What if impact creation was as strategic and intentional as value creation? What if every dollar earned didn’t just fuel a business’s bottom line but also strengthened its ecosystem—its customers, employees, communities, and the environment?
The RoundMap Flywheel reimagines how organizations create and amplify value by integrating the Value Engine and the Impact Flywheel into a unified system. This setup ensures that the energy from value creation is reinvested strategically to build resilience, foster equity, and drive sustainable growth for all stakeholders.
Let’s explore how the Value Engine powers returns and how the Impact Flywheel transforms them into meaningful, ecosystem-wide impact. Please consider the following image of a virtuous Flywheel setup in which value returns are reinvested to amplify impact and mitigate adverse effect and gradually returned to the company:
Notice the pedals on both wheels: the impact flywheel serves as a value reservoir, gradually releasing its impact returns to enhance and stabalize the value creation process (engine). At the same time, we can actively drive impact through shared value networks, leveraging them to fuel and accelerate value creation. Together, these two processes─value creation and impact creation─form a splendid self-reinforcing loop, amplifying each other in a continuous cycle of growth and improvement.
The Value Engine: Driving Value Creation and Returns
The Value Engine represents the traditional value creation process within an organization, grounded in the principles of Michael Porter’s value chain theory. It encompasses all activities and processes that contribute to creating, delivering, and returning value.
However, RoundMap reframes the conventional value capture concept as value returns to highlight a more equitable and purpose-driven approach.
Key Features of the Value Engine:
- Operational Excellence: The Value Engine focuses on creating and delivering value efficiently and ethically to meet customer and stakeholder needs.
- Value Returns, Not Capture: Instead of hoarding value (implied by “capture”), the Value Engine ensures value flows outward, reinforcing the organization’s purpose and creating opportunities for reinvestment.
- Foundation of the Flywheel Setup: The energy generated by the Value Engine sets the entire system in motion, driving both immediate outputs and downstream impact.
The Value Engine ensures that an organization not only thrives financially but also generates the returns necessary to fuel long-term impact.
The Impact Flywheel: Amplifying and Sustaining Impact
The Impact Flywheel transforms value returns into meaningful and equitable reinvestments. Unlike the Value Engine, which is focused on operational and financial performance, the Impact Flywheel redistributes returns strategically to amplify impact across the ecosystem.
Acting as a flywheel within the system, it sustains motion by equitably distributing returns to stakeholders, fostering resilience and sustainability.
Key Features of the Impact Flywheel:
- Equitable Reinvestment: Value returns are distributed fairly across stakeholders, including customers, employees, strategic partners, investors, communities, the environment, and more.
- Strategic Impact: Every reinvestment is purpose-driven, strengthening the company’s ecosystem and building resilience across the value network.
- Sustainability and Inclusivity: The Impact Flywheel ensures that growth is sustainable, inclusive, and aligned with the organization’s long-term goals.
By aligning value returns with a deliberate impact strategy, the Impact Flywheel avoids the ad hoc, fragmented investments often seen in traditional firms and creates a reinforcing loop of ecosystem-wide benefits.
Nascent Flywheel
In the flipped configuration, where impact becomes a secondary consideration, businesses lose the flywheel effect that propels sustainable growth. Without a strategic plan to equitably return captured value among stakeholders, the benefits of a thriving, self-reinforcing system remain out of reach. However, this does not mean such organizations are incapable of change—it ultimately comes down to the choices they make.
Do we choose to extract value from our ecosystems, funneling rewards primarily to shareholders and senior leadership? Or do we recognize that by reinvesting value returns equitably and strategically across all stakeholders, we can grow the pie for everyone? The latter approach not only strengthens the business but also fosters a thriving ecosystem where mutual success amplifies long-term impact and prosperity.
Balancing the Value Engine and Impact Flywheel
The RoundMap Flywheel thrives on the interplay between two critical components: the Value Engine, which drives value creation, and the Impact Flywheel, which redistributes value returns to create lasting, systemic impact. However, for the flywheel to function smoothly, there must be a balance between these components.
When the Value Engine is Too Small
If the Value Engine is underpowered, it fails to generate sufficient returns to keep the Impact Flywheel in motion. This is often the case for businesses in their early stages, where resources are scarce, and value creation is inconsistent. In such scenarios:
- The Impact Flywheel struggles to rotate, stalling the organization’s impact strategy.
- Impact goals become aspirational rather than actionable, creating a disconnect between purpose and operations.
For the Impact Flywheel to contribute meaningfully, the Value Engine must first achieve a level of efficiency and output capable of sustaining the impact process. This underscores the need for organizations to build a robust foundation before scaling their impact efforts.
When the Impact Flywheel is Too Small
Conversely, if the Impact Flywheel is too small relative to the Value Engine, it fails to absorb and redistribute sufficient momentum to smooth out the organization’s value creation process. This often manifests as:
- A lack of resilience, where the organization becomes overly focused on short-term returns without reinvesting in its ecosystem.
- Operational turbulence, with inconsistent growth and increased pressure on internal systems and stakeholders.
In this scenario, the organization risks missing out on the long-term benefits of building a resilient and inclusive ecosystem. The result is a shaky, unsustainable growth trajectory that undermines the Value Engine itself.
The Challenge: Finding the Right Balance
Balancing the Value Engine and the Impact Flywheel is not a one-size-fits-all solution—it’s a process of trial and error.
- Scaling the Value Engine: Start by optimizing value creation processes to generate consistent, reliable returns.
- Matching Impact Investments: Gradually scale the Impact Flywheel, ensuring that reinvestments are proportionate to the organization’s capacity to sustain them.
- Iterative Adjustment: Continuously monitor and adjust the balance between value creation and impact to maintain a smooth, self-reinforcing cycle.
Organizations must recognize that the size of the Value Engine and Impact Flywheel may need to change over time as they grow, diversify, or face new challenges.
Building a Sustainable Flywheel
Achieving the right balance between value creation and impact creation ensures that:
- The Value Engine produces enough returns to sustain the Impact Flywheel.
- The Impact Flywheel smooths out the operation, driving resilience and systemic growth.
- The entire RoundMap Flywheel operates harmoniously, delivering both consistent value and meaningful impact.
This balancing act transforms the RoundMap Flywheel from a conceptual framework into a practical, adaptive system for sustainable and inclusive business growth.
The RoundMap Flywheel: A Holistic, Self-Reinforcing System
The RoundMap Flywheel represents the integration of the Value Engine (Freewheel) and Impact Flywheel into a cohesive system. Together, they form a self-reinforcing flywheel setup:
- The Value Engine generates returns through efficient value creation and delivery.
- The Impact Flywheel converts returns into equitable reinvestments, amplifying systemic impact.
- This strengthens the organization’s ecosystem, creating the conditions for greater value creation and sustainable growth.
The RoundMap Flywheel is designed to build resilience into the entire process, from value creation to impact amplification, ensuring that every motion strengthens the system as a whole.
Bridging Two Worlds: Aligning Value and Impact Strategies
- Value Strategy: Typically focuses on maximizing short-term returns by creating customer value and capturing profit from it. This is about operational efficiency, competitive advantage, and immediate financial outcomes.
- Impact Strategy: Aims to amplify long-term impact by building a sustainable and inclusive ecosystem. This involves investing in employees, communities, and the environment, often prioritizing resilience over immediate gains.
The Power of Integration
For an organization to thrive, it must unite these two forces under a single, overarching business strategy. This requires leadership that not only understands the tension between value and impact but also sees them as complementary forces.
Creating a Strategic Bridge
To bridge the gap between value and impact strategies, an organization must:
- SVP of Value Creation: Focused on optimizing short-term customer value and delivering consistent financial returns through the Value Engine.
- SVP of Impact Creation: Focused on reinvesting those returns to amplify long-term impact through the Impact Flywheel.
These two roles must function as complementary forces at the leadership level, collaborating to ensure that:
- The Value Engine (Freewheel) generates sufficient returns to sustain the Impact Flywheel.
- The Impact Flywheel smooths out the value creation process by building resilience and fostering trust across stakeholders.
This partnership ensures that both strategies are not only aligned but also reinforce each other, creating a virtuous cycle of short-term gains and long-term growth.
One Unified Strategy
- Balance Short-Term and Long-Term Goals: Ensuring profitability today while investing in sustainability for tomorrow.
- Foster Collaboration at the Top: Making the SVP of Value Creation and the SVP of Impact Creation partners in driving the organization forward.
- Align the Entire Flywheel: Creating a cohesive system where value creation and impact creation are no longer at odds but work together harmoniously.
A Call for Leadership
To operationalize this vision, companies must elevate the role of Impact Creation to the top leadership level, alongside Value Creation. This isn’t just about adding a title—it’s about embedding shared purpose and systemic thinking into the fabric of the organization.
When value and impact strategies are united under a cohesive business strategy, the organization transforms. It moves from being reactive and fragmented to deliberate, aligned, and resilient—ready to lead the way in both profitability and purpose.
Why RoundMap’s Flywheel Setup is Fundamentally Different
In most organizations today, impact initiatives are:
- Ad Hoc: Disconnected from the core strategy and implemented reactively.
- Fragmented: Lacking alignment with long-term organizational goals.
- Short-Sighted: Focused on shareholder returns without considering broader systemic effects.
The RoundMap Flywheel transforms this by embedding impact strategy into the heart of the business model. Every action, from value creation to impact reinvestment, is aligned with long-term, sustainable growth.
This unified system ensures:
- Value creation is purposeful, ethical, and efficient.
- Value returns are reinvested strategically to strengthen stakeholder ecosystems.
- Growth is inclusive, resilient, and sustainable for all.
By linking the Value Engine with the Impact Flywheel, the RoundMap Flywheel represents a deliberate shift toward sustainable ecosystem resilience, aligning profitability with purpose and short-term gains with long-term impact.
What Happens When a Business Lacks a Flywheel?
Imagine an engine running without a flywheel. At low speeds, its output is inconsistent—jerking and shaking heavily on its mounts. This is what most startups experience: their value chain produces irregular returns, with occasional peaks but mostly frustrating lows. The ride is rough and unpredictable, as I’ve personally experienced many times.
Now, suppose the organization manages to grow despite these erratic outcomes. As it picks up pace and shifts into a higher gear, the inconsistencies amplify, and the shaking becomes almost unbearable. Early ad-hoc operations are replaced by processes and procedures in an attempt to smooth things out, but the underlying turbulence remains.
Further growth becomes increasingly difficult. The organization finds itself needing more capital to bridge output gaps, applying band-aid solutions to cover the lack of predictability. As the machine accelerates, the pressure to perform grows, and so does the need for more rigid procedures. These processes can stifle creativity and amplify strain, making the workplace unbearable. Eventually, cracks start to show: people leave, systems break, and growth slows to a halt.
The Missing Piece: A Strategy of Impact
What’s missing is not just more procedures or capital—it’s a strategy for impact. Growth isn’t sustainable if it’s solely focused on generating more profit or increasing CEO compensation and shareholder dividends.
To grow steadily, an organization must build for the future. This requires investing value returns equitably into its ecosystem—customers, employees, partners, communities, the environment, and more. By implementing a deliberate Impact Flywheel, the organization can smooth out its operations, build resilience into its ecosystem, and create a foundation for sustainable and inclusive growth.
An impact strategy transforms jerks and jolts into a steady rhythm. It ensures that growth isn’t just about scaling profits but about strengthening the interconnected system that supports the organization’s long-term success.
Continue reading: RISE Plan (Impact-First Business Plan) and the Planned Impact Model
Patagonia: "Don't Buy This Jacket"
A perfect example of a strategy for impact is Patagonia’s “Don’t Buy This Jacket” campaign. On the surface, the message seems counterintuitive for a business: actively discouraging customers from purchasing its products. But beneath this bold move lies a profound impact strategy.
Patagonia recognized that the production and consumption of fast fashion items contribute to significant environmental degradation—an adverse effect of its value creation process. Rather than ignore this, Patagonia chose to confront the issue directly by urging customers to buy fewer products, repair existing items, and only purchase new ones when absolutely necessary.
This campaign wasn’t just about reducing environmental harm; it was about empowering customers to make responsible choices, aligning their actions with the company’s purpose. Patagonia strategically mitigated its impact by:
- Encouraging longer product lifecycles and reducing waste.
- Promoting repair and recycling programs, turning customers into stewards of sustainability.
- Driving value-aligned behavior that connects with the brand’s ethos.
Smoothing the Ride
Patagonia’s example shows how an impact strategy can help a business transition from a rocky, ad-hoc growth path to one of steady, resilient progress. Like the Impact Flywheel, it transforms the jerks and jolts of value creation into a smooth, sustainable rhythm.
By embracing strategies that mitigate harm and amplify good, organizations can grow in ways that don’t just scale profits but also create lasting value for their stakeholders and the planet.
Patagonia Facts: As of 2022, Patagonia, Inc. reported an estimated revenue of $1.5 billion and employed approximately 3,000 people worldwide. The company operates over 70 stores across more than ten countries and maintains offices in the United States, the Netherlands, Japan, South Korea, Australia, Chile, and Argentina.
Patagonia is recognized for its commitment to environmental sustainability and corporate responsibility. Notably, in 2022, founder Yvon Chouinard transferred ownership of the company to a trust and a nonprofit organization to ensure that its profits are used to combat climate change and protect undeveloped land globally. However, truth be told, recent operational changes aimed at tightening processes have led to internal challenges. Employees have expressed concerns that these shifts may conflict with Patagonia’s longstanding values and culture.
Gravity Payments: Reinvesting in People
When Dan Price announced in 2015 that he would raise the minimum salary of all employees at Gravity Payments to $70,000 while reducing his own salary from $1.1 million to the same level, it shocked the business world. Critics labeled it as unsustainable, but Price believed that investing in his team was the best way to build resilience and long-term growth.
This decision exemplifies an Impact Flywheel at work:
- Equitable Reinvestment of Value Returns: Instead of funneling profits disproportionately to executives or shareholders, Price redistributed value directly to employees through higher wages.
- Strengthening the Ecosystem: By addressing financial stress among employees, Gravity Payments created a more motivated, loyal, and productive workforce.
- Building Resilience: The investment in employees wasn’t just about immediate benefits; it cultivated a culture that could weather challenges together.
The Power of Shared Sacrifice
When the COVID-19 pandemic hit, businesses around the globe faced unprecedented challenges. Gravity Payments was no exception, with revenues dropping significantly. Yet, the culture fostered by Price’s impact strategy proved its worth.
Instead of layoffs or reverting to old compensation models, employees voluntarily offered to take pay cuts to help the company survive. This collective sacrifice was a testament to the loyalty and unity built by the earlier decision to prioritize fairness and equity.
As the company rebounded, employees returned to their original salaries. In a heartwarming gesture, they later pooled their resources to buy Dan Price a car, symbolizing their gratitude and the deep bonds that had formed during the crisis.
Lessons for an Impact Strategy
- Equity Builds Loyalty: Investing in people creates not just happier employees but a team willing to support the organization in its toughest times.
- Impact Drives Resilience: A culture of shared purpose and fairness can withstand external shocks, like economic downturns or a pandemic.
- Shared Value Transcends Transactions: When employees feel valued, they give back—not just in terms of productivity but through acts of solidarity and gratitude that strengthen the company’s ecosystem.
Smoothing the Ride
Much like a business lacking an Impact Flywheel will struggle with turbulence and inconsistent performance, many companies faced the pandemic without the resilience to weather the storm. Gravity Payments’ approach shows the power of deliberately reinvesting in the stakeholder ecosystem. By aligning short-term decisions with long-term impact, the organization not only survived but emerged stronger, supported by a workforce deeply committed to its success.
Dan Price’s story is a perfect illustration of how an Impact Flywheel transforms value returns into equity, resilience, and loyalty. It proves that prioritizing stakeholders beyond shareholders isn’t just ethically right—it’s strategically smart. Let me know if you’d like to adjust or expand this narrative further!
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