PART ONE: The Business Flywheel and Why It Matters
Based on the book, Turning the Flywheel, by Jim Collins, this series will delve into the concept of a business flywheel, how our leadership developed our own flywheel, and explain how this tool is a must-have to effectively grow your business.
Behind the Flywheel Concept
The idea behind the flywheel is that there is no one particular “secret to success.” Instead, there are a lot of juicy parts, people, practices, and processes that contribute to building an unstoppable force. If we can capture what sets our business up for success along with what sets us up for failure, we can extrapolate the components that make us wonderful and unique in our market and expand upon those things exponentially.
Jim Collins explains, “in creating a good-to-great transformation” it feels, “like turning a giant, heavy flywheel.” You move a little over time with persistent, consistent, and focused effort every inch of the way forward. Eventually, the momentum of this power creates a compounding effect and every inch turned builds upon all the other choices you’ve made in a well-built strategy.
The notion is that if you set your company’s flywheel up correctly and with great thought from the beginning, this flywheel can renew and extend carrying you to great successes and opportunities using the cumulative effect of each loop.
And that is how you should picture the flywheel, as one giant looping circle with one piece of the puzzle feeding into the next part of the loop and so on. To create momentum with this loop, the pieces should not only be company action steps, but the individual components should actually feed into each as “an inevitable consequence of the step that came before”.
Here’s an example of Amazon’s Flywheel as reference:
Lower Prices on More Offerings
Increase Customer Visits
Attract Third-Party Sellers
Expand the Store, Extend Distribution
Grow Revenues per Fixed Costs
The components are the benefits to Amazon, their workforce, the consumer, the sellers, etc. and they feed into each other so supporting one area supports the next as a natural consequence. Now, let’s review why you need a flywheel.
Why Build a Business Flywheel?
A business flywheel is a strategy that will help your business survive and thrive. When you build a flywheel, you use your ability to turn your business’s initial success into a long-term sustained strategy, that cannot and will not break down. In fact, the idea is that your business will compound itself to achieve greater and greater heights.
To create your flywheel, you must analyze your business by reviewing your best offerings, the value, and its uniqueness. Layer in the company’s mission and vision and the founder’s core values. Focus on the innovation and effort that contributed to the company’s initial achievement and analyze those opportunities more closely to develop new and deeper opportunities in concentrated areas of your flywheel. The final flywheel provides an overall view of this greatness in one shot and under one compass.
The flywheel also offers insight into the company’s direction. When faced with priorities and choices, you can look to the flywheel and ask, “Does [insert priority/choice] fit into one of the flywheel compartments? Does it seem aligned with our company mission and vision?” If not, then the proposed idea is likely one that is not worth exploring - at least at the time being. This is how your flywheel will keep your business on course and aligned with the authentic voice of your company and its ideals.
How to Use the Business Flywheel As an avid user of a company flywheel, one of the most valuable ways I have used our flywheel is to reinforce our company culture. Since everything about our culture and the choices we make should align, we keep our culture in focus and avoid losing sight of our founding values.
Taking it a step further, our flywheel also guides other frequent decisions we make as leaders. In general, your flywheel should assist when making decisions and choices throughout the growth of your business, including decisions about:
Education and program offerings
Strategic partnership decisions
Systems and Processes for Implementation
Internal and external satisfaction improvements
Culture Choices, etc.
Since our flywheel is prominent in how we operate, we aim to provide additional examples in each of the mentioned areas as to how to apply the “feeding your flywheel principle” to help with your business growth. We want to help you piece your own flywheel together and help you use it to transform your business and continue moving toward growth and success. With some work, the flywheel will help you gain traction and momentum to push your organization into greatness.
For your first step, consider brainstorming potential components of your flywheel. What gives your business a competitive edge? What are the significant successes you achieved?
Stay tuned for Part Two of the Business Flywheel series.