The Flywheel Concept – How to Become a Big Business
Most marketing and sales books are about the sales funnel; however, the funnel model has a serious flaw. While the sales funnel is all about driving the customer through the funnel to make a purchase, it ignores the customer’s power to build momentum for the business. The flywheel concept, on the other hand, harnesses the customer’s energy to turn the company’s flywheel. By harnessing the power of positive word of mouth and empowering stocks, the concept of a flywheel helps a business gain momentum.
Many entrepreneurs fall into the trap of looking for the silver bullet that will make their business successful. Unfortunately, as a result of this approach, most businesses find themselves jumping from one quick fix to another, without really creating significant momentum in one direction.
The flywheel concept, also called the flywheel effect, is a business concept introduced by Jim Collins’ book “Good to Great” and explained in more detail in his book “Turning the Flywheel”. The flywheel metaphor has been used to introduce the fact that companies do not become huge and successful as a result of just one intervention or initiative. Rather, they become exceptional because of the accumulation of small victories that accumulate over years of hard work, mostly unnoticed by the outside world, until they break through.
In these books, Jim asks you to imagine a massive flywheel mounted on an axle. It is 30 feet in diameter, 2 feet thick, and weighs over 5,000 pounds. This steering wheel is your business. Your job is to get this flywheel to move as quickly as possible, because momentum – mass multiplied by speed – is what will generate economic results over time.
Jim goes on to say:
“Right now, the flywheel is stationary. To make it move, you put in a huge effort. You push with all your might, and finally, you move the flywheel forward. You keep pushing, and with persistent effort, you get the flywheel to complete a full turn. You don’t stop. You keep pushing. The steering wheel turns a little faster. Two turns … then four … then eight … the flywheel gains momentum … sixteen … thirty-two … moving faster … one thousand … ten thousand .. . one hundred thousand. At some point, you can’t tell exactly when – you are breaking through. The momentum of the heavy wheel works in your favor. It spins faster and faster, with its own weight propelling it. You don’t press harder, but the flywheel accelerates, its momentum increases, its speed increases.
Turn the steering wheel
In fact, flywheel inertia, which is the kinetic energy stored by the flywheel, can maintain the momentum needed to move the business forward during times of moderate business fluctuations or when the business changes speed.
When it comes to business success, there isn’t a single idea or idea that creates momentum. Instead, it is the result of a constant push in one direction over a long period of time. And it is this momentum that can ultimately make a business appear successful overnight, where people outside the company suddenly see fantastic results but fail to understand the momentum that has been building for years, where small wins lead to medium wins, medium wins lead to bigger wins, and then suddenly that success appears seemingly out of nowhere.
Small business owners can put a lot of effort into their business without noticeable effect until one day their business’s steering wheel gains sufficient momentum and begins to stand out from the competition. This is called the breakthrough moment. As the flywheel spins faster and faster, it will provide increasing returns for the business.
To introduce the flywheel concept in practice, let’s take a look at the master of all flywheels – the Amazon flywheel.
- It starts with lower prices on more deals.
- Lower prices lead to increased customer visits.
- More customers help attract third party sellers.
- More and more third-party sellers are expanding the store and expanding distribution.
- More third-party sellers help increase revenue over fixed costs.
- This greater efficiency allows Amazon to lower prices even further.
The Amazon flywheel spins and turns. But you don’t have to stop with just one flywheel. You can create synergistic, self-financing flywheels, as shown by Simon Torrance in his “New Growth Playbook” video course, explaining how Amazon’s flywheel grew and strengthened the Amazon Web division. Services (AWS).
When it comes to your flywheel, where does it start? What follows next? You should be able to explain why each component follows the previous component. When setting your flywheel, avoid being too grainy. Your flywheel should have six or fewer components. If you have more, it’s too complicated, and you should try to simplify it.
When you have a rough draft of your flywheel concept, test it against your hedgehog concept (ADD A LINK HERE). Does this fit or do you need to change the design of your flywheel?
Your goal is to design a flywheel where improving the performance of one of the components leads to better results in all of the remaining components. This way you are able to build a swing machine that feeds on itself to create better results over time.
All flywheels need a power source (motor) and the ability to reduce friction (lubrication) to maintain flywheel acceleration.
Let me share the concept of a flywheel that I use for SteveBizBlog.
The motor that introduces the energy that turns my flywheel includes the following activities:
- Create one long blog content post per week (Wednesdays).
- Teach courses for organizations like SCORE, SBDC, local community colleges like PPCC and on military bases to build the brand.
- Ment a half-dozen or more small business clients each week.
- Answer business-related questions on forums and groups.
- Syndicate content from influencers to build awareness (Mondays).
- Showcase guest author content with full attribution to establish reciprocity (some Fridays).
The lubrication I apply to my flywheel consists of the following activities:
- Apply SEO concepts to posts to make it easier for search engines to find our content.
- Use automated syndication tools to propagate content across different channels.
- Outsource fungible tasks to offshore resources at lower cost.
The SteveBizBlog flywheel consists of four components:
- Entrepreneurs read our content, which increases traffic.
- The increased traffic creates gravity for the backlinks of the highest domain authority (DA) sites.
- High DA backlinks increase our own domain authority which drives our content up in organic search results.
- Higher placement in search results generates more traffic.
How to apply the Flywheel concept to your business?