Every business needs a Flywheel

Posted on by Billy Tucker

From tractors to Ferrari’s and everything in between, engines of all sorts are incapable of functioning without a heavy disc of spinning metal known as a Flywheel. The more you know about the role of and characteristics of the Flywheel, the more you may see parallels with your own organisation.

First, some basics about the operation of an engine when used to generate enough energy to move things.

Strip out all the fancy from an engine, and you are left with a few basic principles;

  1. Fuel is injected into a chamber along with some air, the chamber or Cylinder has a rod or piston at one end.
  2. The fuel mixture is ignited by an electric spark causing the expanding gasses from the explosion to push the piston outward.
  3. The other end of the piston is attached to a shaft, which turns as the piston moves, converting the piston’s outward movement into rotation
  4. A number of ignitions are timed in a number of chambers creating a continuous rotation of the shaft
  5. The end of the shaft is attached to a Flywheel which is hard to turn at first due to its weight (hence why engines have electric starter motors to get the flywheel turning)
  6. Now that the Flywheel is moving, and it has momentum, it has much more energy than any individual ignition could produce, meaning that the Flywheel is storing up the energy from hundreds of individual sparks, ready to move the wheels
  7. When you want to move, the clutch plate is allowed rub against the Flywheel transferring the Flywheel’s energy out to move the wheels and overcoming the vehicle’s inertia.

Like an organisation, the engine needs to be in balance to perform as a whole, and it also needs to be optimised for the function it is intended to perform.

The amount of fuel and the size of the spark, the timing of ignition and in which order. And finally, the size of the flywheel are critical in order to get the balance right between the need for agility (lighter is better) versus the need for power (heavier is better).

I love the concept of a Flywheel because it is so critical yet so often ignored, and so much of the of an engine’s power comes for the energy stored in the Flywheel. Kids debate number of cylinders, capacity, etc, but never the size of the Flywheel!

Organisations of all sizes need to have a Flywheel function too, a place to store the sparks of innovation ready to release them at the optimal moment. Sure, a powerful Flywheel can be the enemy of Agility, but that’s about right-sizing the Flywheel to make sure an appropriate trade-off is made between power and control. But like engines, if the Flywheel is too small the whole thing will grind to a halt when things get tough, too big and it will be hard to alter the speed of the engine easily.

Crankshaft (red), pistons (gray) in their cyli...
Crankshaft (red), pistons (gray) in their cylinders (blue), and flywheel (black) (Photo credit: Wikipedia)

When I think about a Flywheel Function, I think about Finance, IT, Project Management Office, HR and other corporate services. The rightsizing of those functions is essential if the business is to perform, both to ensure that momentum is maintained when new ideas are scarce, but able to respond quickly when innovation emerges.

Starting a business is True Grit, not The X Factor!

Posted on by Billy Tucker

Successful businesses evolve from the same place as unsuccessful businesses, but something happens along the way that makes them pop. On rare occasions, a phenomenal idea will emerge that’s backed by a suitably phenomenal management team then the magic happens, but that’s the stuff of legend. For the rest of us, separating wheat from chaff is a grind.

But the grind is the last thing on the mind of many an entrepreneur. Overnight success stories litter our TV screens, conditioning those who know no better to think that being discovered is more important than working hard. And like pitchy hopefuls on unreality TV, many entrepreneurs mistakenly assume the slippery slope to success is greased by exposure alone. It isn’t. Time spent looking for limelight could be better spent knocking on the doors of potential customers, hunting for feedback and trying to secure distribution for their shiny idea.

Walking the streets and talking to potential customers is busking for entrepreneurs, it probably won’t lead to overnight success, but you get to perfect your pitch and make some money along the way, increasing staying power and the likelihood you will nail an audition if the time is right. Better still, generate enough income to avoid external funding and you negate the allure of instant fame altogether.

The serious side of Gamification

Posted on by Billy Tucker

A steady stream of retail innovation exists online; some effective, some less so. But most claim to centre on a perennial problem in Retail:

How to drive sales through incentives without destroying long term brand value…

Group Buying and other Daily Deals sites were built to address this issue, and they’ve done a pretty decent job if their multi-billion dollar revenues are anything to go by! Though, to some extent they are a victim of their own success in that it’s hard for a brand to discriminate on price discretely when so many of its regular customers are Daily Deals customers.

Further challenges with Daily Deals include the fact that the Brand doesn’t typically control the creative, meaning they are often a Supplier to the Daily Deals Site not a Client. And, the Daily Deals site will leave a permanent record of the Sale in their back catalogue which will appear in Search and therefore undermine brand value. Further, the Brand owner is asked to give away quite a lot, more often than not the Retail price is discounted by more than 50% and a further 20% – 30% is given to the Daily Deals site as a commission.

Clearly there are a number of scenarios where this channel works well for a business. The unit sales volume can be significant with no marketing effort from the Brand Owner hence they are appealing in a lot of ways, especially if owning the customer is unimportant.

A radical new tilt at the problem is Entertainment Shopping, where the retail price is used only to describe the Size of the Prize, but is otherwise irrelevant. One example of Entertainment Shopping is Penny Auctions, where users purchase Bids which they use to win items, theoretically being able to win and items for a single bid, which may cost less than a dollar. TPlay for Winhe reality though is that these Auctions are super competitive and the likelihood is that you will lose many more auctions than you win, yet the bids you used on lost auctions still cost real money – in that sense it’s more akin to gambling than shopping. For the Auction site this means the overall yield per item is greater than the retail value, thus favouring the Penny Auctions themselves more than the Brand Owners or the customers, albeit customers may choose this purchasing route for the sheer joy of the Auction!

In the Entertainment Shopping category Australian Statup Wynbox has a much more evolved solution for Brand Owners. The genius of the Wynbox solution is that they provide their Buy-to-Win platform as an integrated shopping engine for an existing website, meaning the retailer retains end to end control of the user experience.

Buy-to-Win involves the retailer setting a ratio of free items to full paid items, meaning anything from 1 in 2 to 1 in 10 or more may be free, equivalent to a direct discount if that number are purchased by a single customer, or a lucky dip if you are buying just one.This is a simple way to provide a strong purchase incentive without discounting the product, and it can be fun too, so it ticks the box for the user who plays Candy Crush between shopping missions!

There are a number of interesting scenarios that underline the power of the Wynbox platform, such as in the sale of concert tickets for instance. As sales begin to lag for a concert, the ratio is introduced. The ratio can be cranked up to 1 in 2 if necessary to drive sales, but at no point is the ticket price discounted, meaning the customers who purchased the concert tickets at full price never feel cheated and the Talent and the Promoter are happy.

In fact, Wynbox works in a number of scenarios, including Fashion where margins on Full Price products are high but the vast majority of purchases normally occur at a substantial discount, with Buy-to-Win the discount can exist without an overt discount.

All retail businesses should be thinking about the entertainment value of their shopping experience as consumers explore less boring ways to shop for discretionary items. Wynbox offers a fresh solution that can be “plugged in” to an existing site, meaning a fast track to an Entertainment Shopping experience that would otherwise be very hard to achieve.