The simple concepts of the flywheel and how it can impact your business

The flywheel concept from Jim Collins' book "Good to Great" is a powerful metaphor for transforming a good company into a great one. The flywheel represents the cumulative effect of consistent and disciplined efforts, leading to sustained momentum and breakthrough performance.

A regional telecom firm, dedicated to client satisfaction, implements the Collins flywheel concept. They eliminate the concept of promoting the person who has been at the company the longest and implement proper interviewing and selection techniques which fosters a culture of excellence and innovation. They also begin a structured development plan for all leaders in the organization. d

The results?

Positive client experiences improve which leads to referrals and their NPS increases. They see a decline in customers posting poor comments online. The churn rate drops over 10% in year one. Now, the president sets a plan for expansion, enabling deeper investments into talent, processes, and technology. Continuous improvement fuels exceptional service, reinforcing the cycle. With each turn, the company solidifies its position as a leader in their area, achieving sustainable growth. Their goal of doubling their size in five years is now a reality.

Here's a breakdown of the flywheel concept:

Buildup of Momentum: Initially, when a company starts its journey from good to great, progress might seem slow and insignificant. However, like pushing a heavy flywheel, every effort builds momentum, even if it's not immediately visible.

Continuous Improvement: The key to success lies in making consistent, incremental improvements in various aspects of the company's operations, including leadership, strategy, culture, and execution. These improvements might not yield dramatic results initially, but they gradually accumulate and reinforce one another.

Reinforcing Loops: As the flywheel gains momentum, the company’s efforts’ positive outcomes begin reinforcing one another, creating a self-reinforcing loop of improvement. For example, improved employee morale leads to better performance, which, in turn, enhances customer satisfaction and loyalty (Feedback Loops are key to fostering both employee and customer loyalty).

Breakthrough Moments: After a sustained period of disciplined effort and buildup of momentum, the flywheel reaches a point where the accumulated energy generates breakthrough results. This breakthrough might come from significant growth, market dominance, or exceptional performance that sets the company apart.

Sustainable Momentum: Once the flywheel achieves breakthrough momentum, the challenge shifts from initiating change to sustaining it. Companies must continue nurturing the factors contributing to their success and guard against complacency or regression.

In summary, the flywheel concept underscores the importance of consistency, discipline, and persistence in achieving greatness. Companies can create a lasting competitive advantage and drive transformative change by focusing on making continuous improvements and building momentum over time.

Mitch Smith

Rootloud Lead Consultant