Product #64

Turning the Flywheel · Jim Collins · 2019

I can remember when I first saw the now famous Amazon flywheel diagram. It’s simplicity and power was genuinely captivating. The flywheel is the single most important concept from ‘Good to Great’. It deserves this monograph. Few companies operate with the clarity of a well understood strategic flywheel. This incredibly brief and insight dense explainer is worth your time.

Highlights

In a good-to-great transformation, there’s no miracle moment. It feels like turning a a heavy flywheel. Pushing with great effort at first, just to move an inch. With persistent effort you can do an entire rotation. If you don’t stop you’ll build speed, and the wheel will move faster, the time between rotations diminishes. At some point, the flywheel is moving forward with unstoppable momentum.

You need to find your flywheel to get the power of strategic compounding. Bezos turned Amazon into a repeating loop, a virtuous cycle

• Lower prices → more customer visits
• Move visits → more 3rd party sellers (paying commission)
• More sellers → expand the store and distribution (fixed costs)
• Expand distribution → Grow revenues per fixed cost (efficiency)
• Grow revenues per fixed cost → Lower prices  🔁

It takes great discipline in bad times not to abandon the flywheel

Each component isn’t just a next step, it’s an inevitable consequence of the step that came before.

The most common strategic mistake is failing to aggressively and persistently make the most of victories. Don’t be seduced by the endless search for the next best thing. Intel didn’t have to abandon it’s flywheel to move from memory to micro-processors. They just had to transfer the momentum from one product to the next. ‘The big thing’ is your underlying flywheel, not a product line.

Steps to Capturing Your Flywheel

1. Create a list of significant replicable successes your enterprise has achieved
2. Compile a list of failures and disappointments
3. Compare the two . What do they tell us about our flywheel components?
4. Using components you’ve identified sketch the flywheel
• Where does it start?
• What follows next?
• Explain why each component follows the other (and sits before the next)
5. Limit to 6 or fewer components. Does your empirical experience validate it?
6. Test it against your success and disappointments. Tweak it until its a better explainer.
7. Test the flywheel against the three circles of your hedgehog concept?
• Your hedgehog concept:
• What you’re deeply passionate about?
• What you can be the best in the world at?
• What drives your economic or resource engine?

You cannot falter on any primary component and sustain momentum. Your performance is only as good as the weakest link. Confront the brutal facts, practice productive paranoia.

Make big bets, after validating that they would pay off. First fire bullets, then cannonballs.

Many companies that fail abandon the key principles that made them great. Demise tends to happen in 5 stages:

1. Hubris born of success
2. Undisciplined pursuit of more
3. Denial of risk and peril
4. Grasping for salvation
5. Capitulation to irrelevance or death

The big winners take a flywheel from ten turns to a billion turns, rather than starting new flywheels and taking them through a few turns. Apply creativity and discipline to each and every turn with as much intensity as you cranked out your first turn

Be relentless about building momentum.

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Brand Men Meno · Neil McElroy · 1931

1. Study carefully shipments of his brands by units:
2. Where brand development is heavy and where it is progressing, examine carefully the combination of effort that seems to be clicking and try to apply this same treatment to other territories that are comparable.
3. Where brand development is light
1. Study the past advertising and promotional history of the brand; study the territory personally at first hand - both dealers and consumers - in order to find out the trouble.
2. After uncovering our weakness, develop a plan that can be applied to this local sore spot. It is necessary, of course, not simply to work out the plan but also to be sure that the amount of money proposed can be expected to produce results at a reasonable cost per case.
3. Outline this plan in detail to the Division Manager under whose jurisdiction the weak territory is, obtain his authority and support for the corrective action.
4. Prepare sales helps and all other necessary material for carrying out the plan. Pass it on to the districts. Work with the salesmen while they are getting started. Follow through to the very finish to be sure that there is no let-down in sales operation of the plan.
5. Keep whatever records are necessary, and make whatever field studies are necessary to determine whether the plan has produced the expected results.
4. Take full responsibility, not simply for criticizing individual pieces of printed word copy, but also for the general printed word plans for his brands.
5. Take full responsibility for all other advertising expenditures - Field, D.C.A. etc. - on his brands.
6. Experiment with and recommend wrapper revisions.
7. See each District Manager a number of times a year to discuss with him any possible faults in our promotion plans for that territory.

In short, when the brand men have approached their fullest responsibilities, they should be able to take from the shoulders of the Division Managers and of the District Managers a very heavy share of individual brand responsibility. This would leave the sales heads in a much freer position to administer the sales policies of the Company and apply general volume pressure without having to give such a large proportion of their time to thought on how to bring up volume on a certain brand in a certain part of the territory.

Some trace back the genesis of Product Management to the ‘Brand Men’ of the 1930s. For me the headwaters of Product Management can be found much later, when we started making digital products in the late 90s.

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Book Highlights

Product managers must determine which business metrics require the most attention. What effect are they trying to create? Are they trying to influence customer behavior? If so, how? Are they trying to increase performance? If so, by what measure? These metrics must be linked to a larger business impact. Jeff Gothelf & Josh Seiden · Lean UX

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat Author · Book

Creating an empathy map for stakeholders is another valuable tool for understanding their perspective. Tom Greever · Articulating Design Decisions

On a whiteboard, ask the highest paid person in the room to write down the current strategic goal for the year at the top on a series of Post-it notes. Below that, ask that same person (or another executive) to list out the measures of success for that strategy (hint: these should be impact metrics and are often lagging indicators). Below each impact metric, start to draw lines protruding away from each one (like you’re building an org chart). Ask the room to fill out the line below the impact metrics with customer behaviors that drive those metrics (leading indicators). Use Post-its and have everyone work individually on an initial brainstorm. Now have the team do another row below the last one showing the customer behaviors that drive the initial set of outcomes. Jeff Gothelf and Josh Seiden · Lean UX

You don’t need to learn what customers say they want; you need to learn how customers behave and what they need. In other words, focus on their problem, not their suggested solution. Cindy Alvarez · Lean Customer Development

If you know one word is already in a topic, then you’ve information about whether another word should be there. This is what Gibbs sampling takes advantage of. Kim Falk · Practical Recommender Systems

Most people don’t even want to acknowledge that there are opinion-driven decisions or that they have to make them. Because if you follow your gut and your gut is wrong then there’s nowhere else to cast blame…. That’s why some managers and execs and shareholders demand data even when there is none and then chase that imaginary data directly into the abyss. Tony Fadell · Build

Quotes & Tweets

Many of the leading growth teams regularly run 20 to 30 experiments a week... Morgan Brown & Sean Ellis

Being happy with what you have doesn't prevent you from pursuing what you want. Shane Parrish