This article aims to deepen the concept of the “flywheel” of a company and how this can be one of the mechanisms underlying the success of any activity, on which the author’s research focuses in one of the chapters of the book Good to Great.
Thanks to his research on the causes of a company’s success, Collins has discovered that it is not a precise moment or action to define it, but it is more an accumulation of small pushes in the right direction, which gain rhythm towards a successful result, precisely like constantly pushing a flywheel, it will generate an impulse that will make it move faster and faster.
The 4 stages of a successful and lasting activity
The success of an activity is not only due to the flywheel effect, but this is placed within a broader structure of principles, a set of different elements that create positive results.
To build a successful and lasting business, discipline is needed, the element that helps to maintain a constant rhythm and to lay the foundations of a lasting organization. The four stages to creating a successful business are: disciplined staff, disciplined thinking, disciplined actions (the flywheel) and lasting organization over time.
Stage 1: disciplined employees
Hire disciplined employees. To achieve success it is important to hire the right, bright, creative and disciplined people, able to adapt to any situation and capable of always giving the best. Another important figure in the personnel sector is the leader, who must be motivated and inspirational for employees, not only thanks to a simple charismatic personality but thanks to the implementation of stimulating rules and criteria.
Stage 2: disciplined thinking
Follow a disciplined thinking method. Three fundamental principles can be applied at this stage: the “genius of duality”, that is, learning to include both extremes in one’s organization, such as creativity and discipline; be able to face the brutal reality of your situation and finally implement the “hedgehog dilemma”, that is, find the balance between three different elements such as: your passion, what you are the best at and what drives your economy and their resources.
When you are able to make decisions that touch the three spheres in question, then you are pushing in the right direction.
Stage 3: disciplined actions
Perform disciplined actions. It is precisely at this stage that the flywheel strategy is positioned. At the base of any successful organization is a flywheel strategy that creates a rhythm capable of pushing the business for years.
Take for example the Amazon flywheel strategy: low cost offers that lead to an increase in customers, in turn in this way attracting third-party sellers who expand the offered goods and distribution, this results in higher revenues that ultimately lead back to the starting element of the flywheel, the low cost offers. Each element of the flywheel leads to the next, creating a vicious circle that feeds itself.
Precisely for this reason it is important to choose the right components for your flywheel, not static elements but components capable of creating a thrust that leads to the next element and that produces an accelerated pace over time.
Stage 4: innovating the flywheel
Create a lasting and sustainable organization, constantly innovating the flywheel. A wise leader must always be prepared for sudden changes and difficult times.
The principles that are useful for this are: “productive paranoia”, that is, being ready for any problem, thus avoiding the five stages of the bankruptcy cycle; create a corporate mentality based on sustainability, which does not depend on a single leader but which can be repeated over time; accept the concept of dynamic duality, maintaining the fundamental principles of the organization but constantly pushing for progress.
Create the flywheel suitable for your organization
- Compile a list of successful initiatives implemented and for which good results have been obtained.
- Compile a list of failed initiatives, with results below expectations.
- Compare the two lists and identify the components of the flywheel.
- Create a prototype of the flywheel with the identified components. It is important to understand the functioning of the various components and how they relate to the others, therefore to understand the functioning of the entire flywheel.
- Simplify the structure, no more than six components.
- Test the flywheel by comparing it to successes and failures, understand why they are and be able to explain them through the flywheel.
- Compare the flywheel to the “hedgehog dilemma” and make sure it embraces the three spheres.
A flywheel does not have to be specific to an organization, some activities in the first years of life can take flywheels already tested by other companies and adapt them to their own, the most important factor is to better understand the functioning of your flywheel.
Once you have created and understood your flywheel in all its elements, you have to start wondering what are the actions to be taken to speed up the pace.
An excellent flywheel contains in itself the principle called “genius of duality”, in fact, it is able to generate continuity and must be repeated long enough to create a cumulative effect, but at the same time it creates change. Therefore the duality “continuity and innovation” is the principle for maintaining the accelerated rhythm of the flywheel.
Following this perspective, a locked flywheel can be due to two causes: the elements of the basic flywheel are perfect but there is a lack of innovation, or the basic flywheel is no longer suitable for the reality we face, therefore it must be modified.
The changes can take place after facing the brutal reality that the flywheel is no longer suitable for, or by practicing the principle of paranoia. However, if you feel the need to continually update your flywheel, this may be a symptom of an incorrect basic flywheel.
Whatever the case may be, the important thing is not to neglect your flywheel, because in this way you abandon the fundamental principles that underlie the success of the organization and fall into the bankruptcy spiral.
Extend the flywheel
To extend your flywheel, then expand the areas on which your company operates, you can use the principle called “shoot bullets and then cannonballs”. This indicates an empirical method according to which small ideas (bullets) are put in place and thanks to the results obtained it is possible to invest in a greater action that leads to success (cannonball).
Let’s take the example of Apple, which started its flywheel with Macintosh computers, then gradually invested in a small slightly different area, the iPods, once it had a positive result it continued to invest in that area, creating for example iTunes . So Apple has continued to extend its flywheel from iPod to iPhone to iPad, creating even greater momentum than the main flywheel focused on Macintosh computers.
Over time, all large companies will create extensions of the flywheel, but it is important that there is a basic logic, so that each extension contributes to the whole.
What is success and what is determined
In the previous sections we have tried to indicate the fundamental principles behind a successful organization, however how can success be defined and what are the main concepts that determine it?
You must first analyze your results, a successful organization should have the best results in its area of activity. Secondly, your contribution to society must be significant, if your organization disappears, your absence should be felt.
Finally, constancy and sustainability are important, a large organization is such only if it is able to resist the change of leadership over the years, thus demonstrating that its success does not depend on the individual leader.
In any case, the path to greatness never ends really, once success is achieved there is always the possibility to improve, precisely for this reason the concept of the flywheel is the best strategic element to make success constant and cumulative.