#1: Define your flywheel. Ensure that every step in it ignites and accelerates momentum.

Building momentum starts by defining your flywheel—the series of catalytic actions that compound upon one another. Think of your flywheel as the meta strategy for your business. It’s bigger than any one product or launch. It’s a coherent framework that defines what you’re building and how it accrues value.

For an example, here’s a look at Vanguard’s flywheel:

Bill McNabb, then CEO of the mutual fund giant Vanguard, brought his senior team to Boulder in 2009, and they worked for two days to crystallize their flywheel.… which I’ve sketched in a simplified flywheel diagram below.

Notice how each component in the Vanguard flywheel isn’t merely a “next action step on a list” but almost an inevitable consequence of the step that came before.

If you offer lower-cost mutual funds, you almost can’t help but deliver superior long-term returns for investors (relative to higher-cost funds that invest in the same assets). And if you deliver superior returns to investors, you almost can’t help but build client loyalty. And if you build strong client loyalty, you almost can’t help but grow assets under management. And if you grow assets under management, you almost can’t help but generate economies of scale. And if you increase economies of scale, you almost can’t help but have lower costs that you can pass along to clients.

The Vanguard case exemplifies a key aspect of how the best flywheels work. If you nail one component, you’re propelled into the next component, and the next, and the next, and the next—almost like a chain reaction.

In thinking about your own flywheel, it’s absolutely vital that it not be conceived as merely a list of static objectives that you’ve simply drawn as a circle. It must capture the sequence that ignites and accelerates momentum. The intellectual discipline required to get the sequence right can produce profound strategic insight.

As Robert Burgelman, Stanford GSB’s strategy professor, once said, “The greatest danger in business and life lies not in outright failure, but in achieving success without understanding why you were successful in the first place.” When you deeply understand the underlying causal factors that ignite and propel your flywheel forward, you can avoid Burgelman’s trap.

#2: Build speed and momentum. Optimize the performance of every cog in your flywheel.

Think of your flywheel as a gear with teeth that have to mesh into other gears. As such, every component either sustains and builds momentum or subtracts from it depending on how well maintained and executed it is. Flawless teeth build momentum, while faulty teeth grind and slow momentum.

Once you get the flywheel right, the questions becomes, what do we need to do better to accelerate momentum? The very nature of a flywheel—that it depends upon getting the sequence right and that every component depends on all the other components—means that you simply cannot falter on any primary component and sustain momentum.

Think of it this way. Suppose you have, say, six components in the flywheel, and you score your performance in each from 1 to 10. What happens if your execution scores are 9, 10, 8, 3, 9, and 10? The entire flywheel stalls at the component scoring 3. To regain momentum, you need to bring that 3 up to at least an 8.

So it’s not just about having the right flywheel. It’s about executing every component of that flywheel with disciplined consistency—constantly investing in and improving each and every component.

Ultimately your momentum depends upon the performance of every single component. Your goal is to get each component up to a 9-10 out of 10. And then to keep each component their day in and day out. That’s how you get the full compounding effect of your flywheel.

#3: Extend your flywheel. Fire bullets, then cannonballs to lower the risk inherent in big bets.

As you progress, you’ll need to extend your flywheel by broadening the number of things you do and/or the scale that you do them at. Every extension of your flywheel carries inherent risk, that you’ll miss the mark, come up short, or fail somewhere in the process. As such, how you extend your flywheel is incredibly important.

I love Jim Collins concept of firing bullets, then cannonballs as a way to lower the inherent risk that comes with doing anything new and unproven:

How do great companies go about extending a flywheel? The answer lies in a concept I developed with my colleague Morten Hansen in our book, Great by Choice.

Morten and I systematically studied small entrepreneurial companies that become the 10X winners (beating their industries by more than ten times, in return to investors) in highly turbulent industries in contrast to less successful comparison cases in the same environment. We found that both sets of companies made big bets, but with a huge difference.

The big successes tended to make big bets after they’d empirically validated the bet would pay off, whereas the less successful comparisons tended to make big bets before having empirical validation.We coined the concept fire bullets, then cannonballs to capture the difference.

Here’s the idea:

Imagine a hostile ship bearing down on you. You have a limited amount of gunpowder. You take all your gunpowder and use it to fire a big cannonball. The cannonball flies out and splashes in the ocean, missing the oncoming ship. You turn to your stockpile and discover that you’re out of gunpowder. You’re in trouble.

But suppose instead that when you see the ship bearing down, you take a little bit of gunpowder and fire a bullet. It misses by 40 degrees. You make another bullet and fire. It misses by 30 degrees. You make a third bullet and fire, missing by only 10 degrees. The next bullet hits—ping!—the hull of the oncoming ship. You have empirical validation, a calibrated line of sight. Now, you take all the remaining gunpowder and fire a big cannonball along the calibrated line of sight, which sinks the enemy ship.

Some bullets (small bets) hit nothing, but some give enough empirical validation that the company then fires a cannonball (big bet), providing a big burst of momentum.

#4: Stay disciplined. Enduring momentum comes from disciplined thought and action.

Your flywheel, like a set of guardrails, should help you stay disciplined. It should help keep your thinking disciplined, ensuring that every action you take reinforces and accelerates your flywheel. And it should help you say no and decide what not to do—because it doesn’t reinforce your flywheel.

Unsurprisingly, an overarching theme from all of Jim Collins’ research was the role of discipline in separating the great from the mediocre:

An overarching theme across our research findings is the role of discipline in separating the great from the mediocre. True discipline requires the independence of mind to reject pressures to conform in ways incompatible with values, performance standards, and long-term aspirations.

The only legitimate form of discipline is self-discipline, having the inner will to do whatever it takes to create a great outcome, no matter how difficult. When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you create a powerful mixture that correlates with great performance.

To build an enduring great organization—whether in the business or social sectors—you need disciplined people who engage in disciplined thought and take disciplined action to produce superior results and make a distinctive impact in the world. Then you need the discipline to sustain momentum over a long period of time and to lay the foundations for lasting endurance.

#5: Avoid the doom loop. Stick to your flywheel and apply it consistently in good and bad times.

One of the most powerful side effects of having a clear strategic flywheel, is that it gives you a center of gravity—a firm guide from which to make decisions. This is especially critical in turbulent times when it’s easier than ever to operate from a place of fear and lose the disciplined approach that makes companies successful in the first place.

Jim Collins describes how Amazon stuck to their flywheel during the dot-com bust:

Bezos and his team could have panicked during the dot-cot bust, abandoned the flywheel, and succumbed to what I described in Good to Great as the doom loop. When caught in the doom loop, companies react to disappointing results without discipline—grasping for a new savior, program, fad, event, or direction—only to experience more disappointment.

Instead, Amazon committed fully to its flywheel and then innovated aggressively within that flywheel to build and accelerate momentum. ✂️ Over time, Amazon would renew and extend the flywheel far beyond a simple e-commerce website and enhance the flywheel with new technology accelerators such as artificial intelligence and machine learning.

But throughout, the underlying flywheel architecture remained largely intact, creating a customer-value compounding machine that many of the largest companies in the world came to fear.

Once you’ve defined your flywheel, stay disciplined to create a customer-value compounding machine. Especially in volatile and turbulent times.