The Performance-Innovation Flywheel.
Performance funds innovation. Innovation lifts performance. Success renews the passion that turns the wheel again.
From Understanding Entrepreneurial Passion
Companies that pull away from their peers rarely do it with one big move. They build a loop and keep turning it. I call mine the Performance-Innovation Flywheel.
Performance creates resources. A company that executes well earns revenue, credibility and room to maneuver. Those resources fund innovation: the experiments and bets that do not pay off yet. When innovation works, it lifts performance to a new level. Success renews the passion that started the whole thing. Each turn comes a little easier than the last.
Why the wheel stalls
Research on long-lived companies names the most common failure. Charles O’Reilly of Stanford and Michael Tushman of Harvard have studied it for decades under the name ambidexterity. The profitable core starves the new bets. In O’Reilly’s words, “Exploitation, which is where companies typically make money, tends to drive out exploration.” The quarter eats the experiment.
The opposite failure is just as real. A team in love with its experiments stops performing. The wheel slows because nothing is funding it.
They do not let the quarter eat the mission. They do not let the mission excuse a bad quarter.
No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop.
Pair it with a mission
The flywheel needs a second loop beside it. The Impact-Innovation Loop gives the work a direction. The flywheel gives it fuel. Each one alone fails in a predictable way.
- Mission without flywheel
- A noble idea that runs out of money.
- Flywheel without mission
- An efficient machine pointed at nothing in particular. It can spin for years and leave no mark.
Put it to work
- Name your four stagesWrite what performance, innovation, success and renewed passion mean in your company. One line each.
- Ring-fence the fuelSet aside a fixed share of what performance earns for experiments. Protect it the way you protect payroll.
- Find the slow handoffAsk which stage takes longest to feed the next. That handoff is where the wheel loses speed.
- Review both loops togetherIn the same meeting, ask how the quarter went and whether the mission moved.
Quick answers
What is the Performance-Innovation Flywheel?
A loop described by Rob Frasca in The Creator’s Journey. Performance creates resources, resources fund innovation, innovation lifts performance, and success renews the passion that drives the next turn.
How is it different from the Jim Collins flywheel?
Collins describes momentum built from many consistent pushes. Rob’s version names what each push is made of and pairs the wheel with a mission loop, so the momentum points somewhere.