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December 01, 2006

New Perspectives

Achieving the Vision

by Professors Larry Chonko and Buddy LaForge

In this month’s Academic Forum, Lee Morgan, President and CEO of The Antioch Company, which is the parent company of Creative Memories, joins Professors Larry Chonko and Buddy LaForge to talk about what it takes to lead a direct selling company.

Lee: Good afternoon Larry and Buddy. I’ve been looking forward to talking with you today. Leadership is a squishy topic, but very important and difficult in direct selling companies.

Larry: I agree. We have a lot of trouble with it in the academic world, as well. Even defining leadership is a tough task.

Buddy: There are certainly many definitions of leadership. The one I like is “influencing people to achieve common goals for the good of the organization.” It’s really about people and effectiveness; management, in contrast, is more about things and efficiency. Leadership is focusing on creating an effective vision and appropriate environment that aligns everyone toward achieving the vision. Management is more related to the processes and activities required to reach objectives in an efficient manner.

Lee: Although I think Buddy’s definitions are pretty good, there are certain things you have to do to lead a direct selling organization successfully, and it really doesn’t matter whether you call them leadership or management.

Larry: OK, Lee, we will forget the definitions. What recommendations do you have for leaders of direct selling organizations?

Lee: One of the most important is to have a clear purpose for your company-and it cannot be just about making money. We do not live to breathe, we breathe to live. Likewise, a company does not exist just to make money, but it must make money to continue to exist.
Buddy: That’s a pretty philosophical statement in today’s rough-and-tumble business world. What should this purpose include?

Lee: I’m a philosophical guy! A purpose should state how a company makes the lives of its customers better and should describe basic company values. And, for direct selling companies, the purpose should also address the salesforce. Stiffing the salesforce is not a good purpose.

Larry: Can you give us an example?

Lee: The purpose of Creative Memories is to serve human needs by making a difference in the way people remember, celebrate and connect. We also have a number of corporate values that are extremely important to us.

Buddy: But what about the salesforce?

Lee: The purpose also emphasizes providing a community of work that offers opportunities for employees and the salesforce to prosper. This part of our purpose is critical for us and other direct selling firms.

Larry: I like this type of purpose for direct selling companies, because it addresses customers, employees and the salesforce in a meaningful way. It’s very inspirational and should generate passion for the business.

Buddy: I agree. I do something similar in my personal selling class, where students engage in role play to sell a product. Before planning their sales presentation, I ask them to complete the following sentence: “I sell _________, but I improve people’s lives by _________________________.” This helps them focus on their real purpose, and if they emphasize this purpose sales will follow. One of my students this semester was a server in a restaurant. She e-mailed me that she served food, but her real purpose was to provide each customer with an enjoyable dining experience that helped to relieve the stresses of the day.

Larry: That’s a great purpose. What if all servers viewed their job as having a similar purpose? I would dine out more often!

Lee: I agree. An engaging purpose is critical, especially for direct selling firms. It must be communicated often and lived, however, to be effective. Our purpose is carved in granite at the front of our building, so everyone can see it and remember what we really do. We also consider our purpose and our values in all the decisions we make. Our strategies and tactics might need to change, but our basic purpose and values remain constant.

Buddy: What else would you recommend to leaders of direct selling companies?

Lee: Another key focus should be execution. You can’t eat a purpose or values. Generating ideas is easy, but executing them is often the biggest problem. I have seen many situations where a direct selling company has an elegant and comprehensive plan, but is unable to execute it. I have even been in that situation myself. Execution is where the rubber meets the road.

Larry: I’m aware of many examples of poor execution, as well. A lot of time and effort is spent on developing strategies and plans with little attention to implementation. What is required for effective execution?

Lee: This is difficult to answer, because direct selling is complicated. There are so many factors to consider, and you have so many balls in the air at the same time. There are no formulas. If there were, everyone would be successful. I do, however, think intuitive skills are very important.

Buddy: Intuition! We’re academics, we don’t focus on nebulous concepts like intuition.

Lee: Well, you should. Direct selling leaders have to make intuitive judgments. You have to do all of the analyses and evaluate all of the available information, but there is never complete information, and there are so many unknowns and time pressures. Leaders have to finally use their intuition to make what they think are the best decisions.

Larry: Lee, I think you are right. But, how do leaders develop intuitive skills?

Lee: I think a portion of intuition can be learned, but some of it is innate. I have known some leaders in direct selling that always seemed to have the right sense about what to do and how to do it. These are the type of people you really want to hire for your company.

Buddy: What about the part that can be learned and developed?

Lee: Intuitive skills can be developed by learning as much as possible about the direct selling industry and your company, and over time through learning from different experiences. I think those with the best intuitive skills tend to have a strong ability to empathize with customers, employees and the salesforce. They really understand others from the others’ perspective. This empathy allows them to have a better feel for how others will respond to whatever decisions are made. As I said earlier, some people just have this empathetic ability, but it can be developed to some extent.

Larry: Lee, we have been talking about what leaders in direct selling companies need to do. One of the things we find in many companies in other industries is the need for many people at different levels to exhibit leadership skills. For example, there is a lot of teamwork and team selling required in other industries. Leadership skills are very important in these types of situations. Is it similar in direct selling?

Lee: I think it is, but maybe a little different.

Buddy: What do you mean?

Lee: Well, take Creative Memories as an example. Leadership is important within our salesforce. Typically, leaders in our salesforce focus on recruiting, training and supporting our consultants. Buddy would call this management. These activities have always been important and still are. But one thing that would really help us is if these leaders would spend more time with recruits to generate more interest in viewing our opportunity as a career. Discussing various career options, defining expectations, and helping recruits develop and achieve a desired career plan would have an enormous impact on our business. This is clearly more of a leadership than management role, and it is increasingly important to us.

Larry: That is really interesting and an excellent example. Lee, is there anything else you would like to say?

Lee: It needs to be emphasized that leaders in direct selling organizations must walk the talk and be transparent. Having documents that communicate the company purpose and values is important, but the most meaningful thing is for direct selling leaders to be role models. What you do has much more influence than what you say. Be what you claim to be. And be transparent. The salesforce will always find out whatever the company does, so it is best to be transparent and communicate what you are going to do, even if it might not be popular. There are a lot of tough calls to be made. You have to make the best decisions, and communicate the decisions and reasons to the salesforce. If we are comfortable with something we do being in the headlines of the newspaper, then we do it and communicate it. If not, we don’t. This is a simple, but useful, guideline that will help you remain transparent.

Buddy: That’s a great way to end. We really appreciate the wisdom you have shared with us today and hope that our readers will benefit from your insights.

Raymond (Buddy) LaForge is the Brown-Forman Professor of Marketing at the University of Louisville. Larry Chonko is the Holloway Professor of Marketing at Baylor University. E-mail your questions and comments to