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.