Subscribe

Featured Insights: BCG’s most inspiring thought leadership on issues shaping the future of business and society.

" "

The following text is an excerpt taken from “Innovation at Speed and Scale: Competing in the Digital Era with the Flywheel Operating Model,” the first chapter of “The Digital Transformation Playbook: What You Need to Know and Do,” published by Brightline Project Management Institute.

Digital technologies are driving a rapid and irreversible shift in the basis of business competition—continuous customer-centric innovation, at speed and at scale, is now the name of the game. Market-leading incumbents are now confronting the limitations of their conventional top-down, control-centric operating model. Digital leaders, on the other hand, have embraced this sea change; and are pioneering a new operating model—the flywheel—powered by innovative product teams and an accompanying shift in culture and governance to support them.

Digital is shifting the basis of business competition. Customer and employee expectations continue to rise. Competitive pressure from new entrants and new forms of competition are intensifying. Globalization continues to amplify the volatility, complexity, and uncertainty of the interconnected global economy. To compete and win in this new environment companies must learn, adapt, and innovate faster than their competition. Innovation at speed, and at scale, is the new name of the game.

Featured Insights: BCG’s most inspiring thought leadership on issues shaping the future of business and society.

Digital leaders have embraced this new reality. They are systematically harnessing digital technologies to drive innovation velocity in every part of their business. They are deploying artificial intelligence (AI) and digital solutions to create user-centric learning loops to gather data, generate insights, and continuously reshape and reinvent customer experiences, as well as core operations. They understand, at a very intuitive level, the power of digital to augment and accelerate the basic loop of human learning.

Digital leaders have pioneered a new product-centric, digital-first operating model, built around this foundational premise, which we call the flywheel. This operating model prioritizes product teams and empowers them to drive continuous value delivery along every element of the business’s value chain. These multidisciplinary teams leverage AI- and digital-powered solutions to create powerful self-reinforcing loops for continuous data-driven innovation. Once spinning, these virtuous cycles act like flywheels, creating their own momentum for always-on reinvention and growth. This flywheel effect also creates transformative energy for the entire organization, enabling the testand-learn mindset and ways of working to permeate the culture and take root across the organization.

A Boston Consulting Group (BCG) study of 1,200 global companies vividly illustrates the power of this model. From 2018 to 2021, the companies that pioneered and scaled this digital-first operating model delivered 2.5 times higher total shareholder value overall.