Strategic Discipline Blog

Why create a flywheel for your business?

In A Map – The Journey from Good To Great we shared Jim Collin’s framework for building your business from Good to Great.

First Question:

Are you interested in your company becoming Great?

If not, no worries.  You can stop reading now.

Most entrepreneurs are relentless about improving their business.  In Turning the Flywheel Collins shares for the first time the framework to build your business from Good to Great.  (A reminder The Flywheel is the first step in the Third Stage, Disciplined Action in Collins’ framework.)

Last week,I worked with two businesses to help them construct their flywheels. 

One, a small medical practice, just developed an ambitious 10-year plan to reach $24M in revenue.  To achieve this kind of momentum requires keen insight into what drives growth.

The other company, a $3 billion-dollar supply chain provider, with a 200-year heritage wanted clarity on what drives their business growth.  

Changes in their industry, poor decisions, and mergers and acquisitions had reduced their market leadership.  Identifying their flywheel would bring clarity to the critical components that consistently drives their growth. Just as importantly it would yield what might be slowing down their momentum.

Due the sensitivity of this work, I cannot reveal their flywheels.

Following 6 Steps to Create Your Flywheel achieved an invigorating, highly stimulated and intense debate.  Both meetings concluded with agreement, enthusiasm, and clarity on how their businesses need to drive growth.

Snap, Click

“Snap-click went the flywheel,” Jim Collins describes the process of a successfully completed flywheel in Turning the Flywheel: A Monograph to Accompany Good to Great.

For both of my customers’ this feeling permeated both meeting rooms once we’d debated, argued, and debated again the merits of each component in their flywheel.

To prepare for these meetings I reviewed my successes with customers to discover how to reconstruct a flywheel.

One of my customers, a multiple car wash owner in California, discovered his flywheel by accident.

It started in a two-day Rockefeller Habits workshop in February of 2010.  In our discussion on Cash Conversion Cycle, my customer voiced his frustration with his car wash memberships.  Someone would constantly call customers each month because their credit card expired or changed.

He was considering eliminating memberships altogether.  The Cash Conversion Cycle emphasized the value of receiving payments before customers used his services.

He and his financial person crunched the numbers on membership customers.   Turns out car wash membership customers were 10x more valuable than his one-time customer. He not only stumbled upon his Profit per X, but also his X factor.

From that point on he focused his entire business around car wash memberships. He said, “Doug, I’m not in the Car Wash business, I’m in the membership business!”

His financial officer tracked the numbers while his managers focused 75% of their time to make sure customers’ expectations were met or exceeded.  

I’d shared the Net Promoter Score from the Frank Reichheld’s The Ultimate Question.  My customer hired a firm from India to call his customers, track answers to the Ultimate question and record voice responses to “What is the primary reason for the score you’ve just given us?”

Measuring results helped to determine how effective his managers were doing.

As he opened more car washes, he discovered when the car wash NPS score hit 55%, the car washes were profitable. It was a critical number for his managers to focus on.

In 2011 I attended his Christmas Party.  His system tracks vehicle license plates to each employee. Each wash provides a large bonus check to the employee responsible for the highest NPS score at each location. 

Review my car wash customers flywheel.

One of the most powerful aspects of the flywheel is the ability to identify the key processes in your business, score each component to identify where you need to improve. Notice how each component in the Autopia flywheel isn’t merely a “next action step on a list” but almost an inevitable consequence of the step that came before.

If you offer lower-cost car wash memberships, you almost can’t help but make sure your managers invest 75% of their time to ensure customers expectations are met or exceeded  And if you deliver superior results to your customers, you almost can’t help but build client loyalty. And if you build strong client loyalty, you almost can’t help but increase membership renewals and new customers. And if you grow car wash memberships, you can invest profits to expand to more car washes. And if you increase economies of scale, you almost can’t help but have lower costs that you can pass along to customers.

Scoring each component in your flywheel is an excellent way to accelerate momentum.

Would you like help discovering your flywheel?  Contact dwick@positioningsystems.com

Growth demands Strategic Discipline.

To build an enduring great organization you need disciplined people, engaged in disciplined thought, to take disciplined action, to produce superior results, to make a distinctive impact in the world.

Discipline sustains momentum, over a long period of time, to lay the foundations for lasting endurance. It’s the framework for Good to Great:

• Stage 1: Disciplined People
• Stage 2: Disciplined Thought
• Stage 3: Disciplined Action
• Stage 4: Build Greatness

Positioning Systems is obsessively driven to elevate your teams Discipline.  A winning habit starts with 3 Strategic Disciplines: Priority, Metrics and Meeting Rhythms.   Your business dramatically improves forecasting, accountability, individual, and team performance.

Creating Execution Excellence demands creating/defining, understanding, with creativity and DISCIPLINE your Flywheel.

Meeting Rhythms achieve a disciplined focus on performance metrics to drive growth.

Positioning Systems helps your business achieve these outcomes on the Four most Important Decisions your business faces:

Positioning Systems helps mid-sized ($5M - $250M) business Scale-UP. We align your business to focus on Your One Thing!  Contact dwick@positioningsystems.com to Scale Up your business! Take our Four Decisions Needs Assessment to discover how your business measures against other Scaled Up companies. We’ll contact you.

Next Blog: Accelerate Momentum - Score Your Flywheel 

Once you get the flywheel right, the question becomes: What do we need to do better to accelerate momentum? Next blog, score your Flywheel.