Breaking down business models one flywheel at a time
Come for the hand drawn graphics, stay for the analysis.
|Aug 20, 2020||8|
Who am I?
I have spent the past 5 years working as a Product Manager at Amazon, a company famous for its flywheel. For those who are unfamiliar, legend has it that Jeff B himself sketched the following on a napkin, on a long, mild, grey night in Seattle in the mid-90s.
This is of course an established part of company lore and is pretty well known at this point; what you may not know, is that individual business teams are encouraged to think up, if not outright draw their version of this. As I’ve bounced around from Smart Home, to Alexa, to Operations, I’ve repeatedly produced flywheels to include in written proposals. It’s at a point now where I see flywheels in my sleep.
What is a Flywheel?
In a simple graphic, a flywheel explains the success formula for a company or system. As X increases, it leads to more of Y, which in turn increases Z. As Z increases it flows back to X and the cycle begins anew. I believe that behind every successful company is a flywheel that is well understood—at least internally.
A company’s flywheel explains why it becomes easier to run a business as it continues to operate. Like compounding interest, investments in one area of the business flow through to every other area of the business. These set off a series of accumulating advantages that the company enjoys over time. A company that understands its own flywheel can identify where the wheel is spinning smoothly, and where a little bit of grease might come in handy.
What is The Flywheel?
In The Flywheel, I use the flywheel as a framework to understand and analyze companies I find interesting. In each article I explain how and why a company has gotten to where it is today, and what the flywheel suggests about its future.
I’m writing for fellow product minded people who want to improve their own product thinking (and help me improve mine!), but investors thinking about the future direction of companies, and general students of business and strategy will hopefully find value in these articles as well.
Over time we’ll uncover commonalities between the most powerful flywheels, and use the flywheel as a tool to identify weak points that can inform strategic decision making for both operators and investors.
Along the way I’m hoping to interview operators and investors about the flywheels they know intimately. If you or someone you know wants to participate in this project with me, please reach out!
Sign up now so you don’t miss an issue. If there’s a specific company you would want me look at, tweet at me and let me know!
In the meantime, tell your friends!