July 15, 2019

Market Analysis

Amway, the new gig economy and a roadmap for transformation leaders

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This article was originally published on CIO.com.

“Everyone needs a side hustle.”

This sage piece of advice came from my millennial niece as she explained why she was joining a social media-powered, network marketing-based fitness program.

Her statement came amid a ranging conversation about the nature of today’s so-called gig economy, in which everyone is doing something on the side, whether that’s driving for Uber or renting out their spare bedroom via Airbnb.

The evolution of modern technologies has powered this burgeoning gig economy, but in reality, it’s nothing new.

I remember the day, about 20 years ago, when my uncle called to ask if he could talk to me about a new business opportunity. As we sat sipping coffee, he walked me through Amway’s program and how I could become one of its newest partners.

Started 60 years ago, Amway was one of the pioneers of the direct-marketing industry. Along with a few other notable companies such as Avon and Nutrilite, Amway helped usher in what we might call the first gig economy.

Throughout much of the latter part of the 20th century, these firms enabled people from all walks of life to create a supplemental (and sometimes primary) income using “a business model fueled through the power of relationships.”

But as we entered the 21st century and ushered in the digital era, Amway — like many of its industrial age counterparts — found itself on unsure footing.

The company was no longer competing with just other direct marketing companies. The new gig economy had brought with it an entirely new host of side hustle opportunities. This bevy of new competitors included not only the Ubers and Airbnbs of the world, but also the ability to directly sell via Amazon’s marketplace and Etsy, as well as new niche platforms like the one my niece joined.

More importantly, it became clear to company leaders that it was more than just a wave of new competitors that threatened their place in the market, but the nature of the market itself as consumers increasingly engaged with their friends, family — and those with whom they did business — in a digital manner.

The world had gone digital, and Amway needed to transform itself to remain relevant.

While the effort remains underway, what the company has learned on its transformational journey, thus far, offers essential lessons for enterprise leaders everywhere who are increasingly faced with disruptive threats and need a roadmap to respond.

Changing expectations drive a transformation of the operating model

As the digital era dawned, it became clear to Amway executives that things were changing. “Moving from the industrial age into the digital revolution, our biggest challenge has been that the companies that could take an idea and scale it around the globe very quickly are the companies that are winning,” explained Brian Hart, the company’s Vice President of ABO Customer Solutions/IT.

He continued, “We have to compete with that speed and need to be as fast, if not faster, then our competition. Leveraging technology is about gaining speed and scale at a much more rapid pace than we’ve ever been able to do.”

Like many industrial age companies, Amway was seeing disruptive threats on the horizon from nimbler, and increasingly, digital-first competitors.

But company leaders also realized that it was more than just the competitive landscape that was changing. It was also customer expectations.

Today, the company realized, its partners and customers expected real-time, digital, and mobile interactions. “People [now] run their businesses from their phones,” Hart stated. “That’s an expectation that’s out there, and we have to meet it for our business owners and customers integrating with us. The whole gig economy has created new expectations — and we need to remain competitive [with them].”

From mobile access to new ways of communicating, customers were expecting a modern and integrated experience. But for Amway — and most multi-national organizations — the idea that there is a singular experience that they must create is a trite oversimplification.

“Expectations from our business owners and our customers vary greatly around the world,” noted Hart. “That’s been significant in how we think about working in this new digital era. We have to first understand what the expectations are locally in each market and then be relevant and competitive in that space.”

When taken together, the company recognized that it was going to have to fundamentally change the way it worked to strike a delicate balance between speed and scale on one end, and the ability to create localized experiences on the other.

“We don’t want to have an Amway in each country that is completely different. [But] we want to have a personalized and localized experience because every country is culturally unique,” observed Mike Gamaggio, Amway’s Global Manager of Web and Native Application Experiences. “We wanted to have the possibility to deliver country-specific experiences, but at the same time without having to rebuild everything from scratch [for each market].”

It was a tall order. The company realized that to find this balance it would need to take a fresh look at both its technology stack and how it approached innovation.

Driving innovation by transforming the technology stack

Like many organizations, Amway had built much of its technology stack in the days when technology’s role was to reduce costs and optimize operations. As a result, much of the technology stack was monolithic, complex, and difficult to change.

Company leaders quickly realized that if they were going to strike the much-needed balance between speed, scale, and creating customized experiences, they would need to decouple the customer-facing frontend systems from the slower moving backend. “If we waited until every one of our legacy systems were updated to something more modern, we would not be delivering anything that our customers value, so we have to move faster than that,” remarked Hart. “So out of necessity, we’re decoupling our backend systems and our frontend so that we can go fast on the frontend experience.”

But while decoupling freed the company to innovate more quickly on the frontend, they still needed a way to create the customized experiences to compete in their various markets around the world, but to create them in a way that didn’t upset their need for speed and scale.

“We wanted to build a set of standards, so we didn’t have to build everything multiple times, which is what we had done in the past,” explained Gamaggio. “The primary drivers were to improve the customer experience…and to make it more holistic and consistent.”

In the end, the answer was to select a set of core frontend platforms, upon which, the company would build whatever it needed to innovate in the marketplace. “We created a Hybris Center of Excellence and a Mobile Center of Excellence, and we provide direction to orchestrate requirements between markets,” added Gamaggio. “Then, instead of everyone building the same app with the same capabilities, we moderate between multiple markets, bring everyone together, and distribute the workload.”

Gamaggio went on to explain that the net result was precisely the balance they were seeking: the ability to move rapidly and at scale, while creating localized experiences in each of their markets around the world. “We operate [with a common set] of standards, so what one market builds, the others can pull into their app experience. This enabled us, for instance, to launch an app into 50 markets within nine months without having to build it 50 times,” he shared.

Standardizing to drive innovation

As I reflected on my conversations with Hart and Gamaggio, I realized that their success in reshaping both their organization and technology stack to compete in the digital-first gig economy came down to one primary theme: standardization.

If you’ve been reading my columns, that should ring a bell. In a recent CIO article entitled The 3 surprising secrets that drive innovation in the digital era, I identified standardization as the second secret. This revelation came from a conversation I had with Erik Ubels, CIO/CTO of Edge Technologies.

Like Ubels, Hart and Gamaggio described a transformed operating environment in which Amway had relentlessly standardized to drive innovation — as paradoxical as that sounds. Gamaggio, however, expanded on the idea a bit.

He explained that while standardization was essential, it was also vital they embrace some related ideas, including reusability, simplicity, federation, and a focus on the experience.

As Gamaggio explained, he and his IT counterpart, Saikat Ghosh, “made a bold decision to say that best-of-breed sounds really nice…but maybe we’re spending too much money to get a Ferrari into the driveway that we may never drive outside [of the neighborhood]. So maybe we should simplify our implementation stack so that we can run faster, and it doesn’t become a multi-year engagement to [deliver].”

These conceptual pillars became the force that drove decisions. It stopped being about the technology or the inter-organizational politics and became focused on what was going to drive the most value, most quickly.

This shift in attitude is also what drove their focus on federation as the vehicle to enable localized experiences and autonomy, without sacrificing speed and scale. “Another really important point was that once we had created a future-state architecture, how were we going to actually get the work done?” mused Gamaggio. “Were we going to build one big monster team…and go country-by-country to implement it, or were we going to find a federated way in which we established standards, shared the direction we were going, and then distributed and orchestrated the workload amongst multiple teams?”

It should be no surprise which road they chose.

According to the company, the results have been astounding. They have been able to strike a seemingly impossible balance: they have been able to move rapidly and at scale to radically transform the experience for their customers and business owners in a consistent way — all while continuing to enable high levels of local-market customization.

An end-to-end transformation

The most important revelation from my conversations with Amway leaders — and the big message for enterprise leaders everywhere — is that their transformation is succeeding precisely because it was an end-to-end, business-driven transformation.

Even though the result was a significant technology transformation, the driving forces were business demands, a focus on creating a differentiating customer experience, and a shift in how the organization innovated and deployed solutions into the market.

Technology was the means, but not the end.

Perhaps most interesting in this effort was the company’s approach to federation to create high levels of localization in the experience without sacrificing global speed or scale. “If you look at how we’re operating now, we have seven or eight concurrent projects happening,” Gamaggio noted. “You can only do this if you set yourself up in a federated way.”

This type of federation, however, demands an intricate mix of both organizational restructuring and tools that reduce the friction that federation can create. “If we had gone the old-fashioned way [of hand-coding], we’d have needed an iOS and an Android team in every market,” continued Gamaggio. “It would have been very hard to have a standardized approach and share components between countries. We wanted to be able to build once and deploy on both operating systems and to have shareable components so we could create an Amway internal marketplace.”

The company’s willingness to standardize on two core technology platforms (Hybris and Kony) to build upon, and then to reorganize the way they coordinated and managed work to leverage them, was essential in enabling the type of end-to-end transformation they needed.

At the same time, however, the company never lost sight of the fact that it wasn’t trying to transform itself into an entirely new, digital-first company. Instead, it was seeking to leverage technology to better serve its customers and partners, but without forgetting what the company’s source of value in the market had always been.

“Amway has gone to market by having millions of people around the world that talk about our products, share the benefits of our products, and talk on an individual level about how a product can meet one of their needs,” enthused Hart. “It’s a person-to-person story that they’re sharing. Those aspects of community and bringing people together have always been part of what makes Amway unique, valuable, and attractive.”

With its digital transformation well underway, it expects that it will now be well-positioned to be the side hustle of choice for generations to come.

My niece should take note.

[Disclosure: Kony is an Intellyx client.]


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