*Flywheel Image
Imagine that your
task is to rotate a massive 30 foot, 5000 pound disk. You push with great
effort, you get the flywheel to inch forward and after a few hours you get the
flywheel to complete one turn. You keep pushing, and the flywheel begins to
move a bit faster, with continued great effort, you move it around a second
time. You keep pushing in a consistent direction. Then three turns…four….five…
the flywheel builds up speed…six turns…seven….eight…it builds momentum…
20…30…50…a hundred. Then at some point – breakthrough! The momentum of the
whole thing works in your favor.
*Buildup and Breakthrough
The good‐to‐great
companies came about by a cumulative process – step by step, similar to
spinning the flywheel above. There was no single defining action, no one killer
innovation, and no solitary lucky break. One Fannie Mae representative on the
‘magic moment’:
“There was no one
magical event, no one turning point. It was a combination of things. More of an
evolution, though the end results were dramatic.” The cumulative value of a $1
invested in Fannie Mae in 1984 would be worth $64.17 in 2000.
*The Flywheel Effect
Think of a
circular model that continues to wrap around highlighted by four themes:
1. Accumulation of
visible results
2. People line up,
energized by results
3. Flywheel builds
momentum
4. Steps forward,
consistent with Hedgehog Concept
*The Doom Loop
Rather than
accumulating momentum – turn by turn of the flywheel – the comparison companies
tried to skip buildup and jump immediately to breakthrough. Then, with
disappointing results, they’d lurch back and forth, failing to maintain a
consistent direction.
Doom Loop Model:
1. No buildup; no
accumulated momentum
2. Disappointing
results
3. Reaction,
without understanding
4. New
direction, program leader, event, fad, or acquisition
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