Turning the Flywheel Read online

  But how to turn a single product into a sustained flywheel, especially as a garage start-up? Gentes studied Nike and gleaned an essential insight. There’s a hierarchy of social influence for athletic gear. If, for instance, you get a Tour de France winner to wear your helmet, serious nonprofessional cyclists will want to wear that helmet, which then starts the cascade of influence and builds the brand. Gentes validated this insight when he bet a substantial portion of the company’s meager resources on sponsoring elite American cyclist Greg LeMond to wear a Giro helmet. In the dramatic finale of the 1989 Tour de France, everything came down to the final stage, a time trial into Paris. LeMond overcame a 50-second deficit at the start of the time trial to win the entire Tour by a mere 8 seconds—after a 23-day race—wearing an aerodynamic Giro helmet as he rocketed down the Champs-Élysées. Suddenly, it became very cool for serious riders to wear a helmet, so long as it was a Giro.7

  And so, by adopting a key insight from Nike’s flywheel and blending it with his own passion for inventing great new products, Gentes created a flywheel that propelled Giro far beyond the garage: Invent great products; get elite athletes to use them; inspire Weekend Warriors to mimic their heroes; attract mainstream customers; and build brand power as more and more athletes use the products. But then, to maintain the “cool” factor, set high prices and channel profits back into creating the next generation of great products that elite athletes want to use.

  A flywheel need not be entirely unique. Two successful organizations can have similar flywheels. What matters most is how well you understand your flywheel and how well you execute on each component over a long series of iterations.

  As Gerard Tellis and Peter Golder demonstrated in their book, Will and Vision, the pioneering innovators in a new business arena almost never (less than 10 percent of the time) become the big winners in the end. Similarly, across all our rigorous matched-pair research studies (Built to Last, Good to Great, How the Mighty Fall, and Great by Choice), we found no systematic correlation between achieving the highest levels of performance and being first into the game. This proved true even in innovation-intensive industries such as computers, software, semiconductors, and medical devices. Amazon and Intel started life in the wake of pioneers that preceded them; Advanced Memory Systems beat Intel to market in the early days of the DRAM-chip business, and Books.com preceded Amazon in online bookselling.8 To be clear, the big winners in corporate history consistently surpassed a threshold level of innovation required to compete in their industries. But what truly set the big winners apart was their ability to turn initial success into a sustained flywheel, even if they started out behind the pioneers.9

  NOT JUST FOR CEOS

  Now, you might be thinking, “But I’m running a unit deep within a much larger organization. Can I build a flywheel?” Yes. To illustrate, let’s look at a unit leader—an elementary school principal—who harnessed the flywheel effect within the walls of her individual school.

  When Deb Gustafson became principal at Ware Elementary School, located on the Fort Riley Army base, she inherited one of the first Kansas public schools to be put “on improvement” for poor performance, with just one-third of students hitting grade level in reading. Not only did Gustafson struggle with a high student-mobility rate (due to transfers and deployments), but she also faced a 35-percent teacher-mobility rate.10 And the children faced a special type of adversity, the stressful life of military families in wartime. It’s one thing if your mom or dad has to travel for work; it’s entirely another to see your mom or dad deployed to a combat zone. These kids don’t have time to wait, Gustafson told herself. If we fail them at first grade or second grade, if they leave our school unable to read, we’ve failed them for the rest of their lives. We simply cannot fail.

  Teaching is a relationship, not a transaction, and Gustafson believed that relationships could be built only on a foundation of collaboration and mutual respect. When parents are being shipped off to war, when families must sacrifice in service to country, the last thing kids need is warring factions inside their school. They need to feel a sense of calm, that the staff is there for them and is united in a mission to support them. Gustafson later described how she immediately grasped the applicability of the flywheel concept to her school when she read Good to Great and the Social Sectors. “When I got to the part about turning the flywheel, I was bouncing up and down out of my seat,” said Gustafson. “I love the idea that if you can get everyone pushing the flywheel, all going in the same direction, it just starts working automatically.”

  Gustafson didn’t wait for the district superintendent or the Kansas Commissioner of Education or the U.S. Secretary of Education to fix the entire K–12 system’s flywheel. She threw herself into creating a unit-level flywheel right there in her individual school.

  Flywheel step 1: Select teachers infused with passion. “We could not easily attract experienced teachers to teaching on a military base in rural Kansas,” explained Gustafson. “So, I focused on passionate potential, even if inexperienced, figuring that people with the right values and irrepressible enthusiasm could be harnessed and shaped into effective teachers.” All that passionate energy pulsating through the halls got the flywheel going, but it had to be guided, channeled, harnessed; it would simply make no sense to just throw inexperienced teachers into the classroom completely unprepared. That drove Gustafson to flywheel step 2: Build collaborative improvement teams. Each teacher would join a team led by an experienced Ware teacher who exemplified the culture. The mechanism generated cohesion and momentum as teams met in collaborative improvement meetings at least once per week, teachers coming together to share ideas, get feedback, discuss individual student progress, and improve the Ware teaching recipes.

  But, of course, you can improve only if you know how you’re doing and how each child is progressing. And that threw Ware right into flywheel step 3: Assess student progress, early and often. A continuous stream of data, shared and discussed in teams, generated energy—We have to succeed for every child! We can’t let any child fall behind! Each kid matters! Teachers and teams set goals and crafted specific plans to help children who might be falling behind. The momentum increased as teams met quarterly with school leaders to further refine student plans and keep the flywheel spinning toward step 4: Achieve learning, each and every kid. Gustafson and her teachers took a school in which fewer than 35 percent of students were reading at a satisfactory level and changed the trajectory: They hit 55 percent at the end of year 1, 69 percent at year 3, 96 percent at year 5, then 99 percent at years 7, 8, 9, and beyond.11

  All this fed right into flywheel step 5: Enhance the school’s reputation, not just for results but also as a great place to teach. And that, in turn, brought the flywheel around to step 6: Replenish the passionate-teacher pipeline. Along the way, Ware earned status as a professional-development school at Kansas State University, further feeding the flywheel with a continuous stream of student teachers and interns. “We’d get passionate people with teaching potential into the building, and they’d fall in love with our school,” explained Gustafson. “It’s about the culture, and the relationships, and the collaboration with your teammates to improve and deliver for the kids—all that made us attractive to the right people. And that kept the pipeline of passionate people flowing so that we could turn the flywheel year after year after year.” At the time of this writing, the Ware flywheel Gustafson created had been turning for more than fifteen years, touching as many as nine hundred military children per year.12

  Leaders who create pockets of greatness at the unit level of their organization—leaders like school principal Gustafson—don’t sit around hoping for perfection from the organization or system around them. They figure out how to harness the flywheel effect within their unit of responsibility. No matter what your walk of life, no matter how big or small your enterprise, no matter whether it’s for-profit or nonprofit, no matter whether you’re CEO or a unit leader, the question stands, How does your fl
ywheel turn?

  You’ll find the flywheel effect in social movements and sports dynasties. You’ll find the flywheel effect in monster rock bands and the greatest movie directors. You’ll find the flywheel effect in winning election campaigns and victorious military campaigns. You’ll find the flywheel effect in the most successful long-term investors and in the most impactful philanthropists. You’ll find the flywheel effect in the most respected journalists and the most widely read authors. Look closely at any truly sustained great enterprise and you’ll likely find a flywheel at work, though it might be hard to discern at first.

  Before I move on to the question of how to think about changing and extending a flywheel, let me illustrate how far afield the flywheel principle can apply. I’ll close out this section with a highly creative nonprofit, the Ojai Music Festival, which produces an annual musical adventure performed by some of the best musicians and composers from around the world in a magical place.

  The Ojai flywheel cycle starts with attracting unconventional and exceptional talent. Each year, a different music director assumes responsibility as the chief musical curator. From composers like Igor Stravinsky and Pierre Boulez in its early days to violinist Patricia Kopatchinskaja and pianist Vijay Iyer in the contemporary era, each music director brings his or her own distinctive genius, sparking creative renewal right from the get-go.13 It’s as if the festival puts up a blank canvas with an unstated challenge—all we ask is that you paint a masterpiece. Except that instead of a painting on a canvas, the masterpiece composition is a musical experience that engulfs artists and audience alike. “We’ve been able to attract unconventional talent to Ojai for two key reasons,” explained Tom Morris, artistic director of the festival for nearly two decades. “First, they’re energized by whom they get to play with, and second, they’re energized by the fact that we unleash their creativity. It’s like a big snow globe; you shake it up and see what comes down.”14

  The next flywheel step flows from a rigorous constraint. The festival lasts just four days, period. All that transcendent creativity, the snow globe of swirling ideas, must be forged into a tight program. Most ideas—even many great ideas—have to be cut in the end. And that brings us to the crucial insight, the causal link that snapped the flywheel around, from wild creativity to enhanced community support. “We don’t want to evoke an appreciative audience response,” Morris explained. “We want to provoke a passionate audience reaction.”

  Morris tells the story of a town resident who hadn’t attended the festivals because he didn’t like “that kind of music.” But one day, the resident happened to walk into a festival performance of “Inuksuit,” a spatial piece for nine to ninety-nine percussionists composed by John Luther Adams. By “walk into,” I don’t mean that he walked into the back of a concert hall with an orchestra far away on stage; he quite literally walked into the middle of the performance, with the players spread throughout a town park as they played amidst groves and paths, and the audience surrounded by sounds coming from all sides. There were tom-toms, cymbals, triangles, glockenspiels, sirens, piccolos, and all sorts of drums of various sizes and shapes. The music gradually rose from quiet to raucous, then began quieting down until it tapered off to its conclusion, seamlessly supplanted by the chirping of local birds chiming in from the trees. As players periodically moved to different stations throughout the park, some even climbing up into trees while the audience roamed and milled about, the unfolding performance enveloped them all.15 Snap-click went the flywheel, and the once-skeptic who didn’t like “that type of music” found himself transfixed by the experience and transformed into a passionate supporter of the festival.16

  Morris and his colleagues understood that the most committed audience members want to be engaged, inspired, challenged, surprised, stunned, overwhelmed. They don’t want to have a “nice listening moment” that they forget. They want to grow from a transformative musical experience that ignites the spirit and has a lasting emotional impact. And each time the festival delivered on that promise, the flywheel spun around, fueling the resource engine, building Ojai’s reputation, and attracting the next wave of unconventional talent to create the next masterpiece and turn the flywheel anew.

  EXECUTE AND INNOVATE—RENEWING THE FLYWHEEL

  Once you get the flywheel right, the question becomes, What do we need to do better to accelerate momentum? The very nature of a flywheel—that it depends upon getting the sequence right and that every component depends on all the other components—means that you simply cannot falter on any primary component and sustain momentum. Think of it this way. Suppose you have, say, six components in the flywheel, and you score your performance in each from 1 to 10. What happens if your execution scores are 9, 10, 8, 3, 9, and 10? The entire flywheel stalls at the component scoring 3. To regain momentum, you need to bring that 3 up to at least an 8.

  The flywheel, when properly conceived and executed, creates both continuity and change. On the one hand, you need to stay with a flywheel long enough to get its full compounding effect. On the other hand, to keep the flywheel spinning, you need to continually renew, and improve each and every component.

  In Built to Last, Jerry Porras and I observed that those who build enduring great companies reject the “Tyranny of the OR” (the view that things must be either A OR B but not both). Instead, they liberate themselves with the “Genius of the AND.” Instead of choosing between A OR B, they figure out a way to have both A AND B. When it comes to the flywheel, you need to fully embrace the Genius of the AND, sustain the flywheel AND renew the flywheel.

  The Cleveland Clinic became one of the most admired healthcare institutions in the world by embracing the Genius of the AND—consistency AND change—in its flywheel. The flywheel traces its roots back to the clinic’s founding, when three physicians served in World War I and came away inspired by military teamwork. When you’re serving soldiers carried off the battlefield, you don’t ask, “Hey, what’s my reimbursement rate? Am I going to get a bonus for this?” You work shoulder to shoulder with your colleagues, throwing whatever skills you have into the mix to save as many lives as possible and get them home to the people they love.

  From this life-shaping experience, the three physicians vowed to create a distinctive new medical center after the war, one with a highly collaborative culture filled with people utterly obsessed with caring for patients. From its inception, the Cleveland Clinic focused on attracting first-rate physicians who would work on salary—no incentives based on the number of patients or procedures—because they’d be motivated primarily by working with world-class colleagues with a singular goal, do what’s best for the patient. The Cleveland Clinic flywheel begins with the right people operating in a culture that drives patient outcomes, which then feeds into attracting patients and building the resource engine, which can then be redeployed to build capabilities and attract more of the right people to drive the flywheel around.17

  When Dr. Toby Cosgrove became CEO of the Cleveland Clinic in 2004, he deeply understood both the spirit and the logic of the flywheel. A military physician as a young man, he’d been deployed to the Vietnam War and was put in charge of a hospital; like the founders, he’d learned firsthand about working in teams and mobilizing all sorts of people with different skills to get things done in the chaos of incoming battlefield casualties. He joined the Cleveland Clinic in 1975 as a cardiac surgeon and led its heart program to a number-one ranking in U.S. News & World Report. Yet even with all this success, Cosgrove sensed that the Cleveland Clinic needed to rededicate itself to the proposition that the patient must come first. He challenged himself and his colleagues to address what needed to be changed, improved, and created to better serve the patient. For instance, they realized that a traditional structure organized by competencies (surgery, cardiology, etc.) favored medical tradition over working across specialties to best serve the patient. So, they instituted a structural change, creating institutes around patient needs, such as the Miller Family Heart & Va
scular Institute that housed physicians from all the relevant specialties in the same location.

  In his book, The Cleveland Clinic Way, Cosgrove details the myriad of changes put in place to renew the flywheel—changes big and small, strategic and tactical, structural and symbolic. From 2004 to 2016, the flywheel gained a huge burst of momentum—doubling revenues, patient visits, and research funding—while the Cleveland Clinic exported its brand across a growing network, from Ohio to Florida to Abu Dhabi. They renewed every component of the flywheel, but they didn’t dismantle it. “Underneath, it’s the original flywheel,” said Cosgrove. “We reinvigorated it.”18

  There are two possible explanations for a stalled or stuck flywheel. Possible explanation #1: The underlying flywheel is just fine, but you’re failing to innovate and execute brilliantly on every single component; the flywheel needs to be reinvigorated. Possible explanation #2: The underlying flywheel no longer fits reality and must be changed in some significant way. It’s imperative that you make the right diagnosis.

  Over the long course of time (multiple decades), a flywheel might evolve significantly. You might replace components. You might delete components. You might revise components. You might narrow or broaden the scope of a component. You might adjust the sequence. These changes might happen by a process of invention, as you discover or create fundamentally new activities or businesses. Or they might happen by a process wherein you confront the brutal facts and practice productive paranoia about existential threats to your flywheel. For example, a company whose business model depended on collecting the personal information of millions of people found its flywheel imperiled by a data breach. Members of the executive team realized that they needed to insert a component dedicated to protecting privacy and earning trust. The rest of the flywheel remained intact, but without this vital new component, the company might have woken up one day on the verge of extinction.