The Fly Wheel effect in Business

First time i have heard about it while i was watching a video regarding how Amazon works & the concept really touched me. I thought it is the way modern business should work considering all the uncertainity looming large all around the world. go through it, you will find it very useful.

What is it?

“The Flywheel” is a very useful analogy for implementing business strategy created by Jim Collins. It describes how driving a new strategy is like getting a huge flywheel into motion. Initially, there is no movement – many people think that the strategy is absurd – it is almost impossible to imagine the flywheel at speed. With great exertion of will, the CEO is able to deliver some results that get the flywheel moving. They appear small and trivial initially, but create the credibility to move to more ambitious results. As more and more results accumulate, more and more people throw their weight behind the wheel and the momentum of the flywheel builds and builds.

THE FLYWHEEL CONCEPT

The Flywheel analogy captures brilliantly the dynamic of implementing strategy through thousands and thousands of small results aligned in the same direction.

When is it useful?

It helps the CEO think through how they can contribute at different stages in implementation:

1) Initially protective. Early in the process the flywheel’s momentum is very fragile. There are likely to be misalignments with the core organization that act as a brake on the flywheel. It is easy to get discouraged and abandon the flywheel, allowing any small momentum to die. Another flywheel is then taken up, in the hope that it requires less work. In a schizophrenic organization no flywheel will ever be able to build any momentum. The CEO can protect the early momentum by isolating the initial moves from any organizational brakes, dedicating the best resources to it and insisting that the moves get the best possible shot to deliver

2) Communicating the Strategy. In the early days, it may be that the CEO is the only one who can see the potential for the flywheel at speed. A few people are won over by a vivid vision, however the engine room of most companies are full of pragmatists (fortunately!) who will line up behind proven results. Focusing communication about the strategy on results achieved and the immediate next turn of the flywheel is likely to be more powerful than overdoing the visionary fervour. As the results delivered build, the evidence to convince the pragmatists becomes compelling, and more and more of the vision can be declared.

3) Company alignment. Creating momentum in the flywheel requires great focused force, all pulling in the same direction. Misalignments are not just wasted energy, they actively act as brakes on the flywheel. After some initial results and momentum have been delivered, the CEO will need to take active steps to bring his organization into alignment with his strategy – the CEO as organizational architect. The holy Grial is for every single aspect of the organization’s activities and culture to be aligned behind the flywheel, contributing maximum momentum with minimum friction.

Source - www.india-crafts.in