The Flywheel Of Growth: Three Essential Tenets

Flywheel

“Dig in and pull only when you hear go,” shouted my friend, a father of two little boys. Before I could repeat for the children standing closer to me, at the far end from where my friend was, I could hear him shout three, two, one and… A few of us were helping some little kids play a tug of war between two neighbouring housing societies. As the kids lined up, we realised the kids from our apartment were little children in their fives and sevens, definitely looked tinier than the kids on the other side, who were more like ten year olds. A fun game, but there is no one who doesn’t want to win. Realising this difference between the two sides, my friend and some of us who were standing on the sides, jumped closer to our gang of little kids, screaming instructions, lining up height wise and just getting them more organised. As some more kids ran and joined the tug of war on both sides, suddenly the attention shifted to this area and we noticed the imbalance. I remember the friend shouting three, two, one and I joined him in … GO. 

Our little gang, as instructed, pulled at one go. And yeah, despite being tinier than the other lot, they were able to pull the opposite team down on the grass. We won. No one expected it. Everything happened at a fast pace, the coming together of kids on both sides, cheering and running parents and the referee standing in the centre blowing the whistle to begin. Ecstatic was the word for the winning team’s reaction. Magic was the word that the losing team thought of when they saw a younger team pulling them down. Collaborative effort is what my friend smiled as his timely strategy worked. He had noticed that kids on both sides of the rope were not organised, it took him a loud voice to get them together and act. 

Business life is also a tug of war, not with another competitor but with the market forces itself. It is not about winning just one tug of war, but it is about continuously winning many tug of wars. In this week’s Habits for Thinking, I want to bring your attention to a concept highlighted by Jim Collins, author, Good to Great  – called the Flywheel effect. 

Here is an excerpt: 

Pushing with great effort, you get the flywheel to inch forward, moving almost imperceptible at first. You keep pushing and after two or three hours of persistent effort, you get the flywheel to complete one entire turn. 

You keep pushing and the flywheel begins to move a bit faster, and with continued great effort, you move it around a second rotation. You keep pushing in a consistent direction. Three turns… four…five… six… the flywheel builds up speed, seven … eight… keep pushing… nine… ten… it builds momentum… eleven… twelve…. Moving faster with each turn…. Twenty… thirty… fifty…. A hundred. Then at some point- breakthrough!  The momentum of the thing kicks in your favour, hurling the flywheel forward, turn after turn,,, whoosh!… its own heavy weight working for you. You are pushing no harder than during the first rotation, but the flywheel goes faster and faster. Each turn of the flywheel builds upon work done earlier, compounding your investment of effort. 

What was the one thing that caused things to go so fast? You wouldn’t be able to answer. Flywheel momentum is not an act of one big innovation, it is a combined effort of many small activities. 

For example, free shipping by Amazon is considered to have greased the flywheel for Amazon. “People who want something in 2 days are going to pay for it, but everyone who wants free shipping will get their stuff in 5 days,” says Jason Child, who describes the 2001 shipping fees debate as fundamental for the Amazon Prime program and Amazon’s explosive growth. The team was debating whether free shipping would cannibalize their revenue from shipping. The decision to offer free shipping to Amazon Prime customers was a journey from a debate to trials to a success story today. 

Not every idea is successful. Amazon too had launched and withdrawn other ideas. For example, placing a button on the fridge of the household for monthly repeat orders. These were called Amazon Dash buttons. It was rolled out only in a few markets. Designed as a stick-on button to be placed on the fridge or any convenient location, the button made it easier for customers to quickly reorder frequently used household items like paper towels, detergents, soaps etc.  The idea was to make it effortless for frequently ordering items. It didn’t roll out in many markets and after a few years of being in the market, Amazon pulled it out of the market a couple of years ago. 

Free shipping is not just one push in the giant flywheel of Amazon. There are several other activities too. Like getting to put the customer order in a package under a certain time limit in the inventory team. Or, to work on the ease of returns and refund. Every step that solves a customer problem was not taken as one giant step but  was seen as a small push in that area. The only common thread across all teams is focussed towards the goal: customer satisfaction. 

Several initiatives by Amazon have kept the Amazon flywheel in momentum. 

Flywheel is not one giant push. It is a matter of gaining momentum through multiple initiatives. Keeping the flywheel in motion is about keeping the business in good shape. The Flywheel of growth is fueled not by several push initiatives but is also strengthened by three tenets: 

1. Discipline fuels the flywheel: 

The discipline of remaining aligned to the mission. The discipline of keeping the momentum going. The important part of the flywheel growth is it doesn’t stop turning.It takes a disciplined approach to keep the pace of the flywheel. Success often makes businesses complacent. The discipline of turning customer knowledge into action, reading market pulse and maintaining the rigor does not allow any complacency to set in. 

2.Innovation adds to the flywheel momentum:

Flywheels do not move overnight. As a startup, a new innovation in product or service, customer engagement gets the flywheel moving. But as the startup moves and the flywheel gains momentum, the culture of innovation starts working on creating the next push for the flywheel. In established companies too the innovation culture has to keep the flywheel moving in the new digital world. A discipline of prototyping, testing, redesigning or embracing failure for that product or service makes the culture of innovation.

For example: UPS, the global shipping and logistics firm, took an innovative step. Realising the growth of small medium enterprises and e-commerce, UPS launched a new technology company called Ware2Go aimed at connecting small- and medium-sized businesses with warehouses to help streamline online orders. “This is really a technology and platform company – more than a services business – with merchants on one side, looking for order fulfillment capabilities, warehouses looking to fill space appropriately. We wanted to build that using the best of both worlds,” said Nick Basford, vice president of global retail and e-commerce strategy for UPS. Ware2Go is one innovation push to UPS flywheel. 

But it doesn’t stop there. Recently, Ware2Go has added another offering – NetworkVu that analyzes merchant sales and transit data using machine learning with the aim of recommending ideal warehouse placements to small and medium enterprises. This is to maximize delivery speeds within ground networks and control costs.

Ware2go is a new business offering. It is further aided by recommendations for warehouse placements. Each of these add momentum to UPS flywheel business.  

3.People keep the flywheel in motion

The culture of flywheel is dependent on people- not just leadership but also on the middle management. To get teams aligned, especially the middle management aligned towards innovation is not an easy task as this set of people are focussed on regular work delivery. Also, flywheel can stop if the momentum drops due to leadership change, management change. If the business holds a strong culture of innovation and keeps the team aligned to the main purpose, businesses  get built further on with that culture. 

Discipline, Innovation and People are three essential tenets for keeping flywheel in motion. Getting complacent in any one area will initially slow the speed and later will bring it to a halt. It is almost like being in the tug of war and getting all three, the discipline, the culture of innovation and people digging in and pulling together with the sound Go. 

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