In 2001, Jim Collins released the seminal book, “Good to Great”. For over 20 years now, it has acted as a sort of playbook for entrepreneurs seeking to build great, enduring companies. There are a number of critical concepts in the book that can be applied to help entrepreneurs – Level 5 Leadership, First Who, Then What, the Hedgehog Concept and more. This post focuses on The Flywheel Effect and how it can help entrepreneurs build powerful strategies. Let’s first review the Flywheel Concept…

The Flywheel Effect

Think of a massive, heavy flywheel—at first, it takes an enormous effort to push it forward. With each push, it moves a little more, and over time, as momentum builds, it begins to spin faster and faster with less effort. In business, this represents the idea that small, consistent efforts, executed with discipline and alignment, create unstoppable momentum that leads to long-term success. Instead of relying on a single breakthrough or dramatic moment, great companies build momentum gradually by understanding and sticking to their flywheel.

The Flywheel Effect also emphasizes that success is not the result of one big push or lucky event but rather the accumulation of consistent actions. Companies that understand this principle focus on executing their flywheel and not getting distracted. Eventually, their hard work pays off, and growth becomes self-sustaining, just like the flywheel spinning effortlessly due to built-up momentum.

They key to the flywheel, and the tough part, is identifying those 5-6 components that are truly important to the business which will result in breakthroughs. This takes time and energy. Collins recommends seven steps to building your flywheel …

  1. Create a list of replicable successes your organization has achieved.
  2. Compile a list of failures and disappointments. This includes new initiatives that failed or did not meet expectations.
  3. Compare the successes to the failures and identify possible components that should be in your flywheel.
  4. Using the components you have identified, sketch your flywheel. At the top, start with a component that is most within your control, often a core competency. In the example of Amazon, this was lower prices on more offerings. From there, each following component should feed into the next turn of the wheel linked by the phrase “we can’t help but”.
  5. Diagram the loop with 4 to 6 components. Simplify the model and capture the essence of your flywheel. Brainstorm and have a robust dialogue with your team.
  6. Test the flywheel against your list of successes and failures. Do your successes and failures validate your flywheel?
  7. Test the flywheel against the three circles of your hedgehog concept: 1) what you’re deeply passionate about, 2) what you can be best in the world at, and 3) what drives your economic engine.

For example, if you look at the Ventrek’s Flywheel, it all begins at the top of the flywheel – offer an exceptional program. When you build your flywheel, it is critical to understand the first critical item as each item builds on the next thereby creating the momentum and the “catching” of the flywheel. This is the key – understand each piece of the flywheel and what each one is dependent on. In this example, once Ventrek builds exceptional programs (company strengthening program, entrepreneurial strategy program, etc.), the next step is to provide exceptional facilitation. From there, raving fans are created and the wheel goes on!

 

The Flywheel and Entrepreneurial Strategy

It’s one thing to build a flywheel, it’s a whole other concept to actually apply it. This is where Ventrek’s entrepreneurial strategy kicks in! If you recall from a previous post (https://ventrek.com/latest-news/what-is-entrepreneurial-strategy/), for entrepreneurs, strategy is all about appropriately allocating resources (time, money, people) toward quarterly and yearly activities (rocks, objectives) that lead to a desired outcome (5-Year Mission). A critical piece of this puzzle is in creating powerful yearly strategic objectives that advance the company. This is where the flywheel kicks in.

Once you map out your flywheel, you can utilize those components as strategic objectives and identify critical rocks (quarterly priorities) to work on for each. For example, in Ventrek’s example, one of the flywheel components is to “Provide Outstanding Facilitation”. This would essentially become a strategic objective for the year and rocks (priorities) would be build each quarter to ensure this is occurring and measure progress. On top of that, and this is the really powerful part, KPIs would also be built to measure progress on this flywheel (aka, strategic objective). This becomes incredibly powerful as strategy begins to support the flywheel and you are actually able to measure progress and identify any issues along the way.

 

Good to Great pointed out the importance of understanding your flywheel to build a great company. With the Ventrek Strategy System, you can now incorporate and flywheel into strategy and actually see it build and grow. It’s all about execution and the tie in between the concept of the Flywheel and actually applying it in strategy for entrepreneurs becomes extremely powerful toward building a great company.