Invisible Loops
- Ed Fowkes
- 2 days ago
- 5 min read
There are businesses that seem to gather momentum almost effortlessly.
Customers recommend them to friends. Staff stay longer than expected. Suppliers enjoy working with them. Cashflow becomes a little less constrained each year. Small improvements accumulate until, from the outside, success appears almost inevitable.
Then there are businesses that seem trapped in the opposite direction.
Recruitment gets harder. Standards begin to slip. Customer complaints increase. Cashflow tightens. Investment becomes more difficult. Good people leave. The team that remains carries more pressure, making it even harder to recruit well.
From the outside, we often apply simple labels to explain these businesses.
"They're well run."
"They're lucky."
"They've lost their way."
"They're badly managed."
But those explanations don't really tell us very much. What we're usually seeing is something much more interesting. We're watching feedback loops at work.
The Story
Amazon's rise is often attributed to visionary leadership, relentless innovation or extraordinary scale. There is truth in all three, don’t get me wrong. Yet Jeff Bezos sees it from another perspective and frequently described the business using a different metaphor altogether: the flywheel.
The idea was surprisingly simple.
Lower prices attracted more customers.
More customers attracted more third-party sellers.
More sellers created greater choice.
Greater choice improved the customer experience.
Higher sales generated economies of scale, allowing Amazon to lower prices further.
Round and round it went.
No single part of this system was remarkable on its own. The power came from the way each element strengthened the next. Every improvement made the following improvement slightly easier to achieve. And over time, the wheel required less effort to keep moving because momentum had become part of the system itself.
The opposite of the Amazon flywheel is surprisingly common.
Sears was once America's largest retailer, and it provided a few early lessons for me as I worked for a sub-brand of Sears as a Saturday job while at school in the late 1980s. After its merger with Kmart in 2005, the seeds of decline had been sown.
Management sought to protect profitability through cost reduction.
Investment in stores fell.
Customer experience deteriorated.
Sales weakened further.
Lower revenues demanded more cost cutting, leaving stores even less attractive to shoppers.
Each decision was understandable in isolation.
Together, they reinforced decline. The business wasn't simply experiencing problems. It was actively feeding them.
The uncomfortable truth is that most businesses are already doing exactly the same thing, albeit on a much smaller scale. Last week I spoke of the restaurant client I’m helping, and they’ve been pursuing a downward reinforcing feedback loop since the COVID lockdown finished.
We are all in loops of our own. The question for all businesses is whether the loops they're creating are working for them or against them.
The System
One of the reasons loops are difficult to recognise is that they don’t really begin with dramatic events. At least not often.
Imagine two cafés opening on the same day.
The first decides that every customer should leave feeling genuinely welcomed. We will call it Oasis.
The second concentrates on the food. Margin on revenue being the main driver. We will call this Fuel. So what happens?
Oasis.
Staff are trained well, occasionally surprising customers with complimentary drinks or small gifts. Managers are visible and feedback is actively encouraged. The atmosphere is vibrant, customers enjoy the experience, tell friends and leave positive reviews. More people then visit. The café becomes busier, allowing investment in better equipment and more training. Free giveaways are not needed, but remain as unexpected delights. Service improves further. Reviews become even stronger.
Did anything remarkable happen? No, but a small advantage simply kept reinforcing itself.
Now consider the second café.
Fuel.
Recruitment proves harder than expected. It’s just not a great place to work. Slowly, standards are lowered to fill vacancies. New employees receive less training over time because experienced staff are already stretched, and the managers certainly so. Service becomes inconsistent. Customer satisfaction falls. With complaints, refunds are needed. Revenue softens as customer numbers drop. Training budgets are cut. Then the strongest employees begin looking elsewhere because work has become more stressful. Oasis looks like a good place to work!
Again, nothing remarkable happened. The business simply entered a different loop.
Founders could spend less time asking, "How do I solve today's problem?" and more time asking, "What behaviour does this decision make more likely tomorrow?" Businesses are not collections of isolated decisions. They’re systems of repeated behaviour.
A weekly management meeting either becomes a place where decisions are made and followed through, or a place where conversations happen and nothing changes.
Customer complaints either become opportunities to improve or opportunities to slowly lower revenue and growth.
Recruitment either raises standards or gradually lowers them.
Culture isn't built in dramatic moments but through loops that repeat so often, we eventually stop noticing them. Successful businesses might appear calm because they're no longer relying on heroic effort.
The Season
This is where Spring really earns its place in our GamePlan cycle.
Winter has already been done. The decisions have been made. The strategy has been agreed.
Now, spring is where the ideas first encounter reality. New marketing campaigns are launched. Sales processes are refined. Recruitment approaches are tested. Operational improvements are introduced.
Every one of these decisions has the potential to begin a loop. Some will strengthen the business. Others will slowly undermine it. And those are the quiet ones.
The purpose of Spring is not simply to launch initiatives. It is to nurture them, measure them, refine them and, where necessary, stop them before they become expensive habits.
Summer reveals loops very quickly and dramatically. Good systems cope. Weak systems begin to fracture. Customer service either improves through momentum or deteriorates because the underlying loop was flawed from the start.
We want to try and make them worthwhile before we get to summer.
The outcomes didn't begin in summer. They began months earlier, when seemingly small decisions in winter determined the direction in which the business would travel.
Founders often search for breakthrough ideas capable of transforming their business overnight. Those moments do exist. Far more often, however, success or failure is the product of loops so ordinary that they barely attract attention.
Treat customers a little better than before.
Train staff a little more thoroughly.
Follow up enquiries a little more consistently.
Hold people accountable a little more reliably.
None of these changes feels revolutionary. And neither does turning a flywheel.
But then, one day, everyone else wonders why it has become almost impossible to stop.
Easter Eggs in this week’s article
“good company” – Good Company, be Queen
“friendships” – Friendship, by Cole Porter
“decisions have been made” – The Web, by Marillion
“a little better than before” – Mr Brownstone, by Guns N’ Roses
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