MLM Mythbusting: Did Harvard Business School Really Develop 3 Criteria of Successful MLM Companies? (No, they did not!)

English: Harvard Business School (Photo credit: Wikipedia)

Here's one of the most often repeated MLM myths: Harvard Business School teaches Network Marketing. That is a LIE. HARVARD BUSINESS SCHOOL DOES NOT TEACH Network Marketing, Multi-Level Marketing, or any such similar schemes.

MLMers who tries to legitimize the industry often repeat the claim that "network marketing is taught in 200 schools around the US, including Harvard Business School", and "HBS studied network marketing in detail and have developed a 3 item checklist to locate the successful ones."  Sometimes the list is also supplemented by a "4 stages of business success".

This is repeated ad infinitum by MLMers attempting to legitimate their own particular scheme, be in neutraceuticals and next uberfruit juice to woo bracelets and body wraps to... anything! In fact, search in Google for "Harvard Network Marketing" and you'll get bazillion hits. Okay, about 12 million hits. Almost all of them are lies.

Here's the honest truth:

There is only ONE SCHOOL in the US, that I know of, that offers a a degree in network marketing. It's a tiny little community college in Kansas called Bethany College. Technically it isn't even that. It's degree in marketing, with emphasis on network marketing.

(If you can cite another one, please show proof: magazine or newspaper article, school syllabus, etc.)

Harvard Business School (HBS) themselves are VERY TIRED of network marketers claiming something they do NOT do. In fact, if any MLM business claim so, it will very likely face a LAWSUIT from HBS, as this article (back in 1995!) had already busted. Quoting from the article:

 ``If the registrar's office had a dollar for every call we've had over the years over whether Harvard Business School teaches multilevel marketing or has studies on it, we could throw a very nice Christmas party,'' reads one internal business-school memo. ``This claim is harder to kill than a dandelion.''
What was once a nuisance now looks like grounds for potential defamation or libel lawsuits, says Frank J. Connors, a Harvard lawyer. Some handouts, for example, now claim _ falsely _ that Harvard has conducted ``extensive research in the network marketing industry,'' and that the business school calls multilevel marketing ``a once-in-a-lifetime opportunity.''

Got that? REPEAT AFTER ME: 

Harvard Business School DOES NOT TEACH NETWORK MARKETING!

Okay, where did this came from? How did this nasty rumor got started? 

From a network marketer, of course. 

In 1984, a MLM consultant by the name of Beverly Nadler, published an article in Business Connections magazine (an obscure MLM industry magazine) that claimed the following:

Multi-level marketing (also known as MLM) has finally gained respectability. It is being taught in HarvardBusinessSchool, and both Stanford Research and the Wall Street Journal have stated that between 50% and 65% of all goods and services will be sold through multi-level methods by the 1990's. This is a multi-billion dollar in­dustry.

The source of her information was NEVER disclosed. Furthermore, Wall Street Journal has NEVER published such a statement that 50-65% of all goods and services will be sold by MLM by 1990's. This is very simple to check at the WSJ website. 

When contacted by AP reporter in 1995 for comment on the accuracy of her claim, she had no comment. However, according the AP, Nadler apparently admitted in her 1992 book "Congratulations, you lost your job" that she did not verify some information in her 1984 article. 

In other words, she made up the s***. 

But she's proud of her lie, since she still publishes it on her website, where she's proud that her lie was the most copied and read MLM article in the world for many many years, fooling millions of people. 

Oh, and she'll TRAIN you in MLM if you pay her. 

And NOBODY bothered verifying this information! (until 1995, when the AP reporter did so)

And the entire MLM industry had been living a lie... for 30 YEARS! 

Now that we have established that HBS does NOT teach network marketing, who really wrote that 3 item checklist that supposed was attributed to HBS? First, what does this list say? It says a good MLM company has 3 keys: 

1. Must be older than 18 months (but younger than 4 years)
2. Must have products that are unique and consumable
3. Must be a "ground floor" opportunity (low number of distributors per capita)

This is often followed (but not always) by 3 or 4 phases of a successful MLM business (sometimes formulation is combined with concentration):

• Formulation
• Concentration
• Momentum
• Stability

In general these two lists were attributed to Harvard Business School. However, as we've shown, it was NOT from HBS. So, where did the two lists came from? 

One author attributed the 3 keys to Trump / Kiyosaki, who supposedly wrote an article (for what?) that seem to be a summary from "We Want You To Be Rich". However, searching that book using Amazon and Google showed NO references to such a list. 

Searching for the second list shows that it was excerpted from a book called "Wave 3: The New Era In Network Marketing" by Richard Poe. However, there was no sign of the first list in that book either. 

In fact, in every mention of that first list (in its various forms, with or without examples, with or without additional verbiage pitching thei rown stuff), it is almost ALWAYS mentioned with Harvard Business School (until recently, when someone decided to change it to "Harvard Business School did not write..." )

So I honestly can't tell WHO wrote the list where. The earliest mention I can find is from 1998, but that appears to be a comment spam, not a real article. The first reliable mention of the first list appears to date from 2001, where it was already attributed to Harvard Business School. 

The content seem to be cribbed from multiple sources though. And it's a lot of bogosity. 

1) Do most MLM business fail within 18 months? 

PROBABLY FALSE:  US Census data shows that 72% of business started in 1992 is still running in 1996. If MLM businesses fail within 18 months of launch, then it means it has an ABNORMALLY HIGH failure rate. 

2) Do you need unique and consumable products? 

PARTIAL TRUTH:  ANY business need a product, but consumability and uniqueness are NOT required. Commodities are not unqiue, and jewelry are not consumable, yet you will find both being sold through MLM. Consumable products has better chance of attracting repeat customers, but that's not unique to MLM. Uniqueness may allow the product to be sold at a higher price, thus higher profitability, but Amway has long pioneered selling everyday items for equivalent prices, and many other companies have followed. And uniqueness can be established through marketing a "brand name". 

3) Do you need to get in at "ground floor" opportunity? 

PARTIAL TRUTH: if a business can only make you prosper by getting in at 'ground level' instead of hard work, then it's not a fair business, is it? MLM often touts itself as being your own boss, where you work for yourself, not your boss. But if all your hard work is simply making your upline money (he gets to sit back and relax and let you do all the heavy lifting)  and the only difference between you and him is he got there first (i.e. joined at "ground floor")  is that really what MLM is all about? 

In conclusion, the lists are a mix of partial truths and lies, dressed up to legitimize network marketing through deception. 

Don't you repeat one of these myths. 

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