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The flywheel and the doom loop. Ch 8 of Good to Great Marsha Swink Paul Shirley Jonathan Mclauri n. The flywheel concept. The ONE big push Buildup and Breakthrough. Costco’s breakthrough. 1983 First Store 1986 Forbes names “Best Managed Company” 1993 Merged with Price Company

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the flywheel and the doom loop

The flywheel and the doom loop

Ch 8 of Good to Great

Marsha Swink

Paul Shirley

Jonathan Mclaurin

the flywheel concept
The flywheel concept
  • The ONE big push
  • Buildup and Breakthrough
costco s breakthrough
Costco’s breakthrough
  • 1983
    • First Store
  • 1986
    • Forbes names “Best Managed Company”
  • 1993
    • Merged with Price Company
  • 1998
    • Costco.com emerges
  • 2002
    • 98,000 employees worldwide
    • 37 states with stores
    • International locations in Canada, UK, Asia, Mexico
  • 2004
    • First interest piece article on Costco
      • Comparing Costco to Sams
the flywheel concept cont
The flywheel concept cont.
  • Not just a luxury of circumstance
    • Jim Sinegal-

“On Wall Street, they’re in the business of making money between now and next Thursday. I don’t say that with any bitterness, but we can’t take that view. We want to build a company that will still be here 50 to 60 years from now.”

the flywheel effect
The “Flywheel Effect”

Steps Forward,

Consistent With

Hedgehog Concept

Accumulation of

Visible Results

Flywheel Builds

Momentum

People Line Up,

Energized By Results

example kroger
Example - Kroger
  • No hoopla and motivation
  • Let people see their accomplishments
  • Did not proclaim Big Goals
example costco
Example - Costco
  • Hedgehog Concept
  • Treat employees well
    • Get the right people
  • Give back to the people
    • Rewards
      • Cash back on Gas purchase
      • Membership/American Express Credit Card
      • Fully refundable membership
    • Community Service
      • Backpack filled w/school supplies
      • Adopt a school and reading enrichment
      • Major Contributors to United Way and Children’s Miracle Network
overall meaning of the flywheel
Overall Meaning Of The Flywheel
  • Simple Truth
    • Tremendous Power exists in the fact of continued improvement and delivery of results
      • Every part counts
  • Don’t spend time thinking about it
    • Let the flywheel do the talking
      • As the flywheel turns people start joining the cause
the doom loop
The Doom Loop
  • Skipping the buildup stage…
  • Bells and Whistles never work.
  • Level 4 Leaders changing the direction of the company.
misguided use of acquisitions
Misguided Use of Acquisitions
  • Exciting! Maybe; but is it truly what’s best for the company? -Peter Drucker
  • Mergers and Acquisitions as a creator of success.
  • Two Mediocrities joined together never make one great company.
leaders who stop the flywheel
LEADERS WHO STOP THE FLYWHEEL
  • New leader, new direction?
  • Spinning your Doom Loop. Ex. New CEO Joseph Boyd of Harris Corp.
a wraparound idea
A Wraparound idea
  • Not just consistency but coherence

(or compounding)

takeaways
takeaways
  • Follow all steps methodically
    • Regardless of time
  • Acquisition, Mergers or changes to senior management are not guarantees of success