March 2, 2016

Good to Great: The Flywheel & Doomloop

Good to Great: The Flywheel & Doomloop

This is the last blog in a series which covers Jim Collins book Good to Great, I would like to go over the concept of the Flywheel and the Doomloop, so lets just jump right in.

Turning The Wheel

First things first, we need to look at what a flywheel actually is. Essentially, it is disk that is placed on an axle that is used to smooth out a machines operation. The interesting thing about this device is that in the beginning it is very difficult to move it and requires a lot of effort to get it going. However, once it has started moving and you continuously apply energy to it over time, it builds up momentum and becomes faster and faster.

In the same way, over many years, many of the great companies have put a lot of hard work in doing the right things, such as getting the right people on the bus and finding their Hedgehog Concept. Initially progress was slow and over time they built up momentum, until them ultimately break through. It is at this point that they attract the media attention, as to them it seems that this company came out of now where and all of a sudden is a major player. Little do they know the work and effort before that point.

Looking Inside & Out

When a company reaches that breakthrough point, as I said above, to the outside world it looks like the company just exploded onto the scene. However, from the inside it is a different story, as to them it feels more like an organic process that has shaped the company to what it is now.

Jim Collins gave a really good example with an egg and goes along these lines. He says, imagine you have an egg just sitting there on the shelf. Most people just ignore it and carry on with their daily lives. However, one day the egg starts to crack and a chicken pops out. At this point, everyone is all over this it as out of nowhere the egg just produced a chicken!

However, from the inside it is a completely different story. While everyone was carrying on with their daily lives, the chicken was slowly evolving & growing. To the chicken, it was a multi-stage process where coming out of the egg was just one of those things that needed to be done and is nothing spectacular from its point of view.

The Doomloop

Now, if we now take a look at the way other companies operated, you will find that they went about launching new efforts or programs, which was often met with great fanfare and excitement around it in order to "motivate the troops". I'm sure we have all been in these situations where the CEO launches a new product and everyone congratulates him. In their mind, this is the breakthrough! This is the thing that will make the company great! Unfortunately, this isn't the case.

Most of the time, these killer innovations or grand programs, either fail or just make the company good, and not great. The problem here is that these people are looking for that miracle moment where they reach the breakthrough stage, without going through all the work that goes before it.

In these situations, what you will find is that the leaders in the company would then "stop the flywheel" and turn it in another direction. When that fails, they stop it again and go in the opposite direction. By doing this, they keep on going back and forth and fail go gain any momentum. When this happens, you know you have reached the doomloop.

Acquire, Acquire, Acquire

When Jim Collins took a look at a comparison between the good and great companies and the way they merged with, or acquired other companies, he discovered the following facts.

What he found was that the great companies would only merge once they had their Hedgehog Concept defined and their flywheel had built up a significant amount of momentum. Again, these acquisitions were used as an accelerator of momentum and not a creator of it.

The good companies on the other hand were often found to be doing mergers and acquisitions without any sound reasoning, or to "jump start" their momentum and often landed up in failure.

The Final Chapter

In closing, I would like you to remember that success doesn't happen overnight. It takes time and lots of hard work and discipline with every step that is taken and decision that made, you will eventually get there.

The great companies realized that continuous small improvements were the way to go. After some time enough momentum would be generated that the people in the organization will start to feel the magic and start seeing tangible results. It is at this point that you will find a lot of people starting to get behind the wheel and start pushing as well.

That wraps up this series, I would love to hear what you thought about it. I can say from my point of view I really learnt a lot and I hope you did so as well.

Until next time...keep learning