The Flywheel Effect: Disciplined Action Produces Superior Results

Jim Collins Turning the Flywheel: A Monograph to Accompany Good to Great, might appear as an attempt to rekindle interest in his previous books, Built toLast, Good to Great, How the Mighty Fall, and Great By Choice.

In the Appendix, Collins shares how all these pieces fit together to build an enduring great organization.

Is it an attempt to revitalize interest in his books and themes?

Collins shares in the book: To build an enduring great organization you need disciplined people who engage in disciplined thought and take disciplined action to produce superior results and make a distinctive impact in the world. Then you need the discipline to sustain momentum over a long period of time and to lay the foundations for lasting endurance. This forms the backbone of the framework, laid out as four basic stages:

• Stage 1: Disciplined People
• Stage 2: Disciplined Thought
• Stage 3: Disciplined Action
• Stage 4: Building to Last

What’s The Flywheel

The flywheel fits into stage 3, Disciplined Action. Collins shares his own flywheel. He practices what he preaches.

The value in Turning the Flywheel is Collins examples of companies who build enduring great organizations, what they’re flywheels look like, and how you can build your own.

As a business person, you know this axiom, “In creating a good-to-great transformation, there’s no single defining action, no grand program, no single killer innovation, no solitary lucky break, no miracle moment. Rather, it feels like turning a giant, heavy flywheel. Pushing with great effort, you get the flywheel to inch forward. You keep pushing, and with persistent effort, you get the flywheel to complete one entire turn. You don’t stop. You keep pushing. The flywheel moves a bit faster. Two turns . . . then four . . . then eight . . . the flywheel builds momentum . . . moving faster . . . a hundred thousand. Then at some point—breakthrough! The flywheel flies forward with almost unstoppable momentum.”

Many times we’re tempted to believe there is a single defining action, a miracle moment.

We look at others success and question, ”Why aren’t I as successful?”  “Why do they get breaks and I don’t?”

This book is about the reality of business success, and to help you create YOUR flywheel.

“The greatest danger in business and life lies not in outright failure but in achieving success without understanding why you were successful in the first place.”

This lesson, and quest led Collins to produce his series of insightful books.  It came from a 1982 class at Stanford Graduate School of business strategy professor Robert Burgelman.

The beauty and value of the Flywheel Collins explains, “Once you fully grasp how to create flywheel momentum in your particular circumstance, apply understanding with creativity and discipline, you get the power of strategic compounding. Each turn builds upon previous work as you make a series of good decisions, supremely well executed, that compound one upon another. This is how you build greatness.”

Amazon’s “Secret Sauce” – Flywheel

In the fall of 2001 Jeff Bezos hired Collins to teach him and a few members of his executive team “the flywheel effect.”

Amazon’s team deployed the flywheel concept to articulate the momentum machine to drive the enterprise to be its best.

Bezos infused Amazon to obsessively create more value for ever more customers. Collins shares, “It’s a powerful animating force—perhaps even a noble purpose—but the key differentiator lay not just in “good intent” but in the way Bezos and company turned it into a repeating loop.”

In The Everything Store, Brad Stone writes, “Bezos and his lieutenants sketched their own virtuous cycle, which they believed powered their business. It went something like this: Lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. Feed any part of this flywheel, they reasoned, and it should accelerate the loop.”

The flywheel turned, building momentum. Push the flywheel; accelerate momentum. Then repeat. Bezos, Stone continued, considered Amazon’s application of the flywheel concept “the secret sauce.”

The power of a great flywheel, should never be underestimated.  It builds compounding momentum over a very long time. We’ve shared this compounding idea in Strategic Discipline Harnesses Powerful Forces. Once you get your flywheel right, you want to renew and extend that flywheel for years to decades—decision upon decision, action upon action, turn by turn—each loop adding to the cumulative effect.

Watch this 7 minute video to understand how Amazon developed their Flywheel and expanded it to Amazon Web Services:

https://youtu.be/fhX-xE1HwKM

In order to achieve this, you need to understand how your specific flywheel turns. Your flywheel will not be identical to Amazon’s. It should be just as clear and its logic equally sound.

My good friend, Doug Wick – Scaling Up Coach in Cedar Rapids Iowa is the author of this insightful article.