A flywheel, in the context of business, refers to a structured set of repetitive processes designed to maximise and yield productive results. Flywheels could be either newly devised mechanisms tailored to specific business needs or established and proven methodologies.
Imagine your business as a giant, heavy wheel, when you give it a good push, it starts to spin, slowly at first, and as it gains momentum it moves faster and faster. That is the flywheel effect in action! By putting consistent effort into the right areas, you can keep your business spinning forward, maintaining momentum.
The flywheel effect is not just a fancy theory; it is a powerful tool wielded by successful businesses and individuals to achieve remarkable results. To create a flywheel you need to put your clients at the centre, cut down friction to a minimum and remove all undesirable outcomes thereby enhancing the client experience, delivering good service which further drives sales and client acquisition. Rinse and repeat. Here are ten fantastic outcomes which are a consequence of a well-oiled flywheel:
1. Sustained Momentum:
A well-implemented flywheel generates a continuous cycle of positive outcomes, allowing a business to maintain momentum over time. With a flywheel, you secure regular wins, one after another, like hitting the pedals on a bike. This keeps your business moving forward without detrimental hitches, stops and starts. Take for instance the ease of one-click ordering to personalised recommendations, introduced by Amazon which prioritises customer satisfaction above all else. The ease of use builds loyalty which fuels word-of-mouth marketing and repeat purchases, keeping their flywheel in constant motion.
2. Customer Loyalty:
Satisfied customers create a knock on positive effect and keeps the flywheel spinning and a good flywheel delivers what people expect, so they keep coming back for more, making everyone happy. Therefore, by delivering consistent value, a flywheel can enhance customer satisfaction, leading to increased loyalty and repeat business. The Toyota Production System (TPS) for instance, exemplifies operational efficiency through streamlined workflows, and automation, and empowers employees to minimise waste and improve quality, adding momentum to their manufacturing flywheel.
When Amazon was still in its infancy in the early 00’s, it suffered some setbacks which threatened to run the company aground due to lack of liquidity. Amazon CEO Jeff Bezos held an emergency strategy session and later introduced the company to the flywheel concept which puts the customer at centre of all business activities which in turn drives sales and expansion. Over 20 years later the company continues to grow from strength to strength reaping the benefits of the flywheel.
3. Efficient Operations:
As the flywheel gains speed, processes become more streamlined and efficient, reducing operational friction and enhancing overall productivity. At this point, your whole business gets smoother. Tasks become easier, things get done faster, and you have fewer hiccups along the way.
4. Innovation Acceleration:
The flywheel is a breeding ground for bright ideas! It helps you come up with new and exciting innovations, keeping your business fresh and ahead of the pack. One of the things that can make that workout easily is having positive feedback loops within the flywheel which can foster a culture of innovation, driving the development of new ideas and solutions.
Netflix’s content strategy and personalised viewing recommendations create a self-sustaining ecosystem. Happy subscribers attract new ones, who in turn contribute to more content creation, further strengthening the flywheel’s rotation.
5. Market Expansion:
Just as the flywheel spins faster and stronger so can you become a stronger player in your market, spreading your wings and taking up more space! This can happen with a powerful flywheel in place, by making your market presence more visible, by attracting new customers, and capturing additional market share.
6. Brand Strength:
A well-oiled flywheel can boost external perception of your business and make people think good things about your brand. It can give your business a great name in the marketplace. So, the positive outcomes of a flywheel include a strong and positive brand image. Patagonia’s dedication to environmental activism resonates with conscious consumers, solidifying its positive brand image. This trust attracts like-minded customers and fuels their sustainable business flywheel.
7. Employee Engagement:
A successful flywheel can create a sense of purpose and achievement among employees, driving engagement and satisfaction within the workforce. It also means that when the flywheel is pumping, your team feels proud and excited about their work. They are like the ones pushing the bike, knowing they are making a difference and having fun doing it!
The flywheel concept is scalable, allowing businesses to replicate successful models and expand their operations without a proportional increase in resource requirements. It makes it easier to grow and expand without needing a ton of extra stuff.
9. Financial Resilience:
A robust flywheel can contribute to financial stability by providing a steady flow of positive outcomes, helping the organisation weather economic uncertainties. Even when things get tough, like the economy going downhill, a strong flywheel helps your business stay afloat. It is like having a sturdy anchor in choppy waters.
10. Sustainable Growth:
Ultimately, the flywheel approach enables sustainable and long-term growth by perpetuating positive outcomes across various aspects of a business. This is not a quick sprint, it is a marathon! A good flywheel helps you build a business that can keep growing and thriving for years to come.
Value investor Warren Buffett’s focus on long-term investments and financial discipline exemplifies a robust flywheel. This approach builds financial stability and weathers economic storms, keeping his portfolio spinning steadily.
We hope you gained some insight on the use of flywheels and encourage you to implement the same into your business operations to drive sales and growth.