For Dan Chard, Chairman & CEO of Medifast, a growing direct selling organization is like a murmuration of starlings—tens of thousands of birds flying together.
In the case of the starlings, each murmuration—which can have as many as 100,000 birds in it—can appear effortless. The truth is that each starling is exerting a tremendous amount of effort to dive and swoop and change speeds to keep in alignment with the rest of the flock. Studies have shown that each bird is reacting to the movement of the seven birds immediately around the center bird as it alters directions.
It’s a good analogy when considering Medifast’s course change from a trajectory of stagnation to one of growth over the last five years.
Chard joined Medifast in 2016, when the company was in a difficult situation. It had stopped growing in the US, its only market. It had overinvested in some areas of operations and underinvested in some areas of infrastructure, which meant it had idle capacity in parts of the company—and increased margin pressure if it invested in the underserved areas without growing topline revenue. Lastly, forced changes occurred at the board and senior management levels.
But Chard says what created the greatest challenge for the company was that it had lost focus over time. It was selling the same products through a variety of channels, often competing with each other. Channel conflict was impacting the field.
Company executives were faced with two distinct challenges: create topline growth and operating leverage enabling investment in critical areas while growing operating margins. In the end, Chard says, the key to success and bringing a focus back to the business was in honing key business insights.
Medifast leaders knew that its success came from people transforming their health and that transforming their health happened when they learned to eat healthier learned other healthy habits. That was the basis of what Medifast did—empower people to transform their health, one healthy habit at a time.
Another key insight was that people are far better at creating change when there is somebody to support them. Medifast executives recognized that the support and service of its coaches made an enormous difference in the lives of others. They could also see that people wanted to become part of a community, to share experiences with others who had walked in their shoes.
One last insight was that clients do better when they are taught a habit that creates health—quite different from being taught how to diet or lose weight.
Chard says that once executives had established those insights, they made them the center of the company’s reality as a business. And that reality meant converting to a new business model that put the support of coaches at the center of a community of growing clients going through health transformations.
The transition to a new business model reestablished topline growth for the company and transformed it into an industry powerhouse and top performer. Today, Medifast is the company behind the rapidly growing health and wellness community OPTAVIA. And each part of the organization is working hard to grow their business and support their clients.
“We all change speeds and directions at a moment’s notice to reflect what's going on around us and to take advantage of the opportunities as we grow,” says Chard. “And we recognize that we're better together. But when we're in the middle of it, it's actually quite difficult to get perspective of what's really going on. When you stand back and see everybody moving together, when you see the murmuration, you see an organization moving together. It's incredibly beautiful. Tens of thousands living things, moving together to create something that's bigger than any one of them can achieve on their own.”
For Chard, the takeaway from the experience of the last few years is that a company must find the right place and speed and tempo, and it must learn to move together in a common direction. “The core of the message is that the ability to move together magnifies and accelerates any business initiative and is the main catalyst for growth,” he says.
As a company, Medifast describes this is as “finding our repeatable business rhythm.” Chard says that to create such a rhythm, the steps are relatively straightforward.
It starts with understanding a simple set of insights that drive the success of your organization. Next is to focus on developing and testing a set of activities that support your success drivers and adjust all the resources to support those activities.
“And lastly, and most importantly,” says Chard, “is practice relentlessly to establish the rhythm until everyone in the company and the field is tapping their foot to the same tune.”
Three Principles
When developing a focused growth mindset, Chard says that no matter what kind of products or services you offer or what size of company you have, three principles are key to success.
Stay agile and don't be afraid to change. “We have to be constantly examining the preconceptions about our business, our products, our customers, and our whole way of doing business. Take away one of these things or take one of them for granted and we're on the fast track to decline. Our teams have to be nimble; they have to be constantly iterating and always looking for new ways of doing things in a different and better way.”
Don't let the customer-facing side of business dominate. “That sounds inherently counterintuitive because everyone in business is taught that you need to be customer-centric. And that's true. I don't disagree with that notion. But you can't give your customers world-class service without focusing on other things. Great customer service is ultimately powered by the back-office engine. What does that mean? It means supply chain. It means technology. It means systems. It means processes that enable us to give clients what they really need. If we don't invest time and resources in those things, all of the customer focus in the world doesn't make a difference.”
Remember that organizations are nothing without great people. “People make the difference. People are the ones who make the change, and they’re the ones who allow us to move forward. It’s the people who will go the extra mile to make sure customers are successful and who, during a challenging time, will help us find a way through it.”