– Welcome to the amusement park, do you want to ride the Flywheel or the Doom Loop?
– Jim Collins just keeps coming up lately (a friend of mine mentioned how “Good to Great” stuck with him after getting his MBA, Preston and Stig just covered “How the Mighty Fall” over at The Investors Podcast, Financial Advisor coach Tracy Beckes draws heavily from it in her practice as she referenced it to Michael Kitces). One of the enduring examples from the book is the Flywheel and the Doom Loop. Spoiler alert: they’re not amusement park rides, but consider an amusement park for well-read MBAs a free startup idea for you…
– Collins uses the following analogy for how people usually think about business success stories: “Breaking News – transformation to chicken from egg, what a stunning turnaround for the egg!” It’s what Barry Ritholtz calls the ten-year overnight success. We talk about the event of the chicken appearing and then give credit to the egg for the singular event. Feels insane doesn’t it? With this metaphor, it’s easy to realize that the real narrative, the one that actually matters, is the story of what happened inside the egg until it was time to hatch.
– A Flywheel builds momentum as it turns, spinning faster and faster with less “push” needed once it reaches a critical speed. Without going high school bio on this, the egg cells multiply, the chick forms, eventually it hatches, and then you’ve got a chicken. Brilliant turn around for the egg or amazing biology?
– The Doom Loop describes a process that jumps around, tries to do “what” before figuring out “who,” and despite often operating with good intentions, becomes its own worst enemy. By not building on forward momentum like the Flywheel, the Doom Loop starts and stops repeatedly. The classic analogy is the hedgehog and the fox. The fox tries to catch the hedgehog, darting around, plotting, scheming, hunting, pouncing, but it never works. Why? Because the hedgehog only knows how to do one thing: curl up in a ball and put the spikes out whenever the fox is interested. For all of the fox’s efforts, the hedgehog’s one key trick ensures survival. Hedgehogs keep pushing the Flywheel, while foxes chase erratically while circling down the Doom Loop.
– Looking at what we do every day, it helps to ask if we’re being a hedgehog or a fox. It helps to look at the system were pushing forward and ask if it’s a Flywheel or a Doom Loop (bonus points: for the interested, it also helps to actually read up on the hedgehog and the fox to understand that continuum as well, see the work of Isaiah Berlin originally, and then move onto Philip Tetlock and Nate Silver. We’ll save that for another day).
– Unfortunately, there’s no warning for the real-world amusement park that we call “work.” Nobody tells you which ride you’re getting on to, so you have to do your best to figure it out for yourself. Nobody tells you who the hedgehogs and foxes are, or which are best at which time in what structure.
– Collins is important to read because he gives us the labels to at least try to spot common traits in advance, and ideally, improve our results and experience. The ride matters, so learn what to look for. As the poet/philosopher GZA once said, “you gotta read the label.”