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The Joy of Enterprise Management Incentives
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3 min read

Unlocking momentum: the power of the flywheel effect

Unlocking momentum: the power of the flywheel effect

In the challenging world of business, creating momentum and steering a company through various stages can be daunting. Have you ever wondered how some businesses effortlessly gain momentum? Think of titans like HubSpot and Atlassian - both products that practically sell themselves. But how?

The flywheel effect

Successful businesses adopt the flywheel effect, a concept coined by Jim Collins in the book Good to Great.

Put simply, the flywheel effect is when businesses build on small wins to create such momentum that growth happens organically. Sounds interesting right, but how? Well, it all boils down to customer experience.

According to Cameron Deatsch, CRO of Atlassian, showcasing the best about your business makes it easy for customers to engage. Making it easy to learn about your products and even easier to buy from you, will achieve the desired effect. 

The essence of a flywheel

Illustration of a flywheel model by AtlassianIllustration of a flywheel model (Atlassian)

So how does it work? Similar to a mechanical flywheel, initially cumbersome, once in motion gains momentum with minimal effort. From a business perspective, the basic flywheel revolves around three key stages:

1. Attract

Imagine drawing in prospects - typically done through content, social media advertising, and SEO - putting your company right on their radar.

2. Engage

Once you have their attention, simplify learning about your product with ungated content, free trials, and user-friendly self-serve purchases.

3. Delight

The purchase isn't the end; it's just the beginning. Turn customers into superfans through top-notch onboarding, stellar support, and community building.

Example of a flywheel

Now, let's delve into a real-world example - the Atlassian flywheel approach.  
Firstly, they focused on creating outstanding products that users couldn’t help but talk about.

The Atlassian Flywheel Intercom

The Atlassian Flywheel (Intercom)

That is, attracting prospects by offering exceptional products that spur conversations and interest without splurging on traditional marketing.

Then, when prospects were hooked, Atlassian made their onboarding a walk in the park, simple and comprehensive. They offered ungated content, free trials, and easy self-serve purchases - no hurdles, just smooth sailing.

And here comes the cherry on top: Atlassian's expertise in retaining customers. 
They transformed customers into superfans through incredible onboarding, robust support, and fostering a vibrant user community.

These customers didn't just stay satisfied; they became advocates, spreading the word about Atlassian's products. Creating exceptional customer experience, much like Farfetch and other enterprises.

By excelling in these stages - Attract, Engage, and Delight - Atlassian spun a flywheel effect. Once in motion, it effortlessly drew in new customers and retained the existing ones, proving its efficiency with much lower marketing costs at IPO compared to similar-sized companies.

Sales and marketing spend for companies with an IPO Intercom

Sales and marketing spend for companies with an IPO (Intercom)

Every time the flywheel turns, it not only gains momentum but also reduces friction and adds positive processes and strategies. It's like oiling the cogs each time to make the journey smoother. There are many examples of this playing out.

How can you apply the flywheel to your business?

So, how can you apply the flywheel effect to yourself or your business?

Well, it's all about establishing a self-perpetuating mechanism for sustained growth. Focus on attracting, engaging, and delighting customers - this creates a ripple effect where satisfied customers become loyal users but also advocates. 

Inspired by Amazon’s success:

Discovering vital elements

Initiate by recognising the pivotal aspects of your business that contribute to success. Dive into your historical data, both triumphs and setbacks, to understand what worked and what didn't.

Crafting the flywheel model

Based on these elements, draft a  framework for your business's flywheel. Concentrate on the components that significantly drive growth and customer satisfaction.

Embrace team collaboration

Engage your team in refining this model, and encourage diverse viewpoints and insights to create a comprehensive representation of your business' flywheel dynamics.

Validate and harmonise

Validate the flywheel against your organisation's historical achievements and setbacks. Ensure the proposed model seamlessly resonates with your company's core values, unique strengths, and long-term growth aspirations.

Embrace evolution and flexibility

Continuous refinement and adaptation are vital. Keep the model flexible enough to accommodate changing scenarios, welcoming new strategies or elements as needed.

Recap

In today's competitive business landscape, the flywheel effect stands as a transformative strategy.

Titans like HubSpot and Atlassian demonstrate the power of this approach - small victories compound to generate remarkable momentum, propelling businesses almost effortlessly.

At its core, the fundamental purpose of the flywheel is leveraging customer experience for continuous momentum. It's about creating a seamless journey for customers - learning, purchasing, and transforming them into passionate advocates.

So, set your flywheel effect in motion and watch your business soar.

Your team are on this crazy ride with you. Incentivise them to stick around and help your business succeed with a share scheme.

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