Hello, I’m Lenny and welcome to a🔒 subscriber-only edition 🔒of my newsletter. Each week I tackle reader questions about product, growth, working with humans, and anything else that’s stressing you out at the office. Send me your questions and in return, I’ll humbly offer actionable real-talk advice 🤜🤛
Q: My boss wants me to create a “flywheel” for our business. How does one create a flywheel, and do you have any examples of flywheels I can use for inspiration?
Check this beauty out:
Kidding, but, in fact this image does help convey the concept of a flywheel. You can tell just by looking at it that when this big ole’ wheel starts spinning, with a little help from the steam, it’ll spin faster and faster until this chap makes it around his parents’ backyard model train track.
Now bring that same idea to the business context — instead of steam, what makes your business grow? Which elements of your business feed off of each other to accelerate growth? A flywheel is simply a way to describe these ideas visually.
As one example, here’s how Amazon came to see their business — and then how they visualized it as a flywheel:
“Lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. Feed any part of this flywheel, they reasoned, and it should accelerate the loop.”
ー Brad Stone, The Everything Store
Each element of the flywheel (e.g. Selection) drives the next element (e.g. Customer experience), and so improving any of these elements accelerates the flywheel, and thus accelerates growth.
How to create your own flywheel
1. First, why create a flywheel?
A flywheel is just a tool for you and your team to identify and align on which parts of the business matter most. Of all of the things that you can work on, which investments accelerate your flywheel, and which investments don’t matter?
For example, in the case of Amazon, their flywheel makes it clear that growth alone will lead to lower costs over time. Thus, their time is best spent adding sellers and improving the customer experience, vs. directly cutting costs.
Similarly, for Uber, they can look at their flywheel and recognize how important supply will be to their marketplace:
2. Start with a list
How do you begin? I‘d start with a list:
- What are the core assets of your business? e.g. cars, content, hardware devices
- What are the core actions users take? e.g. signing up, inviting friends, purchasing
- What are the core needs of your users? e.g. something to watch, a ride, discounts
- What are the natural outputs of your business? e.g. content, revenue, invention
- What are the biggest optimizations to your business model? e.g. lower costs, better data
Write these out, whatever comes to mind. Don’t overthink it.
You should now have a big list. Nice 👍
Look at this list and find items that directly drive another item. See if you can create a loop that connects a handful of these. It’s totally fine if it’s messy and random at first.
As inspiration, look back at our Uber example:
- More drivers (asset) leads to more coverage (optimization)
- More coverage (optimization) leads to faster pickups (need)
- Faster pickups (need) leads to more riders (asset)
- More coverage also leads to less downtime (optimization)
- And less downtime leads to lower prices (need)
Play around with your list and see if anything interesting emerges. Here’s some inspiration for the types of flywheels you may discover in your business:
3. Alternatively, look at your past successes and failures
Jim Collins wrote an entire book on flywheels, where he shares a different approach for identifying your flywheel. This approach is only really useful for larger organizations that have had the luxury of time, but it’s still informative:
- Create a list of significant replicable successes your company has achieved
- Compile a list of failures and disappointments
- Compare the successes to the disappointments and ask, “What do these successes and disappointments tell us about the possible components of our flywheel?”
- Using the components you’ve identified (keeping them to four to six), sketch the flywheel
- If you have more than six components, you’re making it too complicated; consolidate and simplify to capture the essence of the flywheel
- Test the flywheel against your list of successes and disappointments
- Test the flywheel against the three circles of your Hedgehog Concept
To dive deeper, definitely get the book.
4. Don’t overcomplicate it — it’s just a tool
I was once working on a flywheel with my team and by the time everyone had their say we had a dozen circles, loops within loops, and arrows in every direction. Though accurate, it was no longer useful.
To illustrate the point, here’s a way-too-complicated-but-accurate Netflix flywheel:
Here’s a more simple yet useful Netflix flywheel:
A few more examples of simple but effective flywheel diagrams:
And finally, I couldn’t NOT include Disney’s wild-but-incredible flywheel:
“Examine the flow of information in the graphic. The film studio is at Disney’s core with different platforms in orbit. Films provide material for comic strips that, in turn, promote films. The comics become reprintable material for books. The film studio feeds article content for Walt Disney Magazine, which advertises Disneyland—a sales outlet for merchandise based off films.”
Don’t be afraid to have some fun.
5. This takes time
“In building a great company or social sector enterprise, there is no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembes relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.”
ー Jim Collins
Figuring out your flywheel, and getting it moving, take time. Don’t worry if you can’t figure it out, or if you aren’t seeing a flywheel in your business. Oftentimes, leaders only figure out their flywheel after the fact – I doubt Jeff Bezos had this diagram in mind when he started Amazon, and Netflix certainly didn’t (i.e. they had no intention of going digital when they launched).
The exercises of thinking about your business as a flywheel, and thus identifying which elements most contribute to its accelerating, will be worth your time. And worst case, you have an excuse to step back and think about the bigger picture with your colleagues.
And finally, if you’ve come across any other great flywheels, or have created one of your own, I’d love to see it! Reply to this email, or post a link in the comments 🙏
Since publishing this post, readers have shared some awesome additional flywheels, which I’ll be adding below.
David Perell’s personal flywheel
Glassdoor’s content flywheel (created by Kevin Kwok):
Epic's flywheel (created by Matthew Ball & Jacob Navok)
Additional reading
- A framework for developing your own flywheel
- Turning the Flywheel by Jim Collins
- The Flywheel Effect
- Flywheels And How To Create Content Communities by Andy Johns
Till next week!
Special thanks to the Compound Writing members who reviewed this post: Stew Fortier, Tom White, Tyler Wince, and Nick deWild. And the flywheel image at the top is from Birmingham Museums Trust - Birmingham Museums Trust, CC BY-SA 4.0
🔥 Job opportunities
- Product: KUDO, Uptime2020
- Growth: Cerebral, Levels, Outschool
- Design: Cascade, Invest Like The Best, Pachama, ResQ, Runway, Sourcetable, Stytch
- Engineering leader: Cerebral, Snackpass
- Frontend engineer: Cascade, Levels, Runway, Transform
- Backend engineer: Sourcetable, Transform
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- iOS engineer: Pairplay
- Sales/BD: Cerebral, KUDO, Swayable
- Ops: Levels
- Community: Outschool
- HR: Cerebral
🧠 Inspiration for the week
- Watch:Minto’s Pyramid Principle summarized by Michael Dearing — the secret to business communication
- Learn: Videos by Harrison Metal — An incredible collection of short educational videos about pricing, strategy, growth, and much more
- Read: TikTok and the Sorting Hat by Eugene Wei — read everything Eugene writes
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Sincerely,
Lenny 👋