Applying Peter Drucker’s Management Principles

How Network Marketing Succeeds Using His Concepts

The fact is truths are truths regardless of where you find them.  Business leaders have listened to legendary management guru, Peter Drucker, for decades.  But to suggest that network marketing is an effective role model for organizations will cause some raised eyebrows and create a number of “tiffs and sighs.”   And there will be others who will be astonished to learn that Peter Drucker’s lofty management insights could possibly have anything in common with the lowly, often maligned network marketing business.  So what is the connection?  Let’s look at a few key concepts and connect the dots.

When his ideas first came on the scene, Peter Drucker was considered a contrarian by most traditional business leaders. GM’s ex-CEO Jack Welsh recognized his brilliance and called him one of the greatest thinking minds in management.  Five of Drucker’s key concepts are:

  • Favor decentralization instead of command and control
  • Employees are assets and not liabilities
  • A manager’s job is to prepare and free people to perform
  • An organization should have a standard way to execute its business processes
  • The corporation should be viewed as a human community

How do Drucker’s views sync with the network marketing industry, which by the way has grown to over $200 billion, using his methods?

Decentralization: Network marketing, by design, is formed by small teams of employees (distributors) working together within their own teams and independently from others. Distributors are clearly focused on getting new customers for the company’s products.  The corporate staff meanwhile is dedicated to doing what they do best: developing new products, creating marketing materials, manning help lines, providing training tools, managing the compensation program, and enforcing policy.

Employees are Assets: Each new distributor is keenly valued.  The teams are built one person at a time. And as a wise old traveling salesman once told me, “Nothing happens until somebody sells something.”  Since their “managers” only get paid when the distributors are successful, each one is an asset with huge potential value.

Manager’s Job is to Prepare and Free People to Perform: As soon as a new distributor joins the team, the training and coaching begins.  Any problems are immediately resolved so the employee’s focus is calm and clear.  John Whittaker, a successful network marketer from Palm Beach Gardens, Florida told me, “This organization (network marketing) is built upside-down from the traditional hierarchy.  The people at the top work very hard to make the people at the bottom successful because that is where the money is.”

Proper Way of Executing Process: Duplication is the key to the business.  Re-inventing the wheel is discouraged because the marketing, training and processes have been developed and tested.  All the new distributor needs to do to be successful is follow the plan.  Being ‘coachable’ is much more prized than maverick innovation.

Human Community: The core is creating a sense of community as each team starts, grows, and then gets large enough to spin off to its own group.  Everyone is connected through the shared vision, processes, and success.  The team members encourage each other as success comes and support each other when things get discouraging.  Socializing with those that help you succeed becomes almost automatic.  The community extends all the way to the top of the organization, even into the executive offices, as these individuals realize that the lowliest distributor is a key element in generating the profits needed for executive salaries and benefits.  It is a true symbiotic relationship not often seen in traditional (non-network marketing) companies.

Remember you can’t have happy customers with unhappy employees.

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Kathleen Rich-New specializes in leadership, team development, and communications. Contact her to learn more at (321) 452-7308 or KRN@clarityworks.biz or visit www.ClarityWorks.biz.  She is also the Executive Woman’s Coach, with specific programs for business women: www.EWCoach.com

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One Comment

  • April 13, 2011 | Permalink |

    Wakling in the presence of giants here. Cool thinking all around!

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