The business flywheel is an established concept that breaks down an organisation into its important parts, and establishes a cycle that helps the business reach its goals each time it is completed.
This is a concept that is easier shown with examples, and we will take two:
- One from Amazon.com who have applied this concept for over twenty years in their quest for total eCommerce domination.
- The other from Mäd itself, so you can see what makes us tick!
The Amazon Flywheel.
The Amazon Flywheel is based on their mission to become “Earth’s most customer-centric company.” It is made up of several components:
- Great Customer Experience
- Lower Cost Structure
- Lower Prices
See this graphic to see the relationships between each of these.
This has allowed Amazon to have almost unparalleled growth in their industry, and also break into new industries. This has allowed them to go from an online bookshop to the world’s largest eCommerce company, and also the leading provider of Cloud Computing Services, beating tough established companies such as Google, Microsoft, and IBM.
The Mäd Flywheel.
Just like Amazon, our Flywheel also starts with Great Customer Experience, but then it continues down a different path. This is because our mission is to help turn great ideas into business realities.
- Great Customer Experience: Customers that get tangible quality results from Mäd that help them move up.
- Proof: Potential customers can see real proof of point #1.
- Traffic: More and more potential customers inquire to Mäd about our services as our brand is known.
- Mäd Brand Investment: Investing in making Mäd better (equipment, office, web, social media, culture, etc..). This helps drive new talent by making Mäd desirable.
- Talent Development: Investing in our people, and also finding awesome new people! Making the best place to work and grow.
For instance, the reason that we don’t have lower prices in our flywheel is that we’re not a consumer-centric organisation, but we deal with other businesses, and the value of our services far exceeds our billings. So for instance, $20,000 to $100,000 for a brand platform that will make you millions more in revenue and profits over the next few years is not a large expenditure, and it doesn’t make sense to de-prioritize quality for price in this scenario.
So how does one go about building a Flywheel strategy for your business?
- Think about what is not going to change.
- Set Responsible Individuals for each part of your Flywheel with attached KPIs.
- Share your Flywheel
1. Think About What Is Not Going to Change.
Because this concept is about a continuous cycle of improvement, it is best to focus only on points that are not going to change over time. The litmus test for this is that you should be able to look back in ten years time and not regret investing in these areas, because they solve real problems that are always worth solving.
If you are an eCommerce website, your customers are not going to ever say “Hey, I wish this website was slower to load.”
If you ship items to your customers, they are never going to say “Man, I wish delivery took a week instead of a day!”.
If you are a service company, your customers are never going to complain “I wish they didn’t have this real-time project management system in place where I can check the status of my project at any time”.
And so on.
2. Setting and Monitoring responsibilities.
By placing an individual with direct responsibility for each area in your flywheel, it allows accountability when you set KPIs against each area.
Taking the Mäd flywheel as an example, you can see some of our KPIs below:
- A great customer experience is measured by repeat business with a customer, as well as a “Net Promoter Score” of 7/10 or more.
- Talent Development is measured by how many employees stay with us in a given year (our retention rate) and by how much money we invest in training programs.
- The Mäd Brand is measured by metrics such as website page views, social media engagement, articles published, and so on.
3. Share your FlyWheel.
It might seem counterintuitive to spend the time to break down and understand your business carefully, and organise a new strategy, only to then share this information with the public. Surely your competition will be able to use this information against you?
However, it’s actually a really good idea to not only define your own flywheel but also to publicly announce it. It gives your employees and customers an understanding of where your company is heading, and why they should choose you.
Of course, while your competition will take note, this is not something that they can simply copy, as it is created due to the particular circumstances of your business, not theirs. If they try and blindly copy your strategy, they will run into trouble as they will be purely focussed on what they are doing, instead of how and why they should be doing it.
Do note that we do recommend keeping the individuals responsible for each part of the flywheel and their KPIs private within your organisation.
The Flywheel is one of these business concepts that have stood the test of time, and is simple enough to understand quickly and can be adopted without too much strain even in large organisations, and this is why it is one part of our strategic branding process that helps our clients win.
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