The Flywheel Concept is a term first used by Jim Collins in his book ‘Good to Great’ to explain how companies can make incremental improvements that at some point work together to achieve tremendous growth.
Collins showed how Amazon’s Flywheel helped the company grow and achieve scale to become the incredible powerhouse it is today.
In this episode, Dave breaks down how your company can map out your own flywheel and leverage it to build momentum, achieve scale and enhance top and bottom line financial performance.
It’s the No Bullshit Marketing Show. I’m Dave Mastovich, CEO and founder of MASSolutions, the world’s only no bullshit marketing consultancy. What can you learn from Amazon’s flywheel concept? Whether you love Amazon, hate Amazon or begrudgingly put up with Amazon, we can all admit, it’s an amazing success story that has changed all of our lives and continues to impact all of our lives.
The beauty of how Amazon was built, and has grown, is that it all began on a napkin with their strategic development of something that was discussed a lot in the seminal book, Good to Great. Good to Great is one of those legendary business books that regardless of when you read it, what your age is at that time, and what year you’re reading it, it still has relevance and still applies. And in the book Good to Great, they talk about the concept of a flywheel. A flywheel is in the machine industry. It spins and makes the process smoother, and everything builds upon each other. Well, that’s the concept of a flywheel for business is that you have this wheel of things that work together and continue to spin and make the operation smoother. And then you just go faster and faster and your growth comes in, you achieve your goals of market share, and scale and customers and profits. Well, in the book, Good to Great, the flywheel is discussed and the Amazon example is shown. And the Amazon example covers a lot of different things, and I pulled it up here on my phone, just so I’m speaking from some level of exactness because you see multiple v
ersions of the Amazon flywheel. In the book Good to Great, the one that they’ve shown is kind of scribbled out, and it’s probably the one that was originally there, and overtime, they slightly tweaked it. But the concept of Amazon’s flywheel was that they wanted to have a combination of the lowest cost structure, lowest price, more choice, and more sellers, which would lead to more customers. Now you can see how this concept of flywheel would work. If you have the lowest cost, and if you have more sellers, and you have more offerings, you’re going to get more customers. And when you get more customers, that scale is going to kick in, and you’re going to be able to have even lower prices, you’re going to get more people who want to sell, which means you have more offerings, which means you’ll get more customers, which means you’ll be able to continue to offer the lowest prices, get more people to want to sell, have more offerings, get more customers, and so on, and so on. That’s the example of one of the most successful growth companies in the history of business.
But the beauty of it is we can think in terms of a flywheel. And think from a marketing strategy standpoint because a flywheel combines marketing and customer strategy with operational strategy and organizational strategy. So it’s the one thing that really does combine all those strategies. And part of the reason strategy, I’m going to divert a little bit here, but again, part of the strategy can be a lightning rod or cause stress or cynicism or frustration is because people don’t really understand that there is organizational strategy. How are we going to be built? What’s our structure going to be like? What type of leadership and management? And there’s financial strategy, how you’re going to price things and what you’re going to do and what your philosophy is. And then there is marketing strategy, which customers you want to target and who you want to reach, connect and engage with. So there’s multiple types of strategy. And most people just go yeah, I do strategy, we’re strategic, or we do strategy, we do marketing strategy. And that’s really just a tactic they’re discussing. But the flywheel was beautiful because when you develop your flywheel, you’re able to, first of all, have the way that your company is going to build upon everything that you do to keep getting better and better and better and better at what your major objectives are. It’s also going to help you to better understand who your customers are and who you want them to be, and how you market.
So developing that flywheel can be huge for you. It was obviously huge for Amazon. Remember, Amazon’s flywheel was that they wanted to have the lowest cost offerings, they wanted to have more choices, more selection, they wanted to have more sellers, which would lead to more customers, and help them achieve scale. And when they had more customers, they’d be able to offer the lowest prices, and get more people wanting to sell. They’d be able to continually scale, which leads to getting more customers, and so on, and so on. So your business needs to think in terms of your marketing strategy, which looks at which customer segments do you want to be in? Which ones are you already in? It looks at how you’re going to systematically learn what those customer segments think, feel and want, then how you’re going to give that to them, when and where they want it at a price they’re willing to pay. Because then you can do the fun part, which is to tell them about it again and again. When you tell them about it, it’s a story built by and for and about your customers, built by and for about your customers. If you start thinking of this in terms of marketing strategy, you start thinking in terms of developing your flywheel, you can get exponential growth and achieve that scale, and the operational efficiency and marketing efficiency and financial efficiency by spinning and building upon each other.
I’m encouraging you to take that leap into trying to develop your flywheel, just as Amazon did, so that you have a true marketing strategy to go along with your organizational strategy and your financial strategy and operational strategy. I want to practice what I preach. Let me tell you a little bit about the MASSolutions flywheel, which we’re excited about. Everyone on the team just talks about it and gets pumped because it is what we’re passionate about and what gets our customers the results that they get. And they stick with us for so long or come to us when they have the most difficult challenges ahead of them. So the MASSolutions flywheel starts with systematically gather insights. You’ll hear me talk a lot about the science of marketing and the science of storytelling.
There’s a science to systematically gathering insights, and those insights might be qualitative insights gained from talking to customers and tracking what we were told. It might be quantitative market research, it should be tied to target market segmentation, and competitive analysis. It might be using tools like predictive index to see who’s doing what and why and what energizes versus what drains them. So systematically gathering insights is the first part, the top part, of the MASSolutions flywheel. But then we want to leverage the experience, expertise and instincts of each team member. So we’ve gathered these insights, and we continue to gather and leverage the experience, expertise and the instincts of team members. That enables us to then develop customer experience solutions, and to create stories. You see, when you systematically gather insights with our intellectual property, how we do that, and we leverage our experience, expertise and instincts, we come up with customer experience solutions that help our clients and our clients’ clients. They help our customers and our customers’ customers, whose customer experience solutions. And they enable us to develop top and bottom line storytelling, which goes to the next piece of the flywheel, which helps us reach, connect and engage with the target audiences of our clients or customers, reach, connect and engage with those customers, to change behaviors and mindsets.
While we’re doing that, while we’re reaching, connecting and engaging, and while we’re changing behaviors and mindsets, we’re still systematically gathering insights. And we’re still leveraging the experience, expertise and instincts of each MASSolutions team member, which leads us to develop more customer experience solutions and to create better, stronger, more memorable top and bottom line stories, which reach, connect and engage with target audiences to change behaviors and mindsets. And our flywheel goes round and round, and helps our customers again and again. So you can see I’m passionate about the MASSolutions flywheel. I’m equally passionate about helping you create your flywheel. Let us help you create your flywheel so that you’re able to benefit the way MASSolutions has. But forget about MASSolutions, benefit the way Amazon has and other great growth companies. Your flywheel can do that for you. Let us help you with that, and along the way, we’ll develop customer experience solutions and create memorable engaging top and bottom line storytelling for you so you can reach, connect, engage your customers, and change behaviors and mindsets. Thanks for listening to another episode of the No Bullshit Marketing Show, recorded here in MASSolutions studio in bold, beautiful, downtown Pittsburgh, Pennsylvania. Remember, ask yourself, what’s the big idea? And build your story around the answer. It’s all about bold solutions. No BS.