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The business flywheel

The Business Flywheel illustration: the model of The Business Funnel, where prospects are filtered to yield end customers is compared with The Business Flywheel, where customers are at the centre, acting as the driving force behind your business momentum.

Perhaps, like me, you’re used to thinking about bringing customers onboard as a funnel. It’s a very natural metaphor for thinking about customer acquisition. For example, you market to 10,000 people, 500 people visit your website, 50 of them put something in the basket and 10 of them buy. If you draw it out it looks like a funnel. And the next time you market you start fresh with a new 10,000. But the real world isn’t like that. Delivering a good service to your customers helps the next customers come in. Hence the flywheel model.

A flywheel is typically a big heavy wheel that stores and releases energy from an engine or vehicle. The flywheel metaphor is about happy customers driving your growth. And when you think about your business this way it can cause you to make different decisions. Having more customers is like a bigger, heavier flywheel containing more energy. Happy customers speed you up, unhappy customers slow you down. Making it easier for customers to try your product reduces friction, as does making it easier for for customers to talk about and share your product. Get your flywheel big, heavy and spinning like crazy and your business is doing well.

The flywheel model is from Brian Halligan at Hubspot. I’ve thought about customer funnels for literally years and I wish I’d known about the flywheel long ago. Check out Hubspot’s flywheel intro for more .

Published 7 Apr 2019

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Goodhart's law illustration showing a manager frustrated by 1000's of tiny nails when measuring on number of nails made, and pulling their hair out when presented with giant nails when measuring on weight

Goodhart’s Law: when a measure becomes a target, it ceases to be a good measure.

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Naismith's Rule for mountain hiking time

Business without marketing is like winking at someone in the dark illustration: with three panels including someone winking in the dark, someone leaving, and then concluding that they weren't interested (from the Steuart Henderson Britt quote)

Winking in the dark

The "virtuous cycle" of Amazon and Uber illustration: closed loop flow diagrams demonstrate the effect of growth on factors like demand, price and service for Amazon and Uber.

The ‘Virtuous Cycles’ of Amazon and Uber

Survivorship Bias illustration: two analysts observe bullet damage, depicted by red dots, on a fighter plane returning from battle. They propose that heavier armour is added to all aircraft in the most hit areas of the plane. A third onlooker wonders whether this surviving plane tells a different story in that it returned because the most vulnerable areas weren't hit. Maybe heavier armour should be added to those areas?

Survivorship bias

Buoyancy and how ships float explained showing 1m3 of water displaced supporting a tonne of weight and the same principle floating a 50,000 tonne ship

Goodhart's law states that when a measure becomes a target, it ceases to be a good measure. In other words, if you pick a measure to assess performance, people find a way to game it. To illustrate, I like the (probably apocryphal) story of a nail factory that sets "Number of nails produced" as their measure of productivity and the workers figure out they can make tons of tiny nails to hit the target easily. Yet, when the frustrated managers switch the assessment to "weight of nails made", the workers again outfox them by making a few giant heavy nails. And there's the story of trying to measure fitness by steps from a pedometer only to find the pedometer gets attached to the dog. Some strategies for helping this are to try and find better, harder-to-game measures, assess with multiple measures, or allow a little discretion. More detail in this nice little article. I also liked an idea I read in Measure What Matters of pairing a quantity measure with a quality measure, for example, assessing both the number of nails and customer satisfaction of the nails. How strongly Goodhart's Law applies varies. John Cutler shared the Cutler Variation of Goodhart's Law: "In environments with high psychological safety, trust, and an appreciation for complex sociotechnical systems, when a measure becomes a target, it can remain a good measure because missing the target is treated as a valuable signal for continuous improvement rather than failure." Also see: Campbell's Law I revised the illustration. Here is the original…Goodhart's law states that when a measure becomes a target, it ceases to be a good measure. In other words, if you pick a measure to assess performance, people find a way to game it. To illustrate, I like the (probably apocryphal) story of a nail factory that sets "Number of nails produced" as their measure of productivity and the workers figure out they can make tons of tiny nails to hit the target easily. Yet, when the frustrated managers switch the assessment to "weight of nails made", the workers again outfox them by making a few giant heavy nails. And there's the story of trying to measure fitness by steps from a pedometer only to find the pedometer gets attached to the dog. Some strategies for helping this are to try and find better, harder-to-game measures, assess with multiple measures, or allow a little discretion. More detail in this nice little article. I also liked an idea I read in Measure What Matters of pairing a quantity measure with a quality measure, for example, assessing both the number of nails and customer satisfaction of the nails. How strongly Goodhart's Law applies varies. John Cutler shared the Cutler Variation of Goodhart's Law: "In environments with high psychological safety, trust, and an appreciation for complex sociotechnical systems, when a measure becomes a target, it can remain a good measure because missing the target is treated as a valuable signal for continuous improvement rather than failure." Also see: Campbell's Law I revised the illustration. Here is the original

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