Why start-ups need flywheels to become scale-ups

A key feature of a flywheel is that the process is circular, not linear like a funnel. So, instead of the energy all being used, or wasted, on a single process, it can be redirected - fuelling further growth.

Flywheels have become increasingly trendy lately. 

A popular replacement for the marketing ‘funnel’, the flywheel of growth has been adopted and adapted by numerous corporates, largely inspired by Amazon

Enthusiasts credit the idea with stimulating exponential growth. But is the flywheel really the powerful system it is claimed to be? And can it be used anywhere?

How flywheels focus on growth

In engineering, flywheels can be used to store and then release energy. 

They have been used in engineering for hundreds of years, but perhaps the easiest way to understand the analogy is with a simple children’s spinning top.

When you spin the top, the more powerful the initial spin, the longer it lasts. Other factors are at play too. Its weight and balance will affect the length of spin. And spinning on a surface with as little friction as possible helps it keep going. 

These analogies cross over well into startups looking to grow.

A key feature is that the process is circular, not linear like a funnel. So, instead of the energy all being used, or wasted, on a single process, it can be redirected – fuelling further growth.

Amazon is an example of how the flywheel principles can be applied. 

Using a simple funnel approach, they might have focused on simply fulfilling the orders for their original online bookstore. 

But instead, they expanded. 

Taking advantage of a large customer base, they expanded their range, which attracted more shoppers. Those shoppers attracted other retailers, who could use Amazon as a storefront, which in turn attracted more shoppers.

If they had used a funnel approach, they might have focused on improving their initial business selling books. Perhaps refining their logistics or looking at customer service. 

But by making their flywheel heavier with more customers and retailers, they had more power to fuel their expansion. The flywheel helped make Amazon the giant it is today.

Flywheels are ideal for startups

Can start-ups learn from the flywheel of growth? 

After all, a start-up exists to grow.

The good news is that flywheel principles can be applied at any scale and at any stage.

Start by thinking about the power input. Whether from the founder, or staff, it needs to be aligned with the vision to ensure its effect is maximized.

Then think about what goes into your flywheel, and how it could generate more power. 

Your flywheel might take customers and engage them, turning them into promoters and bringing in more customers, starting the process again. 

Or you can use your customer base to develop partnerships, which in turn attracts more customers.

Then, think about the friction, the things that get in the way, either of customers or your team. What can you do to remove that friction?

You might empower your staff to make decisions that support the business, ensuring it is agile and responsive.

Or reduce sign-up requirements to make it easier for customers to buy from you.

Keep refining

The more you question your flywheel, the more value you can extract from it:

  1. How can you make your flywheel more efficient?
  2. How can you help it drive further growth?
  3. How can you make sure it keeps spinning?

Everyone’s flywheel will look different.

But by embedding flywheel principles from the very start, it might soon look less like a flywheel – and more like a dynamo that drives your growth.

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