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The corporate pyramid and network marketing

For centuries, a pyramid has been the way we as organized and managed our people and ourselves. From the Roman army to the Catholic Church to the organization charts of General Motors and IBM, from power to communication flowing in an orderly manner from the pyramid’s top, down to its base; from the high priest, the general, the CEO perched at the absolute tip, and down through the ranks of lieutenants and department managers in the middle, to die workers, poor grunt soldiers, and to the true believers at the bottom. This is an appropriate starting point to talk traditional corporate organizations and network marketing.

In his book “Management Tasks and Network Marketing Practice,” Peter Drucker writes: “Traditional organization theory knows only one kind of structure, applicable alike to building blocks and whole buildings: the so-called scalar organization; that is, the hierarchical pyramid of superior and subordinates. Traditional organization theory considers this structure suitable for all tasks.” 

It;s true that virtually every entrepreneur who has participated in a discussion about network or multi-level marketing has heard it described as a pyramid scheme.

Consider: When you apply for a job with a conventional employer, someone in personnel will ask for personal information about our past. They want to know if we would work well with their specific company before they would discuss their opportunity with us at all. They want to know if we had completed the requisite obstacle course before taking all their time with our search for economic security. The big question that you probably never thought to asked, is in reality one regarding whether we are sufficiently institutionalized.

We wouldn’t dream of challenging the organizational structure of a typical company, of calling it a pyramid, of saying that “the guys on the top make all the money.” (After all, most of us are sufficiently institutionalized.)

Most of us have heard the charge leveled against network marketing companies that they are made up of fanatics, of “true believers,” even cultists — and that network marketers are “addicted” to their activities, to their companies, and to their network marketing opportunities.

Examine: an average week of a typical worker in a traditional corporation. Let’s call her Debbie. She works 40 hours a week for a job she hates, living a life that she cant stand, driving a car that she hates to look at and generally is not a happy person. Yet, few would say that Debbie is a fanatic, a “true believer,” that she belongs to a cult, or that she is “addicted” to her way of life. But this story is at least as objectively true of her situation as that of any network marketer we’ve ever heard of.

The differences between traditional corporate structure and network marketing are mainly differences of flexibility and choice.

Traditionally structured organizations are “hierarchical pyramids of superiors and subordinates.” Frequently, promotion up the levels of the pyramid are made according to performance. But, just as frequently, these promotions are made for other reasons. Even within organizations where performance is the measure of success, there are fewer and fewer positions available as the performer he comes more and more accomplished. Even when there are open positions, promotions are usually slower than performance. In some instances, performance actually hinders promotion because in those cases promotion means a loss to the company of the particular productive work accomplished by the performer.

It’s also customary in traditional corporate structures to limit the income of subordinates to a figure below that of superiors, regardless of performance. They can’t allow a new salesperson to make more than a sales manager, no matter what he does. This is a true pyramid.

Although the organizational structure of a network marketing organization looks like a pyramid on paper, the number of top positions available is nearly unlimited. In contradistinction to closed traditional structures, network marketing organizations are open. Within any given line of sponsorship, both network marketing uplines and downlines are independent businesspeople sharing a common interest in get-ling the job done. One’s network marketing upline is one’s business associate at a different level of accomplishment, not one’s boss. Perhaps most importantly, advancement is never hindered by performance. Performance is rewarded very quickly. Although not easily done, in most networking organizations a newcomer who outperforms his or her multilevel upline will make more money. Even in those organizations where it is not possible to be passed in level by a network marketing downline, it remains possible for the downline to make more money. This is a horizontal organizational structure.

Traditional corporations are static structures in which the overall relationships among the workers then change only very slowly if at all. and in which competition among the workers in this kind of company will end up resulting in reduced effectiveness of their overall workforce.

Network marketing teams are dynamic groupings in which people get rewarded for their assistance of the success of others. Network marketers get to share all the resources of a providing manufacturer or distribution center in pursuit of very individual dreams and goals, all of which are achievable through the mechanism of mutual success.

  • Alberto Medrano
    March 26, 2014 at 1:56 pm

    I am a member of the LML team, which focuses on a 100% comission blogging market. I don’t think it works as a Pyramid, ’cause we are allowed to 100% comissions. So its all about the affiliates..

  • Emily
    March 30, 2014 at 6:12 am

    It’s clear that a few bad apples have given the pyramid dynamic a bad reputation. I enjoyed this piece. Your point was made very well.

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