The Flywheel Manifesto
Yet we're always being told that great companies are those that have successfully aligned technology in the service of boosting the business.
Most management thinking suffers because it starts from a churchthe church of technology, the church of strategy, the church of culture, the church of revolution, the church of whatever the church happens to be. The approach in these cases is to say, "Well, what we're going to do is figure out how technology applies, the role of culture, the role of alignment and so forth." Ask me, though, and I'm purely agnostic. I come from no church. To serve the business best, what you want to do is discover. Instead of starting with an input variable, we actually start with an output variable: stock charts, because ultimately, from a company standpoint, the big question is, how do you change your cumulative returns to investors and go from one performance level to another, and stay there? If technology drives that, great. If it doesn't, great. If culture does, great. If leadership does, great. Whatever the answer turns out to be, the question is, what are the inputs that drive those outcomes?
Picture a huge, heavy flywheel, a metal disk the size of a city block and about 30 feet thicka massive piece of metal sitting on an axle. And imagine that your task is to get that flywheel turning as fast as possible, to take it from standing still or just puttering along to truly break through the momentum. You start pushing on that flywheel in an intelligent, consistent direction, and you keep pushing on it, and after a whole lot of work, you finally get one giant, slow, creaky turn. Then you keep pushing on that flywheel, and you get another big giant, slow, creaky turn number two, and then four, and then eight. Eventually, you go from 8 to 16, 16 to 32, 32 to 64, 64 to 128, the thing starts to build this momentum turn upon turn upon turn, push upon pushand then at some point, bang! You can feel all that cumulative weight behind you starting to add up, and the flywheel starts to pick up more and more speed, more and more momentum, and you keep pushing in that intelligent, consistent direction, and whoosh!that thing hits 1,000 RPMs, 10,000 RPMs, a million RPMs. And then all of a sudden, bang! You've hit this point of real breakthrough.
Now that flywheel image of buildup leading to breakthrough is exactly what it feels like to take a company or any organization from good to great. Technology accelerates your momentum after you've hit breakthrough. If you're trying to use technology as a way to jump-start things, to go from 2 RPMs to 200 RPMs right away, it never works.
The flywheel process breaks into three basic stages. Stage one is disciplined people, stage two is disciplined thought, and stage three is disciplined action. Technology falls into stage three, disciplined action.
When David Maxwell became CEO of Fannie Mae, it was losing $1 million every business day with $56 billion of loans under water. The board asked David, "What are you going to do?" He said, "That's the wrong question." It was the wrong first question, actually. He decided that he wasn't going to figure out what he was going to do or where his company was going to drive this bus until he figured out who should be on the bus, who should be off the bus, and who should be in what seats. And only when he decided that did he turn to the question of where Fannie Mae was going to drive the bus.
We found that as companies become great, the people who built them were always "who" people first and "what" people second. They always thought first in terms of "who" and then in terms of "what." Technology is a "what" question. It comes later. No technology can turn the wrong people into the right people. And remember: People are not your most important asset. The right people are. It's like the Indy 500. Eighty percent of it is the driver and the team, and only 20 percent of it is the car. Ultimately, everybody pretty much gets the same cars anyway.
And that alone can guarantee IT alignment?
If a company has an alignment gap, then it must have skipped some earlier stages of evolution in its corporate development.
What we found is that if you get the right people on the bus, have disciplined thought and disciplined action, then you're aligned from the startand you stay there. Everyone's turning the same flywheel in the same direction and benefiting from the same momentum. The gap simply wasn't a problem for these companies because it was just the very next stage as things began to unfold.
Do you have the right people on the bus? The wrong people off the bus? A clear, simple concept that pulls everybody in the same direction to turn the flywheel? Have you built a culture of discipline as opposed to just having a culture of bureaucracy or a culture of entitlement? If any of those are missing, you're going to have an alignment gap on all kinds of things, not just technology. You're going to find an alignment gap in tactics versus strategy. You're going to find an alignment gap in how your acquisitions merge in. You're going to have more gaps than you can manage.
One of the key questions we asked every one of the executives for our Good to Great research was how they got alignment among all functions in a company. It wasn't a popular question. One day, my researchers came in, and they sort of threw their binders down on the table in frustration, and they told me that the executives who made these great companies thought it was a stupid question. In fact, a lot of them didn't even understand the question.