February 1999


Fourth Generation Thinking - John Counsel

The term Fourth Generation Thinking is a bit of a riddle. It doesn't mean much until you understand it, but then it's the only term that makes sense! What it's really about is quite profound. Fourth Generation Thinking is actually the philosophical basis of Network Marketing-- the core principles that make it work so powerfully, and distinguish it as the only Fourth Generation business system in existence.

In almost all areas of human achievement, we've either reached, or are rapidly approaching, what I've chosen to call the Fourth Generation of development. The Fourth Generation always represents a breakthrough to the "Big Picture," the whole concept, the accurate perspective from a higher vantage point.

It's significantly different from the first three generations, which represent a straight-line progression in development, where the emphasis is usually on increased efficiency through reduced work, risk, cost, discomfort and time. The Fourth Generation is focused on effectiveness-- not just doing things better, safer and faster, but doing them for the right reasons in the first place. Doing them smarter!

Here's a simple example to illustrate: Take the concept of moving people from one level of a building to another, in either direction. What would represent the different generations in development?

First Generation: The Ladder

This simple device was much more efficient than trying to climb by hand from one level to another. But it wasn't particularly efficient, safe, comfortable, effortless or quick, and you couldn't carry large loads easily. Only a limited number of people could move in one direction at a time.

Second Generation: The Staircase

Much safer, more efficient (more people could move in either direction, carrying bigger loads), less work, faster and more comfortable.

Third Generation: The Escalator

This was a lot more fun, too!

Fourth Generation: The Elevator

Here's where we realised that we were getting more efficient, but not all that much more effective. So we stepped sideways and looked back at why we were doing all this-- which was to move people from one level of the building to another, in either direction, as efficiently as possible.

Why not put the people in a small room and move the room? No doubt about it-- this was much better in every way, especially when high rise buildings became common.

So Fourth Generation Thinking is partly lateral thinking-- that critical step sideways that allows us to look back to the beginning of the process and remind ourselves just what it was we were originally trying to achieve. We return to our motives-- our reasons. The further we progress, the easier it becomes to lose sight of our original destination. We tend to become distracted by the process itself and risk losing the plot.

But it's a lot more than just lateral thinking.

Fourth Generation Thinking is really about integration-- all components working together for a common purpose. So it's also about leverage and synergy-- the exponentially greater results possible only through integration and unity of purpose and focus, so that the whole is greater than the sum of the parts.

It's about the concept of Four Generations to the breakthrough . . . and four generations within each generation. You'll see this concept in practical use in what follows, and the kind of integration involved.

Fourth Generation Thinking in Network Marketing

Network Marketing is the only Fourth Generation business system ever to evolve. That makes it unique-- and unfamiliar territory for people conditioned to First and Second Generation business systems.

First Generation businesses are those that involve master-servant or employer-employee relationships. Second Generation involves independent business owners, trades people or professionals with no employees. (As soon as they employ someone, it reverts to First Generation because of the basis of the relationship involved.)

There are virtually no Third Generation business systems because so few people understand these crucial differences. Even those that begin well tend to fall apart before long because the people involved don't really understand the underlying principles.

An example of a Third Generation business system is buying co-operatives, where those involved pool their purchasing activities in order to increase their united buying power. Too often, though, selfishness and misunderstanding threatens mutual confidence and trust, and the flimsy structure begins to disintegrate.

Franchising is sometimes mistaken for a Third Generation business system. It's not. The criterion that determines the generation is the nature of the relationships involved. Franchisees are not truly independent. The franchise agreements that
govern the business operation are generally weighted heavily in favour of the franchisor. In reality, a franchisee is usually a branch manager who accepts all the financial risk for his or her branch by putting his or her assets on the line. They've done exactly what the franchise industry tells them to do in its promotions . . . they've "bought themselves a job."

For people who understand Fourth Generation Thinking, Network Marketing is a revelation. They begin to see the Fourth Generation attributes of independence, integration, leverage, synergy and exponential results in every aspect of the Network Marketing model. It's impossible for them not to become excited.

What disappoints and frustrates them, though, are the First Generation principles, attitudes and methods that sabotage its implementation in the real world, because the people involved mistake it for what they're used to-- conventional First or Second Generation business systems.

In the same way, Network Marketers become frustrated and disappointed by people who think Network Marketing is illegal pyramid selling. Those people miss the essential differences because of a few superficial similarities that lead them to assume, wrongly, that they're the same.

The only way to change this is through education-- a slow process that doesn't sit comfortably with the majority of Networkers, driven by First Generation, Win-Lose, "Quick Fix" mentalities.

Why are they like this?

Because they don't know any better. It's what they've been conditioned to perceive and believe. Nowhere is this misguided ignorance better exemplified than in the traditional "Career" Path.

The Traditional "Career" Path

The chart below traces a fairly typical career path in our society. Understanding this context-- how and why it happens-- highlights both the similarities and differences between Network Marketing and conventional businesses.

The continuum-- the large arrow reaching from bottom to top in figure 1-- represents the balanced path, or the ideal. Each of us has various resources which we use along the way. Two key resources are leverage and mediums of exchange. Let's consider them briefly.


Leverage creates maximum output from the minimum input. Each form of leverage reduces the effort needed to obtain a greater result. As human beings, we have two types of leverage: bestowed and acquired.

The bestowed forms are the ones we're born with: gifts, talents and abilities. They can't be learned or acquired.

The acquired forms of leverage are knowledge, attitudes and skills. These can be learned, so they can also be taught. This is a great benefit in Network Marketing-- acquired leverage can be duplicated. We use leverage to increase the results possible from our other resources-- especially our mediums of exchange. Those resources are:

Your body-- physical health, the ability to operate in the physical world.
Your mind-- capture, storage, retrieval and correlation of information in order to solve problems-- in other words, creativity.
Your spirit or psyche-- this is where altruism, integrity, honor, intuition, self-esteem and other higher attributes are centered. (It doesn't matter what you call this dimension of your persona. It exists separately from the mind as we've defined it above.)
Your relationships-- the most important of all resources, because good relationships will offset any deficiencies in your other resources.
Your possessions-- which enhance your other resources.
Your personal leverage-- bestowed and acquired.
Your mediums of exchange-- just like leverage, there are two types of mediums of exchange-- bestowed and acquired.

The bestowed medium of exchange is time. It's the only resource that all human beings have in common: that is, 24 hours every day. No more, no less. Sure, we all may have different totals of days in our lives, but on any given day we all have exactly the same number of hours, minutes and seconds.

The only benefit of time is to enhance our other resources. It allows us to use and enjoy our bodies, minds, spirits, relationships, possessions, leverage and money. Without time, none of these would have any real meaning.

The acquired medium of exchange is money. Like time, its only real benefit is to enhance our other resources, and our enjoyment of what they offer.

These mediums of exchange are freely interchangeable. It's the basis of almost all employment, in fact. We exchange our time for money and vice versa-- hence the saying: "Time is money."

So let's follow the classic "Career" Path and see where it leads us. Note that we begin at the bottom and move upward.


We begin life totally dependent on other people for everything. We have no money or possessions. Our knowledge, attitudes and skills are virtually non-existent, and our gifts, talents and abilities are yet to be identified and developed. We do have plenty of time and, fortunately, most of us enjoy vital relationships.

During the first 20 years or so of our lives we use our abundance of time-- and other people's money (usually our parents')-- to acquire knowledge, attitudes and skills, and to identify and
develop our gifts, talents and abilities.


By the time we complete our education, whether it's with a formal qualification such as a degree, diploma, trade certificate, apprenticeship or other career preparation, we're usually in our late teens or early twenties. We now have the knowledge, attitudes and skills needed to be independent. We've enhanced all of these resources with our natural gifts, talents and abilities, and we've formed a network of relationships.

At this point, we're way out in left field, at position A on the chart. We have all the time in the world, and plenty of resources (including leverage), but we have very little money. So we begin correcting this imbalance in our lives by trading our time and resources for money-- usually by climbing onto the employment treadmill. We enter the rat race. We take a job, and enter Stage Two of the process . . . earning.

As we apply our training and resources, and acquire more specialized knowledge, attitudes and skills, we become more useful to our employers. As we prove our ability to master challenges, we increase our own control over the source of our money through promotion.

By the time we reach this point (B), the pendulum has swung to the opposite extreme. We're way out in right field. We now control the money, because we either own or manage the money source-- the enterprise itself.

This is the classic business "Success Story." Congratulations!

But is it true success? Let's look at this all-too- common course of events.

You're now working 80-100 hours a week, you're stressed, you succumb easily to any illness that comes along, you're irritable, frustrated-- about ready for a major mid-life crisis. Your business ethics and integrity are thin, so your self-esteem wanes. Doing the right things for the wrong reasons, or the wrong things for the right reasons-- "the end justifies the means"-- somehow doesn't seem so clever any more. Your competitors are ready to shaft you at any time, and there's no one you can really trust.

Your relationships are looking shaky, the only common ground between you and your partner may be the children, whom you really don't know, either.

You still have your possessions, but they give you little joy; maybe you have significant money-- unless all's been lost in a messy, traumatic divorce settlement. You still have leverage, although you may have abused your gifts, talents and abilities over the years, and your knowledge and skills have focused more and more on less and less as you become increasingly specialised in your roles.

The irony is, of course, that what we said at the start of this section still holds true: "The only use our mediums of exchange have is to enhance the benefits from our other resources."

The question is... what other resources? You've lost or destroyed most of them in the single-minded pursuit of money-- a mere medium of exchange! It's the ultimate twist in the plot, because you lost the plot, long ago. You've blown it. And this is what we all admire as "success"? Scary, isn't it? Because it's so familiar! We now enter Stage Three of the process... yearning.


By wisely using our money and experience (our only real remaining resources), we can find and train people with the time, knowledge, attitudes, skills, gifts, talents and abilities-- and the need for more money-- to whom we can delegate some of our roles and responsibilities. When they prove their reliability, we can give them greater control over the enterprise, while still retaining ultimate control ourselves. These are people who are at position A on their own "Career" Paths.

When they become effective independent operators-- interacting with others in synergistic fashion, focusing on solutions and creating results-- we have achieved true interdependence. Through interdependence, we move on to achieve that fine balance where we have control over our time, money, relationships, health and all our other resources-- the freedom that the "Career" Path promises. Unfortunately, this rarely happens in the real world. Or else it happens so late in our lives that we're left with few remaining days, poor physical health and, too often, nobody with whom to enjoy it.

Wouldn't it be wonderful if we could achieve this kind of balance, this degree of control over all our resources (and our lives) much earlier? Without having to go through all the heartache and frustration of the traditional "Career" Path? Imagine what it would be like if we could sever all connection between our time and our money and complete the process in a fraction of the time.

The truth is... we can!


The Freedom Path

The really exciting thing is that you can secure this kind of freedom within a year or two through Network Marketing-- the most enlightened and advanced system of business yet developed.

Strange as it may seem in view of the disastrous pattern we've just observed, the Path to Freedom is based on the exact same four stages: Dependence, Independence, Interdependence, Freedom. But, as we examine those stages from another perspective, be careful not to miss the essential differences because you're distracted by superficial similarities! There's a world of difference in the approach-- and in the outcomes.

The real difference lies in our perspectives. Understanding this point is critical to our success: While we cannot always control the outcome, we can almost always control the processes.

Like the "Career" Path, we start from the same point: dependence. Dependent people have very little to offer in the way of resources. They haven't yet acquired or developed them. This brings us to a common mistake-- confusing value and usefulness.

If we only value things for their usefulness, the human race is doomed to extinction, for the simple reason that dependent people have no useful
qualities or strengths to offer us. That includes
children-- especially babies.

Think about it.

Of what real use is a newborn baby? (Remember, we're talking about usefulness, not value.) They keep us up at night. They make noise. They make mess. They make work. They're endless trouble.

Yet we value them, sometimes above life itself.


Because, mostly, we get our priorities right when it comes to babies. We value them for themselves, not for what they can do for us. It's enough that they simply exist. Even older children have
little real usefulness, yet we still value them. To become truly free, we must make this crucial shift in perspective and value others regardless of their usefulness to us. We need to invest the time and effort to help them become independent, too.

How We Become Independent

Independence is limited and conditional. We're only ever truly independent in a few areas of life. (We can learn to become independent in almost any sphere, but who has the time or resources?) To acquire the knowledge, attitudes and skills to become truly independent in a particular aspect of life, we go through a process of learning. There are four kinds of learning activities available to us, each one offering higher leverage than the one before, although we must learn to use them all:

Personal Experience: This is the hardest, slowest, most painful way to learn. That makes it the dumbest as well! If we all had to learn only by
personal experience, progress would be excruciatingly slow. We'd be barely out of the Stone Age by now.

Observation: This is a much higher-leverage learning activity than personal experience-- and much smarter! It's really just learning from other people's personal experiences.

Formal Education: This is higher leverage still. It's the accumulated experience and observations of history, plus those of our own generation-- what schools, colleges and universities actually teach. So we seek out independent people who can teach us, quickly and effectively, the knowledge, attitudes and skills we need to master to become independent, too.

Emulation: This is the highest-leverage learning activity of all. It involves finding reliable role models and emulating their examples. But beware-- don't fall into the common trap of mistaking imitation for emulation. In other words, we imitate the effects of success, instead of emulating its causes. Places where you commonly see people making the mistake of imitation are 1) nightclubs, and 2) too many Network Marketing rallies and "motivational" meetings.

The motive behind imitation is emotional dependence-- a craving to be accepted and approved. The chilling truth is that the person whose approval or acceptance is sought can never trust or respect an imitator, because they prove their untrustworthiness and unreliability by their willingness to betray their personal values and standards in order to gain that approval.

The motive behind emulation is emotional independence-- a desire to be free of limitations like ignorance and incompetence. Emulation is based on personal integrity-- imitation is a form of personal compromise.

The Key to Independence

In order to finally become independent, however, we must be able to unlock the door to that condition. The key is mastery. We must master the knowledge, attitudes and skills required or we're still, to some extent, dependent. Note that the emphasis here is on the acquired forms of leverage, not the bestowed forms (gifts, talents and abilities). That's because Network Marketing is based on duplication-- things that can be acquired, learned and taught.

This is one of the most attractive features of Network Marketing. Literally anyone can reach the top, regardless of their gifts, talents and abilities, providing they acquire (and use) the correct knowledge, attitudes and skills. But far too many Networkers seize on "quick fix" counterfeits that can never deliver permanent success.

If you decide that Network Marketing is for you, no matter which business opportunity you choose, Fourth Generation Thinking has the answers to help you build consolidated performance with outstanding security and stability.

How We Become Interdependent

We become interdependent by using others' strengths to offset our weaknesses-- and vice versa. It's natural for human beings to respond to new-found mastery in any sphere of life with such excitement, such exhilaration, that we want everyone to share our feelings of fulfilment. Brand new parents want everyone to experience the intense joy that they feel. A child who has just mastered a bicycle wants to have us watch them as they share their joy with us by showing us how well they ride-- over and over and over again!

This is the very same motive that makes Network Marketing so powerful and so different to all other systems of business, where the motives tend to be more selfish and related closely to fear of loss.

We want our customers to feel thrilled when they experience the brilliant benefits of our products, because we feel the same way, too. We want them to be so excited that they'll want to share those benefits with others, creating even more customers for our products.

It's also how we want new distributors to feel. We want them to experience the same thrill that we did when we sold our first product, when we sponsored our first person . . . to discover for themselves that this business really does work!

The teaching process that leads us to interdependence is a form of sharing. It's the way we share the knowledge, attitudes and skills we mastered in becoming independent, so that our dependent new distributors can share our exhilaration and satisfaction for themselves.

Look at the Freedom Continuum once more (figure 2). Like the learning process, the teaching process consists of four activities, each one offering higher leverage than the one before:

Example: This is the lowest leverage teaching activity. But, like personal experience in the learning process, it's also indispensable. There's a saying that sums it all up in Network Marketing: "Your people will do what they SEE you do."

Formal Education: This is the same as the learning activity, but from the teachers' perspective. We actively teach them the knowledge, attitudes and skills we've mastered so that they can become independent faster and with greater mastery.

Delegation: As our new distributors demonstrate a sound understanding of what they've
been learning, we delegate more and more responsibility to them. We watch their progress and offer any extra training to help them on their way to mastery.

Duplication: This is the ultimate effect of our teaching. It occurs when they finally emulate us in every aspect of mastering independence. There's nothing more we can teach them. They're now our equals in terms of mastery of the essential knowledge, attitudes and skills.

The Key to Interdependence

A group of independent distributors will begin to really produce when they acquire the key to interdependent relationships. That key is synergy.

Synergy is the product of applied leverage. In other words, it's several things working in harmony to produce a result that's far greater than just the sum of the parts. In our case, it's a group of independent distributors working in harmony-- interdependently-- to build income and security that's truly exponential.

How We Become Free!

Freedom is the ultimate human condition. When we achieve this state, our resources-- especially our interdependent relationships and leverage-- are so strong that we have the power to execute virtually anything we can envision. This is creation, the ultimate human accomplishment.

The process of creation, once again, is a fourfold one:

Conception (VISION!): This is the process of creating the eventual reality in our minds, first. We visualize it to the point that it becomes effectively real.

Planning: This is a process of empowerment-- a form of leverage-- where we identify all of the resources we'll need to bring our concept to reality. We begin the process of realization by externalizing our ideas, usually on paper or computer.

Preparation: We now begin marshalling our own-- and other people's-- resources. We apply leverage. We call on our interdependent relationships.We put everything in place ready for the final step.

Execution: We now act on our plans and preparations, applying all necessary leverage and resources to bring our original vision to physical reality. We've completed the process of creating something that didn't previously exist.

The Key to Freedom

Because complete independence is a myth, we need interdependent relationships in order to offset our weaknesses and enhance our strengths. For that to take place, and for us to execute whatever we can conceive and visualize, people must be able to trust us. They need to be absolutely certain that we will never abuse their resources, or use those resources-- and their trust-- to gain advantage over them. Trust is the external effect of a single cause: personal integrity--the ultimate human attribute. Self-esteem is its internal effect.

It's exquisitely ironic that this entire process excludes the sharks in Network Marketing from ever attaining this ultimate level of accomplishment. Because they're so utterly dependent on their own self-defeating, Win-Lose behavior, they soon move on in search of fresh prey.

But how do we achieve this level of trust? How do we prove to our independent colleagues that they can trust us to do the right thing?

Remember our earlier discussion about the distinction between value and usefulness? About how we must value people, regardless of what they can offer us, if we want to succeed in this business? Remember what happened when we sponsored our new distributors? They had nothing to offer but the potential we could see in them. They were dependent on us for everything-- training, support, encouragement, advice, practical assistance, everything.

We demonstrated our unselfish motives by valuing them enough to help them achieve independence, then by working side by side to achieve interdependence. The fact is, we've already proven our integrity to them, over and over. They need no further proof of our honorable motives. We wouldn't even be at that level of accomplishment if we hadn't been trustworthy.

Here's a more accurate perspective on the whole process than the linear context of the Freedom Continuum (figure 2).

The lowest level is dependence; four steps lead to the next level, independence. Those steps are the four learning activities: Experience, Observation, Formal Education and Emulation.

Notice, though, that there are no more steps.

So how do we reach the next level-- interdependence? And what happened to the four teaching steps: Example, Formal Education, Delegation and Duplication? Can you see any relationships? Did you notice that the teaching steps are actually an inversion of the learning steps? In other words, they mirror each other:


Emulation     Example

Education     Education

Observation   Delegation

Experience    Duplication

What it means is this: You achieved independence-- with the help of your own sponsor and you climbed back down the steps!

Why? For what possible purpose?

Because you valued the people down there-- all those dependent," useless" individuals whose potential independence you could clearly visualize as the result of your own experience. Having achieved the prize yourself, you wanted to share the benefits with them! In a very real way, you've created their independence: You conceived it, you planned it, you prepared for it and then you acted on it.

Is it any wonder, then, once you've help
develop strong, independent people, that they co-operate with you to reach the next level through interdependent, synergistic accomplishment? They can now visualize their ultimate freedom as a result of you teaching (sharing) your own perspective, knowledge, attitudes and skills. Together, on a foundation of integrity, trust and cooperation, you can all scale the final wall to achieve true freedom. All your limitations will have been overcome.

Can you see, now, why Network Marketing works? (As opposed to how it works-- the
products, the reward plans, the structures and methodologies?) And why it's so different from other business systems-- despite the superficial similarities in its structures and methods? It's the unseen principles that set it apart as uniquely Fourth Generation.

Most people fail in Network Marketing because they miss the differences and become distracted by similarities. They look at the world's only Fourth Generation business system, see that it employs a familiar organizational structure and similar methods to First Generation business systems, and fail to recognize the profoundly different, unfamiliar set of principles by which it's driven and on which its success depends.

Will you make the same mistake?


JOHN COUNSEL has been in Network Marketing for almost 20 years and is one of the Asia-Pacific region's most widely-read and respected authors, columnists and trainers in Network Marketing. John lives in Melbourne, Australia, and is married to Lynne, with whom he has five children, ages 9 to 29. John is the founder and CEO of The Profit Clinic, which provides professional help to those in small business and Network Marketing. Its multi-award-winning website is one of the largest and most innovative in Network Marketing. Visit it at www.profitclinic.com/MLM.

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Reprinted with permission from Upline, Tye Feature - February 1999, 888-UPLINE-1, http://www.upline.com


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