Lessons from Jim Collins' "Good to Great": Flywheel Effect for Business Growth

Great businesses are built on the momentum of a small series of steps. Each one builds upon the previous to create a solid foundation that helps the business accelerate its success. In simple words, businesses are built by creating a 'flywheel.'

Wondering, "What is a flywheel?" Well, today we are going to break down the flywheel concept from Jim Collins' "Good to Great" to help you build momentum and sustainable growth for your business. Let's start!?

The Flywheel Concept From "Good to Great"

If you have ever tried your hand at pottery, you know how difficult it is to get the wheel going. But once you get it rotating, all it takes is a little effort to keep it going and shape the clay. That's precisely what the flywheel concept is.?

The Flywheel concept for business is like a wheel of small efforts that accumulate over time for a significant impact. It's like a series of good decisions whose impact accumulates to create a huge shift for growth. The baseline here? Consistent and sustained efforts.?

At some point, there's a breakthrough—now, the wheel starts to rotate faster and faster based on your initial hard work, although you are putting in no more than the first time. It's like building inevitability in your business—if you do A, it's almost impossible not to do B, and then C, D, E, and so on.?

You are building a logical sequence where each act drives the next one, and it becomes a closed loop.?

How to Apply It to Your Business?

Roughly, there are about 7 steps you need to take in order to apply the flywheel concept to your business. Here's a quick breakdown!?

List Your Wins

Identify significant, repeatable successes your business/brand has achieved. Include new initiatives and offerings that have exceeded expectations.

Catalogue Your Losses

Write down your failures and disappointments, including initiatives and offerings that failed outright or didn't meet expectations. Be honest!?

Analyze for Insights

Compare your successes to your disappointments. Ask yourself, "What do these tell us about the possible components of our flywheel?"

Sketch the Flywheel

Using the components you've identified (keep it to 4 to 6), draw the flywheel. Identify where it starts, what follows next, and continue until the cycle is complete.?

Ensure you can explain why each component logically follows the previous one. Basically, it should be like A triggers B, B triggers C, C triggers D, and so on until the cycle is complete.?

You can also apply more than 1 force to get the wheel going, such as SEO, experiential marketing, paid ads, etc. Remember, the more forces you apply, the more customers you can attract.

Simplify

If you have more than 6 components, club them together and simplify to capture the essence of the flywheel.

Test it Out

Test the flywheel against your list of successes and disappointments. Adjust the sketch until your biggest replicable achievements align with the flywheel and your biggest disappointments are due to failures in executing or adhering to it.

Cross Check Against the Hedgehog Concept

Make sure your flywheel aligns with the three circles of your Hedgehog Concept from Good To Great. These circles represent the following:

• What you're deeply passionate about
• What you can be the best in the world at
• What drives your economic or resource engine

The Leader You Need To Be

Jim Collins, in the book, also talks about a certain kind of leader who can implement the flywheel strategy really well. Here's what the hierarchy looks like:

• Level 1: Highly Capable Individual—Such leaders excel at their tasks and contribute to the team's success through their individual efforts.
• Level 2: Contributing Team Member — These leaders help their team succeed by using their talents in collaboration with others.
• Level 3: Competent Manager — Such leaders have managerial competence. They can set and achieve goals for their team or company.
• Level 4: Effective Leader — Leaders of this level are able to inspire and motivate their team to achieve high performance and success.?
• Level 5: Executive — These are at the top of the hierarchy. They create lasting success. These leaders are often characterized by their modesty and unwavering resolve to do what is best for the organization.

If you want to implement the flywheel, you need to be a level 5 leader—one with personal humility and professional will. A leader like that prioritizes the company's success over personal achievements.?

Nykaa's Flywheel

Nykaa, an Indian e-commerce business, specializes in beauty and wellness. Over time, they have also expanded into fashion, becoming a prominent player in the market. We studied the brand, and this is what their flywheel could look like —

• Extensive Product Range attracts a broad customer base.
• Superior Customer Experience ensures satisfaction and repeat purchases.
• Engaging Content builds a loyal community and enhances brand visibility.
• Innovative Marketing draws in new customers and retains existing ones.
• Data-Driven Decisions optimize operations and marketing, improving customer experience.
• Omnichannel Strategy increases customer convenience and sales.
• Strong Vendor Relationships ensure product availability and exclusivity.

Wrapping Up

So there you go—the flywheel concept broken to basics with how to do it.?

PRO TIP? At its core, the flywheel concept is all about doing what has worked for you while minimizing friction as much as possible to create momentum. Because only force without friction can build momentum.

So, while you are creating your flywheel, remember to identify what's causing friction. Maybe it's the entry price, complex buying process, or barriers to information. Whatever it may be, you can still fix it!?

Don't forget to tell us how you found this article!