other clubs before making any decision.” When Kuhn denied his request, Flood sued him and Major League Baseball, alleging that the reserve clause violated antitrust laws as well as the 13th Amendment, which barred slavery and involuntary servitude.
Flood v. Kuhn went all the way to the U.S. Supreme Court, where Flood’s case was backed by the testimony of former players, such as Jackie Robinson. No active players agreed to testify, however, and the court ruled against Flood in a 5-3 decision in 1972. By that time, the Phillies had traded Flood to the Washington Senators, for whom he played only 13 games before retiring in 1971. Although unsuccessful, his historic challenge paved the way, for federal arbitration of salary demands, which the MLB organization agreed to in 1973. Two years later, an arbitrator effectively reversed the court’s 1972 verdict, throwing out the reserve clause and opening the door for the modern free agency that exists today.
Curtis Flood did not believe he was a piece of property and refused to be treated like cattle to be corralled by the owners of the franchises. Flood’s brave stand gave today’s players the freedom to choose the team that is right for them. Salaries, attendance, and competition have boomed since giving the players the freedom to choose. America is about that freedom to make your own way and dream your own dreams. This brings me to my main point about the Soul of Network Marketing. Is the future history of Network Marketing going to be about the control exerted by the owners over the distributors or is it about the freedom to compete in the company of your choice?
Free-enterprise works through a process of what Joseph Schumpeter called Creative Destruction. Bad ideas, bad companies, and bad behavior are not rewarded and eventually destroyed by good ideas, good companies, and good behavior. Without freedom, this essential process which enables the free enterprise system is nullified. Creative Destruction generates innovation and positive change to all industries and made America the envy of the Western world. Today, America and Networking are demanding security and believe that by destroying Creative Destruction, they will get it. What they will get is less security, less innovation, and eventually a collapse, just ask any former dictator of any communist regime. You cannot destroy Creative Destruction without destroying the innovation of the entrepreneurs!
We stand at the crossroads of our great profession and it will take a united group of brave field leaders to stand for all past, current and future Networkers. Distributors around the world ought to refuse to be treated like cattle and insist that the Network Marketing companies they represent allow freedom of movement for the distributors. To call distributors independent business owners and yet have non-competes, confidential arbitrations, and other legal harassment to deny distributors freedom of movement, is an embarrassment to the free enterprise ideal that Network Marketing represents. Freedom will not lead to anarchy because true leaders do not jump companies on a whim. Distributors do not leave companies unless they are not being treated with respect both personally and financially. To deny them the right to move when they are not happy is to deny them their God-given rights. I do believe when a distributor leaves that both the company and distributor should do so honorably without attacking one another. By denying distributors the freedom to move, Network Marketing is moving back to the days of feudal lords and the serfdom of the Middle Ages.
True freedom of movement will force companies to provide world class products, services and compensation plans. Leaders who innovate and improve the Networking field will be rewarded with increased respect, compensation, and perks. In Networking, there are no communities until leaders lead. Just like baseball, there are no games until the players play. Baseball had to change and the players and fans benefitted greatly. In the Middle Ages, feudal lords literally owned the serfs and they restricted their freedom of movement to take away their economic as well as their personal liberties. All distributors should check the contracts they have signed with their respective companies and insist upon the freedoms inherent as a human being. As free people, we demand that no reserve clause type wording be in any contract we sign. Or, worse yet, be inserted in an automatic renewal! How can we tell distributors that they own their own business when actually they are owned by companies?
Network Marketed first exploded in America and if we are transporting the American Dream around the world let’s do it the free enterprise way. Let freedom ring by ending the legal intimidation by the non-competitive companies to force distributors to stay against their will. Only in communistic countries did you see walls being built to keep people in against their will, remember the Berlin Wall? History has proven again and again that the human spirit must be free to innovate. Kill the freedoms and you kill the innovation of the entrepreneur by destroying the process of Creative Destruction. Lack of innovation leads to a stagnant cesspool frustrating would be leaders and handing power over to bureaucratic managers who squelch any new ideas.
America does not have to force people to stay in America. Year after year, more people come to America for the opportunities available under freedom. If America ever builds a wall and forces people to stay against their will, what would you think of America? Why would distributors allow the same unacceptable behavior into our profession? I encourage all Network Marketing owners to implement the American strategy. If you are unhappy in America, then you have the freedom to leave. America created a culture of freedom that attracted the masses to them. Network Marketing owners who create a culture of freedom will be rewarded similarly by distributor leaders. The marketplace has always rewarded free cultures greater than tyrannical cultures because free cultures can innovate. Real leaders will not surrender their freedom for any perks, privileges, or special deals. Companies who resort to legal theatrics to force distributors to remain in their business make a mockery of free enterprise and publically display their lack of competitiveness in the marketplace. You cannot control people into success, only liberate them to create their own success.
The history of America is a fascinating story of a group of leaders who refused to be abused by a tyrannical King. King George III tried to control the American colonies into success by his constant intervening into their affairs. After much abuse, the colonist finally had enough. I believe the Network Marketing distributors have had enough of abusive corporate staff and their poor treatment of their leaders. Perhaps it is time for Network Marketers around the world to write their own Declaration of Independence. Thomas Jefferson’s words in the Declaration of Independence ring as true today as the day they were penned,
When, in the course of human events, it becomes necessary for one people to dissolve the political bonds which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness. Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security. –Such has been the patient sufferance of these colonies; and such is now the necessity which constrains them to alter their former systems of government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute tyranny over these states.
I believe that anyone who abuses the freedoms of the people should not be rewarded with more business. Network Marketing is the greatest free enterprise vehicle left in America when allowed to be free. People will rise or fall based upon their ability to serve their communities. Corporations must be held to the same standard of free enterprise if Network Marketing expects to take its rightful spot among the great opportunities in the world. Freedom is self-evident and sneaking in reserve clause type wording at renewal time does not change unalienable rights. Recently I took a mid-day boat ride to the Statue of Liberty and Ellis Island. At Ellis Island, I read about the amazing stories of immigrants leaving everything behind to come to America for the opportunity to own something of their own. Tears welled in my eyes as I read the inscription of the Statue of Liberty. I pray these words will remain true for America and Network Marketing,
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed to me.
I lift my lamp beside the golden door.
Laurie and I started in Network Marketing with many problems and no solutions. We were poor, we were yearning to be free, we were another statistic in corporate America, but all that changed when a distributor handed us an audio tape lifting a lamp to us. The tape told me how I could be free by owning my own business. The tape told me how I could grow and change and become a leader if I had the courage. The tape told me I would be rewarded based upon my own efforts. The tape told me I would never have to work for a boss again and could choose my own schedule and enjoy the freedom of the American Dream. Are these still the principles that we espouse night after night? Superstar leaders like Dexter Yager, Bill Britt, Jody Victor, Joe Markiewicz, John Crowe, Jim Dornan and Dave Dussault all sold me on free enterprise. Do we still believe in Free Enterprise? If so, we have a moral obligation to ensure that we are not lying to our new distributors when we share the opportunity. The Statue of Liberty says it all. We need to lift this lamp to the world as an example of what a free enterprise profession, with free enterprise owners can do to light the path for all.
Thank you to all the leaders and owners who represent our great profession with class, dignity and free enterprise ideals. It is time to take a stand for the rights of people everywhere and weed out the anti-free-enterprise elements of this awe-inspiring profession. Perhaps the Soul of Network Marketing will play a part in re-inspiring the Soul of America. God Bless, Orrin Woodward