Podcast Ep 50 | Jim Collins Flywheel Concept

The Jim Collins Fly­wheel con­cept was devel­oped in the book Good to Great. No mat­ter how dra­mat­ic the end result, good-to-great trans­for­ma­tions nev­er hap­pen in one fell swoop. In build­ing a great com­pa­ny or social sec­tor enter­prise, there is no sin­gle defin­ing action, no grand pro­gram, no one killer inno­va­tion, no soli­tary lucky break, no mir­a­cle moment. Rather, the process resem­bles relent­less­ly push­ing a giant, heavy fly­wheel, turn upon turn, build­ing momen­tum until a point of break­through, and beyond.

Kevin & Brad dis­cuss The Jim Collins Fly­wheel con­cept in detail — and review how to cre­ate, val­i­date, and speed up your flywheel.

In addi­tion, they high­light how to lever­age, mea­sure, and opti­mize your flywheel.

EPISODE TRAN­SCRIPT

Please note that this episode was tran­scribed using an AI appli­ca­tion and may not be 100% gram­mat­i­cal­ly cor­rect – but it will still allow you to scan the episode for key content.

Kevin Lawrence 00:13

Hey there, wel­come to the growth whis­pers pod­cast where every­thing we talk about is about help­ing lead­ers and their teams build endur­ing great com­pa­nies, awe­some com­pa­nies, the kinds of com­pa­nies that we want to read about for decades, kinds of com­pa­nies, we’d like to work at kinds of com­pa­nies that we actu­al­ly like to do busi­ness with kinds of com­pa­nies that real­ly make a pos­i­tive impres­sion on the plan­et, and cre­ate oppor­tu­ni­ties for those around them, and great returns for their share­hold­ers. So I’m Kevin Lawrence. And I’m joined today by my co host, Brad Giles, Brad, how you doing today?

Brad Giles 00:47

Very, very good. Thank you. Good and very inter­est­ed to talk about our sub­ject today. As always, we’ve got a word or phrase of the day, Kevin, yes. What is your word or phrase?

Kevin Lawrence 01:01

I’ll let you go first today, Brad, I haven’t had a chance to think about it. But I’d like you to go first.

Brad Giles 01:10

My word today is spi­ral. So I do a newslet­ter each week. And I, we were talk­ing about this before the show, it’s some­thing that’s been on my mind. So when we think about the work that we do, which is reg­u­lar rhyth­mic meet­ings with lead­er­ship teams, it may look to oth­er peo­ple that were just going around in cir­cles wher­ev­er we made every quar­ter we made every year. And it’s like, yeah, you know, like, they just come in, and they do the same things. And if you look at it only from one angle, yeah, it looks like you’re going around in cir­cles. But if you look at it from anoth­er angle, and if you think about a spi­ral that’s going around in cir­cles, but each time it’s going up high­er and high­er and high­er, it’s actu­al­ly a dif­fer­ent per­spec­tive, because that’s what we real­ly see is orga­ni­za­tions going high­er and high­er. Yeah, up in a spi­ral Up, up, up, up high­er. So yeah, my word that’s what’s on my mind, I wrote about it this week. And I’m real­ly been think­ing, I have real­ly been think­ing about spiral.

Kevin Lawrence 02:23

And I men­tioned to you and I was con­sid­ered writ­ing a book around that same con­cept, because I believe in it, because it’s not only you have more per­spec­tive, in terms of being at a high­er lev­el, you have more insight, because you have greater under­stand­ing and intel­li­gence about what­ev­er it is that you’re doing. It’s a super-pow­er­ful con­cept. And that way, it’s not Ground­hog Day, where it looks the same. And by the way, if you’re deal­ing with the same prob­lems all the time, that means you’re prob­a­bly not build­ing momen­tum, which some­thing we’ll be talk­ing about today. So my word today, I’m going to riff off what you’re say­ing is spy. And I was watch­ing this inter­est­ing doc­u­men­tary series just for a lit­tle bit on the week­end, about spies, and how they get infor­ma­tion on gov­ern­ments in par­tic­u­lar. But we also know some of this stuff hap­pens in com­pa­nies. So not advo­cat­ing, you know, ille­gal infor­ma­tion gath­er­ing. But there, what’s amaz­ing out there is, is the amount that peo­ple will glad­ly share with you. And I remem­ber an exec­u­tive from a soft drink com­pa­ny that will remain unnamed, that I met in an air­port lounge after he’d had a good half dozen cock­tails. And until I joined them, you know, he was prob­a­bly going on to sev­en, I was on one. And I’m curi­ous, and holy, did he tell me stuff. And this mas­sive glob­al bev­er­age com­pa­ny, he told me what it was like in the board­room, because he was in one of those posi­tions to put them in a board­room. Wow. And let’s just say, imag­ine two mas­sive polar bears fight­ing polar bears, fight­ing, try­ing to kill each oth­er. That’s what it was, like in the board­room of this com­pa­ny, and the sto­ries that he was telling me, just, any­way, so the point is, is it’s spy and that is, where can you legal­ly gath­er intel­li­gence about the com­pa­nies that you com­pet­ed most against or the mar­kets that you’re in? And most peo­ple under­uti­lize it? And it’s as sim­ple some­times as call­ing up a CEO of a com­peti­tor? And talk­ing to them and hav­ing a will­ing­ness to, you know, get to know them get to know you and a lot of com­peti­tors do col­lab­o­rate on some ways, right? Some­times they have no back­up sup­ply for you today. So let’s spy. How can you get addi­tion­al infor­ma­tion or have rela­tion­ships that are trans­par­ent but ben­e­fi­cial. And by nature, you just learned a lot more. And so yeah. So you’re sort of spi­ral­ing up. And I’m up there try­ing to zoom in almost like with a satel­lite image and get more infor­ma­tion from that a greater height.

Brad Giles 05:13

Awe­some.

Kevin Lawrence 05:15

So, today with our theme of spi­ral and spies, you know, what is it that we’re going to dig in today that we are excit­ed about? By the way, you know, for those of you lis­ten­ing, we, we’ve been talk­ing about doing this episode for about four or five, six months, you know, and for a num­ber of rea­sons, today is the day it’s actu­al­ly Episode 50. So I think our 50^th episode, is that right? Today’s is our 50^th. Yeah, yeah, it’s our 50^th episode. And hey, for some­thing that we had talked about try­ing for six or 12 episodes, right back in back in COVID. There, it’s kind of cool that we’re 15 do two more episodes, that’s going to be the it’ll be the one year of doing it. So, you know, for Episode 50, we’re talk­ing about some­thing that we’re quite excit­ed about and is incred­i­bly impact­ful for the firms that we have the great hon­or to work with. So Brad, on fur­ther a lit­tle drumroll.

Brad Giles 06:10

Today, we are talk­ing about the fly­wheel. But let’s be fair, you already know that if you’re lis­ten­ing because you saw it on the sub­ject of today. So we’re talk­ing about the fly­wheels are so impor­tant. Once you’ve built one, once you’ve built one, and you’ve watched it real­ly embed­ded in an orga­ni­za­tion, a fly­wheel can be real­ly, real­ly impor­tant to clear­ly and sim­ply and suc­cinct­ly explain how do we get momen­tum with­in this busi­ness? So let’s maybe begin with explain­ing what is it and I’m going to refer to some text with Jim Collins explains it, obvi­ous­ly it comes. Jim goes, Yeah,

Kevin Lawrence 06:55

this comes from him. This is Jim’s. And let’s be very clear, we are giv­ing full cred­it to Jim Collins, who cre­at­ed this con­cept, did the research that dis­cov­ered it and shared it with us, we’re going to, we’re going to share our insights of how to apply it and lever­age it with com­pa­nies. But this is Jim’s invention.

Brad Giles 07:13

Okay, so let’s dip in the fly­wheel effect is a con­cept devel­oped in the book good, great, no mat­ter how dra­mat­ic The end result, Good to Great trans­for­ma­tions nev­er hap­pened in one fell swoop. in build­ing a great com­pa­ny or social sec­tor enter­prise, there is no sin­gle defin­ing action, no grant pro­gram, no killer inno­va­tion, no soli­tary, lucky break, no mir­a­cle moment. Rather, the process resem­bles relent­less­ly push­ing a giant, heavy fly­wheel turn upon turn, build­ing momen­tum until a point of break­through and beyond. So that’s Jim’s def­i­n­i­tion of the fly­wheel effect. And then so the fly­wheel is a series of actions that a busi­ness takes to cre­ate momentum.

Kevin Lawrence 08:15

Yeah, and what I would say and it’s in this book for those who see the video is from he wrote a sep­a­rate mono­graph on this called turn­ing the fly­wheel just on this piece. I’ve got a won­der­ful signed copy here, which he was nice enough to sign. But in sim­ple terms, I’d put it as it’s, it’s how do you build unstop­pable momen­tum in your com­pa­ny. That’s the idea. And a lot of com­pa­nies don’t, a lot of com­pa­nies are con­stant grind for­ev­er, and there’s always stuff to do. But then there are oth­ers that spi­ral up and scale and they build more pow­er and more momen­tum as they grow. And that’s what this is about. So it’s about mak­ing sure that choic­es that you make, con­tin­ue to build your momen­tum, but you got to know what builds momen­tum, first of all, and I’ll share an exam­ple like in our own firm, Brad did­n’t talk about this specif­i­cal­ly. But we worked on the fly­wheel a cou­ple years ago, and then real­ly nailed it. Prob­a­bly just over a year ago with some stuff we did with our team. And then we start­ed pay­ing more atten­tion to it. And, and things have spilled dra­mat­i­cal­ly since that. We just refo­cused a few things that we were doing is, you know, we had caught up in being so pas­sion­ate about what we’re doing, and excit­ed about it. But some­times we for­get and we get obsessed with doing great work for our clients, but that alone isn’t enough. There’s oth­er things that it kind of brings and so’s the strat­e­gy togeth­er. And that’s real­ly the idea of is it guides I’ve writ­ten it No, here’s a guide strate­gic focus on the high­est val­ue activ­i­ties and ensures you build self sus­tain­ing momen­tum. Time, that’s the idea. So if you’ve got a busi­ness and it’s going well, but you can’t feel the engine of it get­ting bet­ter and self sus­tain­ing over time, you prob­a­bly want to take a look at it.

Brad Giles 10:12

And self sus­tain­ing is real­ly a key thing to think about when you think about the momen­tum. So the busi­ness is grow­ing, I’m going to say on its own, but you’re mak­ing the those key activ­i­ties work. But that cre­ates self sus­tain­ing growth, it con­tin­ues to spin faster and faster. So the great lead­ers take it from one turn to 10 turns to 1000 turns to a mil­lion turns, and it con­tin­ues to spin faster and faster. Now, the only way that you can do that is with focus and dis­ci­pline and under­stand­ing these com­po­nents, and not try­ing to build many dif­fer­ent businesses.

Kevin Lawrence 11:00

Yes. And mak­ing it sim­ple. And it’s fas­ci­nat­ing. You know, if I, if I look at, you know, clients that we’ve imple­ment­ed this, and you know, they’re sure we’ve had many, many CEOs go and spend two days with Jim in his lab in Boul­der, and this is one thing he talked about, you know, with inten­si­ty and pas­sion, a lot. And every sin­gle client came up with this as a home­work piece. And we’ve since imple­ment­ed it prob­a­bly over five years and lots of com­pa­nies. And you know, what’s inter­est­ing, one of them that we did it in, we remem­ber, we were sit­ting in a meet­ing down in Los Ange­les, beau­ti­ful day, we’re up on a rooftop deck, and it was a spec­tac­u­lar, as good as a day in LA can get close to the beach was all it was awe­some. But we’re going through and iden­ti­fy­ing the flow because the com­pa­ny got in trou­ble. And they brought me in when a com­pa­ny got in trou­ble. And so we’re sit­ting there and we’re going through the fly­wheel. We fig­ured out their fly­wheel. And then we went and rat­ed, how strong each of the areas were. And the look that the CEO had, was almost hor­ri­fied. And I could feel the feel­ing in their body. And it was gut wrench­ing. Because the sec­ond or third thing on the fly­wheel was they rat­ed it at a three out of 10. Yeah, then they went through and looked at where they had spent mon­ey in the last two or three years. And it was like a one out of 10. They looked at where they had hired peo­ple on the fly­wheel pro­por­tion­al­ly, it was like zero to 10. Because they, they actu­al­ly, in the excite­ment of their suc­cess for­got a key aspect of their suc­cess. And they knew that they could rat­tle it off. But they had for­got­ten and when we went through and did the fly­wheel It was like, we need to invest more, we need to change more. We need to bring this back to life. We need to get the right per­son run­ning this who is going to fight for the peace of the fight. What’s the point of it is I’ve had many clients that when we go through and do the exer­cise, first of all, they’re like, there’s some­thing that they make it a notable recal­i­bra­tion on. And that piece that is notably weak on the fly­wheel, they can see how it the direct cor­re­la­tion, how it’s hold­ing them back. So it’s a health check in a real­i­ty check on your spool­ing of your strat­e­gy to make your busi­ness you know, spi­ral up, it’s insane­ly pow­er­ful. And it’s not the eas­i­est thing to fig­ure out. So what we’re going to do today is give you some guide­lines to help you to fig­ure it out, so that you can get the ben­e­fit of hav­ing it and then mak­ing it part of your real­i­ty check that you do every quar­ter and every year.

Brad Giles 13:48

Yeah, um, and so I guess before we jump in fur­ther, we’ve explained what a hedge­hog con­cept is. But I’d like to also just explain what sor­ry what a fly­wheel is, I’d like to also explain what a hedge­hog is and what a smack recipe is, because we’re going to talk about those things a lit­tle bit lat­er on. So let’s begin with a hedge­hog con­cept is a sim­ple crys­tallin con­cept that flows from the deep under­stand­ing about the inter­sec­tion, think about three cir­cles, inter­sect­ing in the cen­ter of Venn dia­gram, the inter­sec­tion of pur­pose or core pur­pose. What accom­pa­ny can be best that accom­pa­nies com­pa­ny’s prof­it per x or sin­gle eco­nom­ic denom­i­na­tor. Then that so that’s the hedge­hog con­cept. Okay, we’ve spo­ken about that before on this pod­cast. Now a snack recipe.

Kevin Lawrence 14:47

the hedge­hog is just a sim­ple way to artic­u­late what your busi­ness is about. And you know, what’s the best in the world pas­sion­ate about and what makes mon­ey those three things, the cen­ter of which It’s your B hag, your big, hairy, auda­cious goal that you want to achieve over the next 10 to 30 years. So that is a core cen­tral basic piece and under­stand­ing. It’s kind of like, you know who we are, and what are we about, in sim­ple terms.

Brad Giles 15:14

So that’s the hedge­hog and then we move on to what we call the smack recipe. So that’s short, for spe­cif­ic, method­i­cal and con­sis­tent. So this is, again, about dis­ci­pline. So a smack recipe is the code for trans­lat­ing a high lev­el hedge­hog con­cept into spe­cif­ic action, and for keep­ing an orga­ni­za­tion focused in the same direc­tion, there­by build­ing fly­wheel momen­tum. So again, it’s about keep­ing the orga­ni­za­tion focused in the same direc­tion. So the more that we can not get dis­tract­ed, the more that we can main­tain focus in the right direc­tion. Under­stand­ing the com­po­nents that make up the fly­wheel, the more that we can build that fly­wheel momentum.

Kevin Lawrence 16:01

Yeah, and that’s at the root of most strate­gies is to stay focused on the most high­ly impact­ful activ­i­ties. And as com­pa­nies grow, they get dilut­ed by inter­est­ing cre­ative ideas, and basi­cal­ly dilute their force. And it’s no dif­fer­ent than if you have a bul­let, you want to shoot at a tar­get or an arrow, you want to shoot at a tar­get. When you shoot it, if it splits off into 100 pieces, it’s not going to have the same impact, ver­sus one sin­gle pro­jec­tile hit­ting a tar­get is going to have more impact ver­sus a kind of spray. And it’s we want to keep the impact behind our actions. That is the idea. And again, these are things to help us so with a hedge­hog in mind, and I even when we do it with clients, we even put the hedge­hog in the mid­dle and the fly­wheel around it. Right. And it was we’re talk­ing about the smack. There’s prob­a­bly a visu­al way to inte­grate the smack as part of it to help stay focus. So yeah.

Brad Giles 17:06

is the crazy, crazy thing, right? You already, if you’re lis­ten­ing to this, you already have a fly­wheel. Yeah, it’s already suck. It just might be a bad one.

Kevin Lawrence 17:23

It’s like you already have a great idea, but maybe buried in the back of your brain mixed in with the bad ideas. there is there is bril­liant ideas and all of our brains, but some­times they get lost.

Brad Giles 17:36

Yeah. And the thing is, is that we are not mak­ing a fly­wheel. Okay, we are dis­cov­er­ing a fly­wheel. And it’s such a dif­fer­ent way to think about it.

Kevin Lawrence 17:48

start­up and you’re try­ing, you don’t even know which way is up yet and what your busi­ness mod­el is. But with this, you know, most of them aren’t pure star­tups. But if you’ve been around and already had some good suc­cess, there is a ver­sion of a fly­wheel. Now, it might be a weak fly­wheel, or it might have weak­ened or it might be awe­some. But it’s dis­cov­ery to get clar­i­ty so that you can use deci­sions that con­stant­ly enhance it. So yeah, you already got one, it just it might be a pos­i­tive one, it might be neu­tral. And it might be a neg­a­tive fly­wheel, which Collins calls the doom loop in his work.

Brad Giles 18:24

Yeah, so let’s go back to the spi­ral, you can have spi­rals which are going upwards, which is not the best anal­o­gy, but spi­rals that are going upwards and cre­at­ing more momen­tum, or you can have ones that are going down and then the doom loop. So you can have pos­i­tive or neg­a­tive fly­wheels. The thing with it is that it’s already there. Every busi­ness already has a fly­wheel, but most of the time, they’re not focused on it. And they’re not, they’re dis­tract­ed. And the absence of dis­ci­pline around the flaw wheel means that they’re not see­ing any­where near the kind of effort that they could

Kevin Lawrence 19:10

So in one of the com­pa­nies that we worked with, the CEO came out a Jim ses­sion, he fig­ures when he sold the com­pa­ny, it added 20% to the val­ue of the orga­ni­za­tion because we could artic­u­late the fly­wheel, and he sold it for a big num­ber. So that was a big val­ue But the inter­est­ing thing is, is that every­thing that we did if it did­n’t line up to the fly­wheel, we did­n’t do it. All of our acqui­si­tion tar­gets had to enhance the fly­wheel. And if and even if they did­n’t fit with­in the fly­wheel, we would­n’t do them. There was one that slipped through that was bad choice but acqui­si­tion tar­gets. Every­thing went back fly­wheel. Inter­est­ing­ly, when that CEO would address the com­pa­ny, as he did on a fair­ly reg­u­lar basis, and the lead­ers, what he talked about was, aside from the cul­ture, you know, the pur­pose and the val­ues was a fly­wheel and hedge­hog again and again, it was, for him, it was the most impor­tant thing. Because if we improve this thing, the whole machine improves.

Brad Giles 20:24

And you know, what I rec­om­mend, every­body in that orga­ni­za­tion would have under­stood the fly­wheel and they would have under­stood. Every­one tries to make strat­e­gy more com­plex than it should be.

Kevin Lawrence 20:44

Because they don’t know what they’re doing. If your strat­e­gy is com­pli­cat­ed, it means you don’t under­stand it, it should be able to make sense to a 10 year old kid, the best strate­gies or so basic, except for the ones that are com­pli­cat­ed, but those usu­al­ly aren’t the best ones.

Brad Giles 21:00

Yeah, now,

Kevin Lawrence 21:01

and it’s not that a mad bril­liant, crazy, spec­tac­u­lar sci­en­tist, could­n’t come up with poten­tial­ly a bet­ter strat­e­gy. But if it’s super com­pli­cat­ed and intri­cate, even though it could be bet­ter, it’s almost impos­si­ble toex­e­cute. So a sim­pli­fied ver­sion. and sim­pli­fy­ing, you know, sim­ply as you know, gen­tle­men, Mas­tery, my is, you know, my one of my favourite quotes is attrib­uted to Mark Twain may or may not have actu­al­ly been him, but we’ll go with Mark Twain today. And that’s, you know, I would have writ­ten you a short­er let­ter. But I did­n’t have the time. Right. It’s hard to be sim­ple and suc­cinct, and sim­ply, his sim­plic­i­ty is mas­tery. you can’t scale some­thing that isn’t an insane­ly sim­ple and easy to under­stand. It does­n’t scale.

Brad Giles 21:53

Yeah. And so for that leader in that exam­ple, many times, I’m gonna say every time many times when he’s com­mu­ni­cat­ing to the staff, what he’s doing is rein­forc­ing what’s most impor­tant because peo­ple respect what you inspect, right? So the most impor­tant thing is, right, this is our hedge­hog. And this is our fly­wheel. And this is how they work togeth­er. It’s every­one gets it, every­one knows what the most impor­tant things are.

Kevin Lawrence 22:24

As long as you keep remind­ing them.

Brad Giles 22:27

Yeah, of course, the, that’s the job of or part of one of the key jobs of the leader is to keep remind­ing them. So I want to give a quick exam­ple of a fly­wheel, which is Ama­zon. Okay, Ama­zon has a real­ly sim­ple fly­wheel that most peo­ple will get, because most peo­ple know Ama­zon. So it’s got five com­po­nents. Num­ber one is low­er prices on more offer­ings. Num­ber two, if we do that have low­er prices or more offer­ings, we can’t help but have increase cus­tomer vis­its, more peo­ple will come because we’ve got low offer­ings. If we increase cus­tomer vis­its, we can’t help but attract third par­ty sell­ers. So there’s more peo­ple on our plat­form, more third par­ties are going to want to come and sell. So already in these first three steps, you can see the momen­tum that this builds, then when we move to num­ber four, we expand the store and extend the dis­tri­b­u­tion. Now, if we attract those third par­ty sell­ers, the pre­vi­ous point, we can’t help but expand the store and extend dis­tri­b­u­tion. If we do that we can’t help but grow our rev­enues per fixed costs. So we’ve got more rev­enues per fixed costs. And if we do that, we can’t help but low­er prices on more offer­ings. So you can see as we go around that cir­cle, how it builds momen­tum in the busi­ness, and how Ama­zon’s grown to be, if not the largest, depend­ing on when you lis­ten to this one of the largest com­pa­nies in the world, just by focus­ing on that real­ly, real­ly sim­ple model.

Kevin Lawrence 24:06

It is and you know, and Jim had done some work with I think it was with Bezos. I mean he talked about this.

Brad Giles 24:13

He did back in 2000. I think it was

Kevin Lawrence 24:15

yes, there was when they talked here and here is I put the image on the screen out of Jim’s book turn­ing the fly­wheel for those can I find it there’s a there’s an image on page two of his book, but the idea is one thing feeds the next thing and before you know it, because it because they have low­er the costs and then they can have a go back to the fly­wheel here. It becomes an uncon­trol­lable for so because they can low­er their prices they can get more cus­tomers, which gets more peo­ple wants to sell to them, which gets a bet­ter store, which grows rev­enue per fixed costs low­er the price. low­er price brings more cus­tomers brings more sell­ers who more stuff on the site, more rev­enue per fixed cost, low­er the prices, and then it just keeps going and going and going. And to the point where, you know, there’s this thing called monop­oly, which mill peo­ple don’t like where they almost com­pa­nies pret­ty well con­trol the mar­ket. So the idea with a fly­wheel in real­i­ty, what you’re going to do is to push the lim­its to be such a pow­er­ful force, that it almost in oth­er peo­ple’s eyes is unfair, the truth is, you’ve just got such momen­tum, because you’ve been so darn good. So lots of that’s a great, that’s a great exam­ple, we have anoth­er client that has one, and I’ll keep it gener­ic. But it’s basi­cal­ly as their fly­wheel goals, they keep get­ting to hire more amaz­ing peo­ple who inno­vate, which the cus­tomers are thrilled, the cus­tomers refer stay, obvi­ous­ly, but refer oth­er peo­ple. And because they have a larg­er cus­tomer base, they get way bet­ter buy­ing pow­er. So for them is lever­ag­ing sup­pli­ers and buy­ing pow­er get­ting dis­counts, because the buy­ing pow­er, they can invest more in peo­ple, which make the prod­ucts and ser­vices bet­ter which thrill the cus­tomers which gets more refer­rals, which gets them a big­ger client base, which gets more buy­ing pow­er. And then it just to the point in this com­pa­ny, they were num­ber one in their space in the state they were in in the US. And it was a very state based busi­ness was a sub­stan­tial com­pa­ny. They bought num­ber two, and num­ber two was almost relieved. Like, like, we talked, I would talk to some of the peo­ple in the aquar­i­um cuz they’re like, thank God, like we were done. Because they were such a pow­er­ful force. Yeah, now we bought that com­pa­ny. And we know we could have crushed them. But we bought it because we want­ed to take the cus­tomers and we did­n’t want to ful­ly destroy the com­pa­ny was good val­ue to buy them and take over those cus­tomers. But it was a machine. And inter­est­ing­ly, their fly­wheel was so strong, but their prod­uct dif­fer­en­ti­a­tion actu­al­ly was­n’t that strong. So when you would line their prod­uct up, and we did some work on that’s anoth­er con­ver­sa­tion, but their fly­wheel was so strong it, it almost did­n’t mat­ter. They were just a beast. And inter­est­ing­ly, they got to 91% a play­ers in their com­pa­ny. And there was hun­dreds of peo­ple. It was just a beast, like a beast of a machine. It was an army. It was unbe­liev­able. Lots of lots of great things. And we can also talk about when it does­n’t work. Go ahead, right.

Brad Giles 27:38

Yeah, so the prod­uct dif­fer­en­ti­a­tion may not have been dif­fer­ent all pos­si­ble. But they were dif­fer­en­ti­at­ing through their fly­wheel in terms of they were get­ting the sim­ple things, right. con­sis­tent­ly, all the time service.

Kevin Lawrence 27:56

Excel­lence. Yeah, their dif­fer­en­ti­a­tion was bet­ter ser­vice. But prod­uct wise, there was­n’t but their fly­wheel always around ser­vice excel­lence. Yeah, like just the best ser­vice you could pos­si­bly get in indus­try. It’s just awe­some exam­ples and unders been the ones that go the oth­er way. You know, and we tend not to work with com­pa­nies like that. But com­pa­nies who work with might go through phas­es, where any­one in the in when you don’t have this or you have a neg­a­tive fly­wheel. You’re on Col­in’s map. So but the essence of it is you do some­thing, it fails.

Brad Giles 28:33

Yeah.

Kevin Lawrence 28:34

Your peo­ple get dis­en­gaged or dis­ap­point­ed, then you just try any­thing. And usu­al­ly it’s hype and you’re throw­ing spaghet­ti at the wall. It fails, your peo­ple are dis­ap­point­ed and you just flail and do some­thing else. And the typ­i­cal is you come up with some big slo­gan or, you know, a fan­cy out­side CEO, and you’re not strate­gic and you’re not dis­ci­plined, you’re just chuck­ing stuff at the wall and hop­ing stuff works and you have good inten­tions ver­sus get­ting back and grind­ing out as Col­in says one of us favorite quotes from a ses­sion I did with him was you know, suc­cess is relent­less exe­cu­tion of the bor­ing basics that are with­in your hedge­hog. The basics, like went to a restau­rant last on the week­end and I ordered a cou­ple things and the peo­ple that are real­ly nice, but you know asked for water and they for­got to bring water for prob­a­bly 20 min­utes it’s a basic you know, it’s not rock­et sci­ence. And I asked for my meal to be cooked a cer­tain way and it was­n’t and it was not a crazy request. It was a nor­mal request. So you know where I go back Yeah, cuz I like the place and it’s close to the peo­ple are nice. But you know the basics of bring water when a cus­tomer wants water and maybe it was a bad night. about who Oh, bad hour, who knows, and cook­ing some­thing as it’s expect­ed. But if they do that two or three times, you know, they’re not going to have a line­up for reser­va­tions, right? It’s

Brad Giles 30:11

not going to build momen­tum. They’re not going to build momen­tum. That’s the thing. Would you rec­om­mend that to oth­er peo­ple? Would you be a rav­ing fan and an advo­cate? Would you go back? No. Because no,

Kevin Lawrence 30:23

I would give them anoth­er try. But the oth­er tried the pre­vi­ous expe­ri­ence was awe­some. But anoth­er try. I don’t want to say their name. Super nice peo­ple there. But but but but I’ll go over the tribe. And then after that, I’ll prob­a­bly start going, I go some­where different.

Brad Giles 30:37

Yeah, because I went to a restau­rant on the week­end as well. It was on the beach, like, so where I live, we have a sun­set over the water. So you go to a restau­rant on the beach, you look at the sun go down for din­ner. It’s love­ly. So that was fan­tas­tic. Like, the fit out was love­ly. The staff were pret­ty friend­ly, but the food was just okay. Like, it was­n’t even like it was just a home. Right? So it’s the What is it? How do you build momen­tum in that type of envi­ron­ment? Yeah, you have the sun­set? Yeah, you have good staff, and you have food does­n’t need to be like the best food in the world. It just needs to be yo is pret­ty good. Like, that’s it. And that’s the relent­less focus on the boring.

Kevin Lawrence 31:22

Instant­ly good are pret­ty good. Yeah. And again, it’s not rock­et sci­ence. So basi­cal­ly, take a restau­rant that’s under­per­form­ing peo­ple would you know, change a menu, right? Or change a name or repaint a wall or got a bunch of staff out? Maybe it works, but at the end of the day, what does the cus­tomer want? They want what they’ve asked for, they want good, pleas­ant ser­vice, which this place has the ser­vice piece cov­ered. It’s not rock­et sci­ence, but that peo­ple get lost in all of this oth­er stuff. And it’s from the eyes of the cus­tomer. What are the basics that mat­ter the most. And that’s and the fly will should point you in that direc­tion. Some­thing that that helps you to be think­ing that way? Go ahead. So there’s

Brad Giles 32:06

there’s two, there’s two prob­lems that cre­ate this issue that cre­ates the need for a hedge­hog smack and a fly­wheel. Okay. And those are num­ber one is the human brain does­n’t like dis­ci­pline, the human brain gets bored, and it wants to be cre­ative. It real­ly wants to do new and excit­ing things. to focus on the bor­ing basics, the human brain is like, that is not what I want to do at all. But the sec­ond thing is that lead­ers are seduced by an end­less search for the next big thing. And many lead­ers want to pur­sue growth for growth’s sake.

Kevin Lawrence 32:52

Yeah, and that’s okay, as long as some­body else is focus­ing on those bor­ing basics to make sure they’re right. And your strat­e­gy is point­ed at speed­ing up your fly­wheel. It new can be good. But often, it’s more dan­ger­ous than it is good for a lot of people.

Brad Giles 33:11

Well, it’s no growth for growth sake, I often say

Kevin Lawrence 33:14

to peo­ple growth to become a bet­ter orga­ni­za­tion and bet­ter take care of your cus­tomers or your employ­ees. Yeah, qual­i­ty growth, not just growth. In oth­er words, you fall on your face.

Brad Giles 33:25

Yeah. So you go, Yeah,

Kevin Lawrence 33:30

I was just gonna say, look, so how do you do it? You know, and then we talked about start­ing with a hedge­hog and smack list. But you just go through and try and unpack and some­times you have to go back five years in the busi­ness? What is it that dri­ves this thing? What is it and the own? It’s as sim­ple as a brain­storm of try­ing to map out pieces. We like to get peo­ple sit on their own and think about it, then let’s work on it as a group, what is it that dri­ves this busi­ness? And the ques­tion is, you know, what is the lan­guage that Jim uses, because I can’t help but can’t help. But so for exam­ple, this oth­er com­pa­ny we talked about, because we pro­vide out­stand­ing ser­vice expe­ri­ence to our cus­tomer, we can’t help but retain them and get refer­rals because we retain them and and and, and get refer­rals, we can’t help but grow the total num­ber of users in our sys­tem. Because we have a mas­sive increase on our total num­ber of users, we can’t help but lever­age that for bet­ter buy­ing pow­er with our sup­pli­ers. Because we have bet­ter buy­ing pow­er and save that mon­ey. We can’t help but be able to invest in more amaz­ing peo­ple. Because it’s we can’t help but and real­ly one thing real­ly specif­i­cal­ly dri­ving Next now, we can’t give you a paint by num­ber, it’s an it’s a dis­cus­sion. Some­times you do one, you throw it away, you try, again, you try from three or four dif­fer­ent per­spec­tives. You know, some­times there’s one that’s a cus­tomer ori­ent­ed fly­wheel. Some­times it’s a prod­uct or r&d fly­wheel like, like Intel’s exam­ple. Some­times it’s an employ­ee ori­ent­ed fly­wheel, and I’m sure there’s many dif­fer­ent types. But it’s to start map­ping it out. And because any­body can end up with four or five, six things that real­ly dri­ve into a con­tin­u­ous loop, like a fly­wheel that spent spools up,

Brad Giles 35:35

but it’s already there. It’s already inside your busi­ness. And the insights come from the hedge­hog and the snack recipe. And those things are built using very spe­cif­ic meth­ods that will give you a great and deep insight. You can’t just, you can’t just rock up and go, hey, let’s get some stuff onto a page and the met­al main will become Ama­zon, it just does­n’t work that way you’ve got to do the think­ing it has

Kevin Lawrence 36:02

a store trick­ly now, and again, those things may not be work­ing at the time, some­times they fall they fail. Yeah. But his­tor­i­cal­ly, this has led to this. So for exam­ple, one of the com­pa­nies had made an expan­sion into the US. And it was going hor­ri­bly, well, for a num­ber of rea­sons. And but Cana­da was a wild suc­cess sto­ry. So we just went back into Cana­da, we went, we did­n’t even both­er look­ing at the US. We went five years back in Cana­da. Okay, what were you doing when the growth engine took off?

Brad Giles 36:36

And what was it?

Kevin Lawrence 36:37

What were the spe­cif­ic things and we went through? And we made the fly when then we over­laid it to the US? And we’re like, Ah, no wonder.

Brad Giles 36:45

that’s why it’s com­plete­ly logical.

Kevin Lawrence 36:49

It is so obvi­ous. But you’re right, ready, he got to go back in time to map it out. So you go and map it out. But let’s move on. So that’s point two, how do you cre­ate it start­ing with the hedge­hog? And the smack list is con­tent go through and map it out? And then num­ber Go ahead, Bing or something?

Brad Giles 37:07

And so how many flies? This is a great mis­take that I’ve seen how many fly wheels? Should an orga­ni­za­tion have? Six?

Kevin Lawrence 37:14

814? How many would you like to have? I mean, you know, it does­n’t real­ly, you know, you know, it does­n’t, you don’t need to have one, you could you know, you don’t need to be dis­ci­plined, you could just have a whole bunch because they’re kind of fun to play with. You, you can also have 27 goals per per­son, per quar­ter. I mean, why would­n’t you have more, the bet­ter, more the mer­ri­er? That’s a bet­ter par­ty hav­ing 27 instead of sev­en, isn’t it?

Brad Giles 37:37

Yeah. And that’s cool, because then we’ll get more stuff done. If we have 27 goals.

Kevin Lawrence 37:41

27 times the thing done, if we have 27 goals and 14 fly wheels, and we feel we should have like at least a dozen core val­ues. And while we’re at it, we should prob­a­bly have sev­en dif­fer­ent names for the company.

Brad Giles 38:00

So for those of you who may not have picked up there’s a an a blan­ket of sar­casm that’s just fall­en over us. Let’s remove that and come back and shake that blan­ket off. No, what we’re say­ing is, you should have one fly­wheel for each CEO. One fly­wheel for each CEO. And why is that because you might have mul­ti­ple prof­it and loss and bal­ance sheets in an orga­ni­za­tion. Okay, but you’re prob­a­bly only going to have one CEO. And so I think about one orga­ni­za­tion that I work with now I’ve got two dis­tinct divi­sions that work with dif­fer­ent types of cus­tomers. Okay, one’s more of a, let’s say, a small­er cus­tomer, the oth­er ones a much larg­er cus­tomer. But we’ve got a cen­tral fly­wheel that works across the entire CEOs over­sight, then there’s anoth­er busi­ness and they Yeah, they have got three dif­fer­ent areas in which they oper­ate. They’re all in the same indus­try, but three com­plete­ly dif­fer­ent areas. One CEO and all of those, they have this same fly­wheel. So because some­times the ener­gy of the CEO you want it all to be going in the same way, as you men­tioned ear­li­er with your friend who, your friend, your col­league, your asso­ciate, who comes out talks about the fly­wheel and the hedge­hog, relent­less­ly. One cen­tral point of focus per CEO,

Kevin Lawrence 39:47

I think so and that can be hard. Any­body can come up with sev­en or three, but to get down to the one fly­wheel that dri­ves the whole machine. All of the assets that you have in orga­ni­za­tions crip­ple now, teams might go and devel­op a fly­wheel a lit­tle sub fly­wheel, let’s call it. But that’s not the part that we’re obsessed with. We’re obsessed with the main one for the orga­ni­za­tion that dri­ves the orga­ni­za­tion­al strat­e­gy. You could have your logis­tics team that might think about it down and logis­tics, you know, in some orga­ni­za­tions, you know, in a divi­sion­al lev­el, they will allow them to cre­ate a divi­sion­al pur­pose, or a divi­sion­al B hag or a divi­sion­al, what­ev­er. That’s, we’re not say­ing you can’t, you might let peo­ple do it. But this is about the over­all orga­ni­za­tion and the one that we all talk about reg­u­lar­ly, just like the one com­pa­ny name, and the one B hag, and the one set of core val­ues. I think it’s super impor­tant. And com­pa­nies some­times that aren’t good at sim­plic­i­ty will cre­ate mul­ti­ples. So I think it’s super impor­tant. I got so so. So one per­son, and then how do you know that it’s cor­rect? Right. And, you know, it’s not rock­et sci­ence. But you know, Brad, you and I are big on pres­sure test­ing ideas. And because the­o­ry does­n’t pro­duce val­ue, it’s real­i­ty that pro­duces val­ue. So the one that the sim­ple pres­sure test is going through and say­ing, does this direct­ly dri­ve this? Or because of this? Is it true that we can’t help but get the next one. The sec­ond is to go through and look at some of your biggest peri­ods of suc­cess, or divi­sions or parts of your busi­ness that have had mas­sive suc­cess or mas­sive fail­ure, and go and then pres­sure test. So was there some­thing in here that was actu­al­ly crit­i­cal to our suc­cess? When we did well? And was there some­thing in this that broke? That was, uh, that was crit­i­cal to our fail­ure? That’s anoth­er way of pres­sure test­ing to make sure that you absolute­ly got it.

Brad Giles 41:58

Yeah. Does it explain your fail­ures and suc­cess­es or your suc­cess­es and dis­ap­point­ments? That’s the sim­plest test. When you look through those three to six items. Can you say? Yeah, well, when we launched in this mar­ket, or when we did that, or when we did that, like that absolute­ly suc­ceed­ed because of that, or that absolute­ly. file because of that. Yeah. So. So that’s the sim­plest way to val­i­date it. It’s cor­rect. There’s no, there’s no enor­mous diag­nos­tic that you need to take. Just ask. Can suc­cess­es and disappointments?

Kevin Lawrence 42:37

Yep, exact­ly.

Brad Giles 42:39

Now,

Kevin Lawrence 42:40

now that we’ve so we’ve gone through, and we know what it is? We’re push­ing towards pos­i­tive we’ve draft­ed it. We’ve val­i­dat­ed it’s cor­rect. We know we’ve only got one. How do you speed this thing up? And this seems basic, right? But it’s one of the things that actu­al­ly speed it up. And you know, hold on to your hat. This is rock­et sci­ence here. But it’s, you lit­er­al­ly make sure that your major goals relate to an area of the fly­wheel. Right now, if you’ve eval­u­at­ed your­self, and you have one area that’s real­ly low­ly, if that client to talk to you about when we had the meet­ing in Cal­i­for­nia, you bet­ter make darn sure you fix that. Because that will every time the fly­wheel spins that one area it’s gonna slow down because it’s a weak spot. So you got to make sure you patch up your weak­ness­es and you know, shore them up with the right resources and get them back to suc­cess. But ide­al­ly, is that your most impor­tant your you know, your yourr goals you have for three years, we call them key thrusts or pri­or­i­ties wher­ev­er you want to call them. They should direct­ly be link­ing to the fly­wheel. That’s not that every­thing on your fly­wheel needs to be your three year goals. Your three year goals need to dri­ve what mat­ters and your one year goals and your quar­ter­ly goals. That’s a sim­ple, sim­ple thing to look at. And, you know, if you can go and look at your plans often, Brad, you know, for you and I both when we go to a com­pa­ny and eval­u­ate their strat­e­gy and exe­cu­tion plans, often they’re all over the road. Yeah, it all seems like impor­tant stuff. But if you put it through the fil­ter of the fly­wheel it might not make a dif­fer­ence. And even though they have beau­ti­ful inten­tions and awe­some plans, because leaders

Brad Giles 44:21

are often seduced by an end­less search for the next big thing, and they pur­sue growth for the sake of growth. And that means that some­times pri­or­i­ties land on these 90 day or one year or three year lists that may not nec­es­sar­i­ly make sense.

Kevin Lawrence 44:39

Yeah, and some­times lead­ers are seduced by the good old things right there’s some are caught up in the shiny new there’s all oth­ers that are caught up in the reli­able old and that can be just as bad you know, we go into com­pa­nies and and and our three year strat­e­gy in our com­pa­ny has­n’t changed a lot in a decade now. That can be a good thing for some. Some­times they’ve just they got stuck tun­nel vision and think­ing about their busi­ness and it needs a shake. So, again, there’s no right answer here. The key is that you got to invest into those things that speed it up. And yeah, that’s speed­ed up. And, you know, and the kind of the point num­ber five, and it’s a bit of almost maybe not need­ed, but how do you make sure you don’t slow it down? Well, don’t invest in things that don’t speed it up.

Brad Giles 45:31

Right. Yeah, that’s, that’s obvi­ous. And I would add to that, reg­u­lar­ly look at it quar­ter­ly and annu­al plan­ning ses­sions. So what col­or and this kind of will lead to our next point, but What col­or is this com­po­nent of the flow wheel cur­rent­ly? Is it red or green? And then what do we need to do to get it to become green? Yeah, so

Kevin Lawrence 45:54

for exam­ple, last week, I spent all week vir­tu­al­ly with my one of my clients in India, right. I think I talked to him about a lit­tle bit last week. They’re like, they’re like fam­i­ly. You know, when I saw his six nights, six evenings and my time, and one of our things that we did with the three direc­tors that run through broth­ers as we go through and eval­u­ate the fly­wheel. Where are we at? How are we doing on the dif­fer­ent pieces? Now? How do we take that into mind when we set the three year strat­e­gy? You know, every quar­ter, or every time I meet with them, I know that we do twice a year mean­ing we go back and we get a report col­or cod­ing the fly­wheel not only over­all, but by divi­sion, which we’ll talk about a lit­tle bit lat­er. So yeah, which so which real­ly leads

Brad Giles 46:36

us which real­ly leads us into num­ber six, the next one, which is how do you mea­sure and we both touched on that, I’ve got one client that comes to mind. And we’ve tak­en the flow will real­ly, real­ly deep into the lay­ers of the org chart. And so we’ve divid­ed each of the com­po­nents of the fly­wheel into what are the four things that we do that makes this com­po­nent of the fly­wheel work, okay, so we’ve got to have sales­peo­ple hav­ing that KPI and we’ve got to have the oper­a­tions, peo­ple hav­ing that KPI or what­ev­er it might be. So across the floor, where we can look at it in its sim­plic­i­ty. But then we can look behind it to the things that make eight the KPIs that we need in each of the areas of the busi­ness to have that fly­wheel col­or green, let’s say. And then beyond that, like you just men­tioned, we’re set­ting pri­or­i­ties at a 90 day or one year or three year lev­el to get those, those KPIs to green. Yeah,

Kevin Lawrence 47:41

so Exact­ly. So what I’ve heard you say, Brad, is that you know that you have KPIs for each part of the fly­wheel. And even look­ing at that way, you can del­e­gate it down to make sure dif­fer­ent depart­ments are doing their part to enhance that piece. So yeah, I’ve got one client, where they have one KPI for each part of the fly­wheel, I’ve got anoth­er that’s got four, I don’t real­ly care how many you got. But you know, even when it has for the com­bi­na­tion of those four mea­sures indi­cat­ed, and because of that, we can pro­vide a score and col­or­ing and you and I both love red, yel­low and green col­or­ing, just, you know, traf­fic lights basi­cal­ly did a pre­vi­ous episode on that on the pod­cast, but it’s a sim­ple way to eval­u­ate per­for­mance. And, and, you know, and you know, which it’s basic, but what’s the report­ing, and like he’s abroad every quar­ter look­ing at it. And we’ll talk about it in our in num­ber eight about how do you tweak it? So So six is, you know, how do you mea­sure it, KPIs and your red, yel­low, green? And then num­ber sev­en, which I start­ed is how do you lever­age it across mul­ti­ple divi­sions or loca­tions. So here, this sim­ple, we’ve got one fly­wheel for the over­all busi­ness, we take the iden­ti­cal fly­wheel with­out touch­ing it. And we use it as an analy­sis tool on divi­sions or depart­ments. So the client India, for exam­ple, they have, you know, just under 10 dif­fer­ent loca­tions that they work in through­out the coun­try. So when we get the fly­wheel reports, we actu­al­ly don’t get sum­ma­ry data on the over­all, we get the report on each dif­fer­ent loca­tion, red, yel­low, green, and where there’s a yel­low or a red a com­ment of why and what can be done to fix it by the per­son who runs that loca­tion. So the peo­ple that run the loca­tions, which are like, you know, gen­er­al man­agers of divi­sions, they know them­selves to eval­u­ate them­selves on the fly wheel and they’re being trained to come up with an action plan. So it’s very sim­ple. You just apply it as a fil­ter to look at a piece of and the cor­re­la­tion in this com­pa­ny is in sane, it feels like a direct cor­re­la­tion between the fly­wheel and per­for­mance. Now, unlike any­thing, there’s no not many things in the world are 100% Indi­rect, but there’s an insane­ly strong cor­re­la­tion between because they’ve got it right between the col­ors on the fly­wheel. So the high­est per­form­ing loca­tions are gen­er­al­ly green all around.

Brad Giles 50:12

So I would go as far as to say, not with­stand­ing your last com­ment, I would go as far as to say, when the fly­wheel is all green, you’re out­per­form­ing the mar­ket. In terms of growth? Yeah, um, yes,

Kevin Lawrence 50:30

you should be out­per­form­ing the mar­ket, or at least you’re per­form­ing at your best. Right, like you are the dude, you are just you, you are excel­lent. Like, in most cas­es, you’re prob­a­bly out­per­form­ing the mar­ket. You should be Yes, I’m fil­ter­ing my nose. We’re talk­ing about it. Yes,

Brad Giles 50:46

yeah. Yeah. out of thin air.

Kevin Lawrence 50:49

You know, I know that you don’t, you don’t. So but it’s but it’s basi­cal­ly, it’s an eval­u­a­tion tool. But the key to remem­ber, this is not our cor­po­rate head office, let me eval­u­ate you. You’re train­ing peo­ple to think about their busi­ness to be bet­ter, smarter oper­a­tors in every­thing we do. Again, with­out spi­ral­ing up with every­thing we do, every per­son that we’re we’re almost sub­con­scious­ly want­i­ng to train them to be the CEO, or to move in that direc­tion to be a bet­ter, more capa­ble ver­sion of them­selves. So the num­ber eight, you know, how do you opti­mize it over time? And we’ve already said this, but it’s, you know, quar­ter­ly plan­ning meet­ings, look­ing at it, eval­u­ate it, take that into account, when you reset your goals, annu­al plan­ning to go real­ly look at and say, What do we change some­thing like I’m a big believ­er in once you lock down any strate­gic prin­ci­ple, you should­n’t debate it through­out the year, unless some­thing’s real­ly gone wrong, should drop into exe­cu­tion mode, exe­cute like crazy. And then when you decide it’s time, then there’s a peri­od where you eval­u­ate, and whether it’s at a six month mark in the year where the exec­u­tive goes off and works on strat­e­gy, or some clients do, or it’s at the annu­al plan­ning meet­ing, it does­n’t mat­ter what it is. But on those quar­ter­ly, you know, stay­ing in exe­cu­tion mode, and then eval­u­ate strate­gi­cal­ly when­ev­er you do it.

Brad Giles 52:12

And ask, have we had any fail­ures in the last year, or quar­ter but year? And does is that explained by our fly­wheel because some­times you’re adher­ing to the fly­wheel means that you will expe­ri­ence a fail­ure. But you know, like, I go back to the spi­ral at the begin­ning of this episode, we’re get­ting a deep­er under­stand­ing over the years of our fly­wheel deep­er under­stand­ing, deep­er under­stand­ing. And so that reg­u­lar rhythm and check­ing in makes a huge, huge difference.

Kevin Lawrence 52:45

Yep. I agree. And the thing I’d real­ly want peo­ple to under­stand, Brad is, look, our role is to help facil­i­tate com­pa­nies that want to build endur­ing great com­pa­nies and con­tin­ue that growth path and get big­ger and bet­ter con­tin­u­al­ly. That’s their that’s their, their goals. And that’s what we do. And we look at those lots of dif­fer­ent tools out there. And I look at what sticks and con­tin­ues to add val­ue 235 years in the future. And the fly­wheel absolute­ly does. Yes, five years in the future, it’s still insane­ly valu­able, and we will nev­er stop look­ing at it. It’s, it’s, it’s incred­i­ble. And in com­pa­nies that keep focus­ing on it, they gen­er­al­ly keep get­ting bet­ter and bet­ter, because they’re obsessed with the stuff that mat­ters most. So should we do a quick recap here, Brad, and maybe I’ll do one you can do the next I’ll start with num­ber one, I’m gonna go back and forth. So it’s like a point num­ber one point to remem­ber is, you know, you’ve already got a fly­wheel, and either it’s a pos­i­tive fly­wheel it’s spi­ral­ing you up. Or you could have a Doom loop that’s keeps knock­ing you down. And yeah, that’s, that’s the first thing. It’s already there. And our job is to dis­cov­er it.

Brad Giles 54:04

Num­ber two is, is you begin by under­stand­ing your hedge­hog con­cept and smack list. So you look at those two things. If you haven’t got it, then you build those before you build the fly­wheel you get a deep under­stand­ing of what works and what does­n’t in those areas. That’s the you know, that’s the qual­i­fi­er, the pre conceived,

Kevin Lawrence 54:25

right and those both are also prin­ci­ples, you’ll still look at five years down the road. Num­ber three is you got to val­i­date it’s cor­rect. First of all, make sure you only have one per CEO Thank you very much. But each piece should dri­ve the next piece and you should be able to say, because of this, we can’t help but as it dri­ves to the next piece

Brad Giles 54:48

num­ber four, how to speed it up well, a relent­less exe­cu­tion of the bor­ing basics with­in your hedge­hog. So ask the ques­tion, What col­or is it which we’ll get to in a moment, ask the ques­tion But then relent­less, bor­ing, exe­cute exe­cu­tion of the bor­ing basic.

Kevin Lawrence 55:05

Yes. And find peo­ple that like doing that stuff that we might con­sid­er bor­ing. Five, and it was kind of obvi­ous. How do you not slow it down? Well, don’t do things that don’t relate to the fly­wheel and dis­tract ener­gy away from it, and eval­u­ate on a quar­ter­ly basis how you’re doing so you can keep tweak­ing it.

Brad Giles 55:25

Yeah. So and then num­ber six, how do you mea­sure and know that it’s get­ting stronger, red, yel­low, green, each of the com­po­nents with­in the fly­wheel and then ask your­self, what are the key per­for­mance indi­ca­tors that will tell us that we’re con­sis­tent­ly going to be green mea­sured those and then build pri­or­i­ties that will help to give the busi­ness the abil­i­ty to achieve those KPIs?

Kevin Lawrence 55:51

Num­ber sev­en, how do you lever­age across mul­ti­ple divi­sions and loca­tions? Well, you take the one fly­wheel, you don’t make new ones, and use it as an analy­sis tool to eval­u­ate and ide­al­ly, train the peo­ple that run that part of the busi­ness, to use it to guide their think­ing and their actions.

Brad Giles 56:09

And then final­ly, num­ber eight, how do you opti­mize it over time? Well, at annu­al plan­ning ses­sions, rethink it. Ask your­self, have we had any fail­ures in the past year? And is that explained by our fly­wheel have we had any suc­cess­es is that explained so help the lead­er­ship team to get a deep­er under­stand­ing of what the fly­wheel is doing and not doing and kind of con­tin­u­al­ly stress tester? What a good episode this has been. So

Kevin Lawrence 56:42

let’s make sure turn­ing the fly­wheel the mono­graph by Jim Collins, go and read it go back to good degrade. And by the way, if you hap­pen to be in one of those Doom loops, go back to what used to be my favorite of all Jim’s books, how the mighty fall, this is a boat, the doom loop, a boat com­pa­nies that make bad choic­es and stay in a neg­a­tive down­ward spi­ral. Often until they either straight­en them­selves out with relent­less exe­cu­tion of the bor­ing basics, or they get bought.

Brad Giles 57:18

And quick­ly that turn­ing the fly­wheel book is about a one hour read. Like it’s Yes, yeah, yeah. It’s a mono­graph. It’s like 38 pages. I think.

Kevin Lawrence 57:30

You’re such a pre­cise brain. It’s actu­al­ly 37. And then notes.

Brad Giles 57:35

Yeah, so yeah, so it’s a very easy read and see, it’s very thin,

Kevin Lawrence 57:40

you can, you can prob­a­bly read it before your plane takes off. If you’re one of those peo­ple, that’s back to trav­el­ing. So I were real­ly gonna say Good thing, a shout out to Jim Collins, and thank him for this great research. You know, we rely on that research a lot in this and you know, and we’re experts at imple­ment­ing it in com­pa­nies and bring­ing val­ue to life. And we’re grate­ful to have peo­ple that have cre­at­ed these con­cepts that are proven based on research, not just hypo­thet­i­cal ideas.

Brad Giles 58:12

Awe­some. So thank you for lis­ten­ing. I hope you’ve enjoyed today’s episode about the fly­wheel. This has been the growth whis­pers where we always talk about build­ing endur­ing great com­pa­nies. My name is Brad Giles, and you can find me at evo­lu­tion part​ners​.com​.au and of course, my co host, Kevin, the Cana­di­an with the extra cheese, who joins me every week, if you can find him at Lawrence and co​.com. Thanks very much for lis­ten­ing. We look for­ward to chat­ting again next week.