Align your teams around your strategy and avoid silos

Andres Zylberberg | Evolution Partners 

So we have a strategy. How do we engage our teams around it and get momentum? It’s one of the most frequent conversations I have with clients wrestling with complexity, frustration, and disappointing results.

Professor Michael Porter of Harvard University describes strategy as

“Strategy describes how a company creates a unique and valuable position through a set of differentiating actions.”

In practice, it is the successful completion of differentiating actions, positively impacting each other, which leads to success in strategy (our top-line revenue). It’s also the process of ‘Turning the Flywheel’, a basic machine principle, whereby the momentum created by a turning wheel eventually ensures the wheel turns by itself.

The concept of the Flywheel, as proposed by renowned author Jim Collins, is a powerful way to engage our teams around the key elements of our strategy, leveraging collaboration, alignment, and igniting momentum.

The good news is no matter which industry you are in or the complexity of your business, your business already has a Flywheel. The objective now is to identify and articulate the 5 – 6 key strategic components that ‘turn the wheel’ and ‘fuel the engine’ in your business.

This process also enables us to communicate with each function of our business, clarifying how they add value to each of the interlinked strategic elements for business momentum. That reduces the silo mentality, creating cohesiveness and better results across the company.

Amazon’s Flywheel

One of the best applications of the Flywheel concept is Amazon. When Amazon started in 1995, it was a website that only sold books. Within a month of its inception, the company had already shipped books to over 40 different countries. Since then, Amazon has become one of the world’s largest e-commerce companies, accounting for around 44% of total e-commerce sales in the United States in 2017. So, how exactly did Amazon pull off such impressive results?

As Jim Collins says in his book, Jeff Bezos infused Amazon with “an obsession to create even more value for even more customers.” The key differentiator was not just in good intent, but the way it was turned into a repeating loop – turning the ‘wheel’ and fuelling the engine.

Amazon’s wheel, which strategically compounded actions and created momentum, started with a strategy to offer lower prices on more offerings. These were the steps;

1. Lower prices on more offerings can’t help but to increased customer visits.
2. More customer visits can’t help but attracting third-party sellers.
3. Third-party sales can’t help but expanding the store and extending distribution.
4. Extended distribution can’t help but growing revenues for fixed costs.
5. Finally, this better pricing led right back to their original goal – lower prices on more offerings.

Building your economic engine Flywheel

This is a good opportunity to discuss with your Leadership team and explore the key strategic elements that generate momentum in your firm.

Each element should have a clearly defined owner (who will be the voice communicating performance), specific measures of success (to identify if that element is performing as expected), and its current status.

Our clients find it useful to use a traffic light system to highlight each Flywheel element status. A Green status means all measures of success, for that element, are as per our target. Amber status means some measures of success, for that element, are performing well, and some aren’t. A Red status means that all key measures of success are below expectations and we need to action on that.

The goal is good enough. Some teams feel the need to get it right before sharing it with the broader team, falling into what we know as analysis paralysis. Instead, consider approaching this concept as an iterative process.

Testing your Flywheel

How do we know we have identified the right elements of our Flywheel? It’s one of the questions we hear from leadership teams when exploring their Flywheel.

We can’t help but, it’s what Jim Collins suggests in his work.

Amazon’s Flywheel example starts with lower prices on more offerings, and when that happens they can’t help but increase customer visits. And by increasing customer visits, they can’t help but attract third-party sellers. And you got the idea.

Identifying priorities

During this process, several ideas will probably be on the table to improve the performance of each of your Flywheel elements.

Most of our clients find those ideas as cross-functional initiatives, which when executed facilitate collaboration and cohesiveness across the business.

The goal here is to identify and align on the top priority. The most important initiative you should action on now to ignite your Flywheel and generate momentum.

 If you want to know more about how to identify your business Flywheel, contact us at andres.zylberberg@evolutionpartners.com.au