In the previous article, we designed a sustainability flywheel: a way to turn better data, smarter decisions, and reinvestment into a compounding engine for profit, resilience, and long-term value.

But there is a hard truth most organisations discover the painful way:

Many sustainability flywheels never start spinning.

Not because the model is wrong—but because the early ideas that would power the flywheel are killed too early. Pilots stall. Innovations get stuck in “proof-of-concept.” Teams reset direction every year. Momentum never builds.

This is exactly the failure mode Safi Bahcall describes in Loonshots.

His research helps explain why organisations systematically reject the very ideas they later wish they had protected—and how to design systems that let fragile innovations survive long enough to become profitable.

In this article, you’ll learn:

✅ Why sustainability innovation fails inside otherwise well-run organisations

✅ How Safi Bahcall’s core Loonshots concepts explain common ESG failure modes

✅ How to design a lightweight sustainability loonshot engine that protects early ideas and connects them to the core business

✅ How loonshots feed the sustainability flywheel — and why the flywheel cannot spin without them

✅ A concrete case study showing how fragile sustainability ideas became a repeatable, profitable system over time

By the end, you’ll understand not just why sustainability innovation so often stalls, but how to build the missing system that allows profitable sustainability to get started and scale.

What Loonshots means for sustainability

Bahcall’s research highlights three ideas that matter directly for sustainability leaders.

1. Phase transitions: when innovation suddenly stops

One of the book’s core insights is that organisational behaviour can change abruptly when incentives shift. As groups grow, the balance often moves from stake (you win if the idea wins) to rank (you win if your position improves).

When rank dominates, organisations become hostile to risk. New ideas are filtered out—not because they are bad, but because they threaten existing structures. Bahcall describes this as a phase transition: the same people behave differently under different incentive physics.

For sustainability, this explains a familiar pattern: once initiatives touch core operations, capex, or margins, they face resistance that has little to do with their actual business merit.

2. Artists and soldiers: why one system can’t do both

In Loonshots, Safi Bahcall distinguishes between two fundamentally different kinds of work that exist inside every organisation.

• Artists explore fragile, uncertain ideas. Their job is to test possibilities, learn quickly, and find out whether something could work.

• Soldiers execute, scale, and optimise what already works. Their job is reliability, efficiency, and consistency.

Both roles are essential—but they succeed under very different conditions.

Artists need small budgets, fast decisions, and permission to be wrong early. Soldiers need stable processes, clear targets, and predictable returns. Problems arise when organisations apply soldier rules too early. New sustainability ideas are judged using annual budgets, fixed KPIs, and short payback expectations—the same standards used for mature investments. Under those conditions, uncertainty looks like failure, and fragile ideas rarely survive.

Bahcall’s insight is not that one role is more important than the other. It is that one system cannot optimise for both at the same time.

His rule is simple: separate the phases, but keep them connected. Artists should explore until there is evidence of value. Soldiers should take over once scaling makes sense. The handover between the two—when an idea moves from exploration to execution—is where most sustainability efforts either succeed or quietly die.

3. The Moses Trap: why hero leadership breaks innovation

Another failure mode Bahcall describes is the Moses Trap: when ideas advance only at the discretion of a single powerful leader. This can look decisive and effective, especially early on—but it creates bottlenecks and bias.

In sustainability, this often shows up when progress depends on one exceptional CSO or CEO. As long as that person pushes, projects move. But when they shift focus, lose influence, or leave, the innovation pipeline collapses. The organisation never learned how to move ideas forward on its own.

The alternative is a system mindset. Instead of acting as heroes, leaders act as gardeners: they design clear rules, incentives, and decision paths so that good ideas can emerge, be tested, and transferred reliably—regardless of who is in the room. That is what turns sustainability innovation from a personal mission into an organisational capability.

Subscribe now

A simple sustainability loonshot engine

The sustainability flywheel explains how value compounds once momentum exists.

A loonshot engine explains how that momentum gets started in the first place.

Most organisations already run sustainability initiatives. What they usually lack is a system that allows early ideas to survive long enough to prove whether they work.

A simple sustainability loonshot engine looks like this:

This is not a new department.
It is not a large transformation programme.

Think of it as a small, deliberately lightweight system layered on top of the existing organisation.

Its role is very specific:

• to test sustainability ideas cheaply,

• to learn quickly,

• and to hand over only the ideas that clearly create value.

Everything else is allowed to fail early and quietly.

This engine feeds the sustainability flywheel at exactly the point where most organisations struggle: turning ideas into real savings, innovation, and momentum.

Step 1 – Diagnose the phase transition

Many organisations believe sustainability innovation fails because of culture, mindset, or lack of ambition.

Loonshots suggests a different explanation:
innovation often fails because the decision system has crossed a tipping point.

As organisations grow, decision-making tends to shift from:

• “Will this idea work?”
  to

• “Will this affect my position, budget, or risk exposure?”

When that happens, uncertainty becomes a reason to reject ideas — even if the expected value is attractive.

In sustainability, this shows up in very recognisable ways:

• Ideas move quickly when they stay within one team, but stall once multiple functions are involved

• Approval discussions focus on downside risk, not upside potential

• Finance asks for certainty that can only exist after experimentation

This is not a people problem.
It is a system design problem.

Practical focus
Review your last 10 sustainability ideas that did not progress. Ask a simple question:
At what point did the decision shift from learning to risk avoidance?

KPIs to track

• Time from idea submission to pilot approval

• Number of approval layers required to start a pilot

• Number of functions with veto power over experiments

Step 2 – Separate artists and soldiers

One of the most actionable ideas in Loonshots is that exploration and execution require different rules.

• Artists explore uncertain ideas. They need speed, protection, and permission to be wrong.

• Soldiers scale proven ideas. They need reliability, efficiency, and control.

Most organisations apply soldier rules too early — especially in sustainability. Early ideas are forced to meet the same standards as mature investments, which almost guarantees rejection.

A sustainability loonshot engine creates a protected space for artists, without weakening operational discipline elsewhere.

In practice, this means:

• Small budgets

• Clear learning goals

• Limited exposure to the rest of the organisation

This is not:

• A reporting team

• A branding exercise

• A traditional R&D function

It is a temporary shelter for fragile ideas.

Practical focus
Create a small cross-functional team (sustainability, finance, operations, data) that runs a handful of experiments per year, each designed to answer one clear business question.

KPIs to track

• Cost per experiment

• Time to first measurable signal (cost reduction, risk reduction, feasibility, or demand)

The goal is not certainty. The goal is to decide whether an idea deserves a chance to scale.

Step 3 – Build transfer, not more pilots

Many sustainability innovations fail after they succeed.

Pilots deliver results—but never become standard practice. This is what Bahcall describes as a system failure, not an execution failure.

To avoid “pilot purgatory” (successful pilots that never scale), transfer must be designed upfront.

Every sustainability experiment should pass four explicit transfer gates:

1. Value signal demonstrated
   A credible cost saving, risk reduction, or revenue signal exists.

2. Operational owner assigned
   A business unit or function commits to owning the solution.

3. Process integration defined
   Changes to procedures, systems, or decision templates are documented.

4. Funding source identified
   Scale-up is linked to capex, opex, or reinvested savings.

Practical focus
Require each experiment to nominate its future operational owner before it starts.

KPIs to track

• % of pilots transferred into operations

• Time from pilot completion to full rollout

Step 4 – Fund learning so good ideas don’t die early

In the flywheel article, reinvestment is about scaling proven value.

Here, reinvestment has a different job: keeping exploration alive long enough to find value.

Many sustainability ideas don’t fail because they’re wrong. They fail because funding resets before the organisation has learned enough to decide. A pilot shows promise, but there is no budget to run the next iteration, expand to a second site, or do the integration work needed for transfer. The idea quietly dies—not from poor performance, but from lack of continuity.

That’s why a loonshot engine needs a simple rule: once an experiment shows a credible value signal, it should unlock small, predictable follow-on funding.

You can formalise this in different ways (green revolving funds, internal carbon fees), but the mechanism matters less than the principle:

Protect a portion of verified savings or budget to fund the next round of experiments and scale-up work.

Practical focus
Create a small “follow-on” pool that can fund the next step after a pilot—replication at a second site, process integration, supplier onboarding, or data system changes. Make access to that pool conditional on passing the transfer gates (value signal, owner, integration plan, funding path).

KPIs to track

• Annual verified sustainability savings

• % of savings (or budget) reserved for follow-on funding and scale-up work

• Number of experiments that receive follow-on funding within 60 days of showing a value signal

Step 5 – Convert S-type loonshots into strategy

Some sustainability ideas improve efficiency or reduce costs. Others quietly change how the organisation makes decisions.

Loonshots calls these S-type innovations.

A simple way to think about it:

• P-type loonshots change what you do (a new product, process, or technology).

• S-type loonshots change how decisions are made (rules, incentives, metrics).

In sustainability, many of the most powerful breakthroughs are S-type:

• Using lifecycle cost instead of purchase price

• Applying internal price signals to emissions or resources

• Shifting from product sales to service models

These changes often look small on paper, but they systematically steer decisions toward lower risk and higher long-term value.

Because they reshape decision logic, they are harder to reverse — and harder for competitors to copy.

Practical focus
Identify one recurring decision where sustainability impacts exist but are currently invisible (e.g. procurement, capex approval, product design).

KPIs to track

• % of relevant decisions using lifecycle or sustainability-adjusted metrics

• Number of decisions delayed, redesigned, or cancelled due to sustainability insights

Step 6 – Prevent the Moses Trap

In Loonshots, the “Moses Trap” is the pattern where progress depends on a single powerful sponsor. Ideas move forward because one leader believes in them—not because the organisation has a repeatable way to test, prove, and transfer them.

Sustainability is especially vulnerable to this. One strong CSO or CEO can push projects through. But when that person is busy, changes roles, or leaves, the pipeline slows down or collapses. The organisation never learns how to innovate without them.

The fix is not less leadership. It is a better system.

You want sustainability ideas to advance because they meet clear criteria—not because they have the right champion. That is what makes innovation scalable and durable.

A practical way to do this is to create a standing “loonshot review” forum with simple, consistent rules:

• Experiments are approved based on a clear learning goal and a limited budget.

• Projects move from pilot to rollout only if they pass the transfer gates (value signal, owner, integration plan, funding path).

• The forum includes finance and operations so that scaling decisions are real, not symbolic.

Practical focus
Create a recurring (e.g., monthly) review where sustainability experiments are evaluated with a one-page template. Keep decisions fast and criteria consistent. Rotate membership so the system doesn’t become another rank-driven bottleneck.

KPIs to track

• Number of business units or functions sponsoring experiments (not just the sustainability team)

• Share of experiments with an operational owner assigned before the pilot starts

• Average decision cycle time (proposal → approval; pilot complete → scale decision)

How this feeds the sustainability flywheel

The connection to the sustainability flywheel is direct:

Read more

Many companies are stuck in what Jim Collins would call a “doom loop”: they launch a sustainability initiative, publish a report, change direction when results disappoint, and repeat. Momentum never builds, people get cynical, and sustainability gets labelled a cost or a distraction.

But it doesn’t have to be this way. When sustainability is treated as part of the business model, not just a reporting exercise, it can:

• Cut costs

• Reduce risk

• Open new revenue streams

• Attract better talent and cheaper capital

Research on “high sustainability” firms shows that companies that embed sustainability in their strategy and processes tend to outperform their peers over the long term, both on stock performance and on traditional financial metrics.1.

So the question becomes:

How do you turn sustainability from a reporting burden into a self-funding engine for the business?

Jim Collins’ flywheel idea provides a simple, powerful way to do that.

In this article, you’ll learn:

✅ How Collins’ flywheel idea translates into a sustainability engine instead of a compliance treadmill.
✅ The six stages of a universal sustainability flywheel
✅ How sustainability can generate cost savings, revenue growth, and cheaper capital.
✅ How to design a company-specific flywheel
✅ Real-world case study and common ESG doom-loop behaviours to avoid.

By the end, you’ll have a simple mental model to turn sustainability from a reporting burden into a self-funding engine of competitive advantage.

What Jim Collins’ flywheel means for sustainability

Collins’ original flywheel research found three things that matter for us:

1. No single defining action. Great companies didn’t transform through one initiative or charismatic announcement. They did the right things consistently, over years, until momentum made success look “sudden” from the outside.

2. Consistent direction. Every small push pointed the same way. Strategy, people, systems, and culture reinforced one another instead of pulling in different directions.

3. Avoiding the doom loop. Struggling companies reacted to poor results with new strategies, restructurings, and slogans – never long enough in one direction to build momentum.

A sustainability flywheel is just that logic applied to ESG:

• You choose a coherent sequence of causes and effects.

• You push the same sequence quarter after quarter.

• You stop expecting a “big bang” and start looking for steady compounding.

A simple sustainability flywheel that works for any organisation

Here is a basic flywheel that almost any organisation can use:

Better data → Better decisions → Savings & innovation → Reinvestment → Reputation & trust → More resources → (back to) Better data

In plain language:

1. Better data
   You see where your biggest costs, emissions, and risks really are.

2. Better decisions
   You use that data to make smarter investment and business decisions.

3. Savings & innovation
   Those decisions reduce waste and open up new products and services.

4. Reinvestment
   You reinvest part of the savings into more improvements.

5. Reputation & trust
   Customers, employees, and partners start to notice real progress.

6. More resources
   You attract cheaper capital, better talent, and stronger partners – which helps you get even better data and repeat the cycle.

This is a general flywheel: it fits almost any sector.

Later in the article, we’ll look at a specific flywheel from Signify’s “Light as a Service” model. After that, we’ll show how your organisation can design its own version.

For now, let’s walk through the six steps in more detail.

Step 1 – Better data: from reporting to x-ray vision

Companies still collect ESG data mainly to fill in reports. But the real power of data is to act as x-ray vision for the business, revealing where money and risk are concentrated.

Surveys suggest many companies still approach ESG data primarily as a reporting obligation and struggle with data quality and availability2. When firms invest in granular data – by site, product, and supplier – they routinely discover high-impact “hotspots” that were invisible in aggregated numbers3. Examples:

• One factory that uses far more energy than others

• One product category that drives most of your emissions

• A handful of suppliers responsible for most social or environmental risk

Better data helps you:

• Spot waste and inefficiency that don’t show up clearly in the P&L

• See physical and transition risks (e.g. floods, carbon pricing) at the level of specific assets or suppliers

• Set realistic targets and incentives based on facts, not guesses

Practical focus:
Start by asking for a one-page map of your top 10 sites or product lines showing: energy cost, emissions, and volume. If your team cannot produce this quickly, you’ve just diagnosed your first flywheel bottleneck.

KPIs to track:

• Share of high-impact sites with reliable energy/emissions data

• Share of key suppliers with basic ESG data

Step 2 – Better decisions: from projects to capital allocation

In Collins’ language, each push on the flywheel is a decision supremely well executed. For sustainability, that means ESG data must shape core financial decisions, not just side projects.

There is growing evidence that when sustainability factors enter investment choices, firms manage risk better and avoid stranded assets. For example, research on corporate sustainability finds that companies with stronger sustainability policies and processes outperform their peers over time4 – suggesting that their capital allocation is better aligned with long-term value.

You see this in practice when:

• A utility cancels a new high-emission plant because carbon risk makes it uneconomic.

• A manufacturer selects more efficient equipment even if upfront capex is higher, because lifetime cost and risk are lower.

• A bank screens lending based on transition risk, avoiding future credit losses.

Practical focus:
Make sustainability non-optional in investment decisions. For all material capex and major product launches, require a short section on:

• Impact on emissions/resources

• Expected cost savings or revenue from ESG features

• Risk exposure (e.g. regulation, carbon price, water stress)

KPIs to track:

• % of capex proposals that include quantified ESG impacts

• % of major decisions changed or cancelled based on ESG insights

Step 3 – Savings & innovation: the self-funding engine

Once sustainability factors are part of everyday decisions, you start to see financial benefits.

On the cost side, many resource-efficiency projects (energy, water, waste, logistics) show attractive returns, often with payback in a few years or less.

Examples from well-known companies:

• 3M’s long-running “Pollution Prevention Pays” programme has reportedly saved the company billions by redesigning products and processes to reduce waste5.

• FedEx’s move to more efficient, hybrid, and electric vehicles has cut fuel use by tens of millions of gallons6.

On the revenue side, NYU Stern’s Sustainable Market Share Index shows that7:

• Products marketed as “sustainable” often grow faster than conventional ones

• They can often charge a price premium

• They account for a disproportionate share of market growth in many consumer categories

In other words: resource efficiency + sustainable innovation =

• Lower operating costs

• More resilient, differentiated offerings

• Stronger margins in growth categories

Practical focus:
Pick one domain where savings are likely and measurable (energy, logistics, packaging). Run two or three tightly scoped projects with clear baselines and tracking. Treat them explicitly as investment cases, not cost cuts.

KPIs to track:

• Verified annual cost savings from sustainability projects (in currency)

• Revenue and growth rate of products with defined sustainability benefits

Subscribe now

Step 4 – Reinvestment: turning wins into compounding returns

In Collins’ flywheel, momentum builds when each turn makes the next turn easier. For sustainability, that happens when you reinvest part of the savings from Step 3 into the next wave of improvements.

Organisations formalise this through internal green funds or internal carbon prices. For example, green revolving funds in universities and companies finance efficiency projects and are repaid from the savings; those repayments then fund the next project, creating a snowball effect of improvements and cost reductions. Internal carbon fees are similarly often earmarked to pay for renewable energy or efficiency upgrades, closing the loop between performance and reinvestment.

Practical focus:
Make a simple rule:

“We will reinvest X% of verified sustainability savings into the next round of projects.”

Even if X is modest (e.g. 25–30%), it signals that sustainability is self-funding, not just another cost competing for budget.

KPIs to track:

• % of verified savings reinvested into ESG/efficiency projects

• Number and value of projects funded by prior-year savings

Step 5 – Reputation & trust: from story to financial asset

As the flywheel turns, results start to show up in brand, customer, and employee metrics.

Surveys show that:

• Many consumers are willing to pay more for products they see as sustainable8

• Employees (especially younger generations) are more likely to join and stay with employers whose values and sustainability performance match their own9

• In B2B markets, ESG performance is increasingly part of supplier evaluation and selection10

Over time, these intangible effects translate into:

• Higher customer lifetime value (loyalty and lower churn)

• Lower recruitment and turnover costs

• Better odds in tenders where sustainability is a requirement

Practical focus:
Measure and talk about specific sustainability outcomes that matter to customers and employees (e.g. product footprints, living-wage commitments, supplier upgrades), not just generic slogans.

KPIs to track:

• % of customers citing sustainability as a reason for choosing your product (survey)

• Employee engagement / retention where sustainability is mentioned as a factor

• External ESG ratings or inclusion in sustainability indices

Step 6 – More resources: cheaper capital, better talent, stronger partnerships

In Collins’ terms, once the flywheel is moving, its own weight works for you. In sustainability, strong performance starts to attract capital, talent, and partners – giving you more force to push the next turn.

On capital, a 2024 MSCI study of global issuers finds a significant historical correlation between higher ESG ratings and a lower cost of capital, in both equity and debt markets. Companies with top ESG scores tend to have lower betas and tighter credit spreads than low-ESG peers, all else equal11.

Combine that with the hiring advantages mentioned above, and you get a reinforcing resource effect:

• Investors more willing to fund your transition at attractive rates.

• Top candidates more interested in working for you.

• Customers and partners more willing to co-invest or sign long-term contracts.

Practical focus:

• Track your cost of capital vs sector peers and explore whether stronger ESG performance could narrow the gap.

• Use sustainability-linked loans or green bonds where appropriate to lock in lower spreads in exchange for clear ESG targets.

KPIs to track:

• Cost of equity and debt relative to comparable peers

• Volume of green or sustainability-linked financing

• % of new hires citing sustainability as a reason to join (survey)

Case study: Circular “product-as-a-service” flywheel (Philips / Signify – light as a service)

Signify (formerly part of Philips) offers Light as a Service (LaaS).

Instead of selling lighting fixtures as products, they sell light as a service:

• Signify owns the equipment

• They design, install, and maintain it

• The customer pays a recurring fee for light performance, not for lamps and fittings

This model supports both profitability and sustainability. Here’s the underlying flywheel, simplified.

1. Design for durability, efficiency, and easy repair

Signify’s circular lighting solutions are:

• Modular (easy to upgrade and repair)

• Efficient (low energy use)

• Built to last

This reduces waste and extends product life.

2. Lower operational burden for the customer

Because Signify owns and maintains the equipment:

• The customer avoids upfront capital investment

• Maintenance and performance are Signify’s problem

• Energy use – and energy bills – are lower

3. Recurring revenue and rich performance data

Signify gets:

• Recurring income from long-term service contracts

• Data on how systems perform over time

This data helps optimise performance, plan maintenance, and design better products.

4. Return and recapture of materials

At the end of the contract:

• The fixtures still belong to Signify

• Components can be reused, refurbished, or recycled

This is a key part of their circular economy strategy.

5. Reduced dependence on virgin materials & stronger value proposition

By recovering materials:

• Signify needs fewer new raw materials

• The offering becomes more attractive to customers that care about circularity and sustainability

6. Reinvestment in smarter systems

The combination of:

• Data

• Recurring revenue

• Reused materials

allows Signify to invest in even better designs and services, which strengthens the next cycle.

This is a concrete example of a company-specific flywheel built on circularity, service models, and data.

This flywheel is general. How do you find your specific flywheel?

The flywheel above is a universal template. It works in almost any organisation because every company needs:

• Data

• Decisions

• Savings and innovation

• Reinvestment

• Reputation and trust

• Resources

But the strongest flywheels build on what makes your organisation different.

To find your specific sustainability flywheel, ask:

1. Where do we spend the most money or use the most resources?
   (e.g. energy, materials, logistics, buildings)

2. Where are we under the most pressure from customers, regulators, or investors?
   (e.g. emissions, packaging, human rights in the supply chain)

3. Where do we already have strengths or capabilities?
   (e.g. engineering, data, service models, circular design)

Your specific flywheel sits at the intersection of:

Biggest impact + Biggest pressure + Strongest capabilities

The next section shows how a global lighting company did exactly that.

Doom-loop patterns to avoid

Collins’ doom loop is painfully common in ESG: disappointing results → new programme → no momentum → disappointment → another reset. Research and practice highlight a few warning signs:

• Leadership churn and fashion-driven ESG. New leaders bring new themes every two years; nothing lasts long enough to build momentum.

• Score-chasing instead of substance. Time and money go into maximising ESG ratings rather than improving actual performance.

• No ownership outside the sustainability team. The Chief Sustainability Officer and their team “own” everything; line managers see ESG as someone else’s job.

• No measurement of financial impact. If savings and growth from sustainability are not measured, finance will treat ESG as a cost centre and cut it when budgets tighten.

The remedy is to design the flywheel explicitly and align roles, incentives, and metrics around it – then keep pushing.

Takeaway

Jim Collins wrote that there is “no miracle moment” in a good-to-great transformation – just a flywheel that slowly, then suddenly, builds unstoppable momentum.

A sustainability flywheel applies that same logic to ESG:

1. Better data gives you x-ray vision of costs and risks.

2. Better decisions bring sustainability into capital allocation.

3. Savings & innovation make the engine self-funding.

4. Reinvestment turns one-off wins into compounding gains.

5. Reputation & trust lift revenue, loyalty, and retention.

6. More resources – cheaper capital, better talent, stronger partners – feed back into the next loop.

The research base suggests that companies who build this kind of integrated, long-term sustainability model tend to outperform their peers financially and manage risk more effectively.

If you do only three things after reading this:

1. Decide where your first flywheel lives (one domain, not everything at once).

2. Define a handful of KPIs that make each step of the loop visible.

3. Commit to reinvesting part of the gains and tracking the financial impact.

Do that consistently, and you move sustainability out of the doom loop of one-off initiatives – and into the quiet, compounding discipline that Collins found behind every great company.

Share Sustainability Simplified (publisher of CSRD Simplified)

Relevant Sources

Good to Great: Why Some Companies Make the Leap... and Others Don’t

Sustainability innovations and firm competitiveness: A review - ScienceDirect

Product sustainability: Back to the drawing board | McKinsey

Achieving sustainable profitable growth with ESG | McKinsey

Sustainable Investing Funds Beating Traditional Funds in 2025 | Morgan Stanley

Creating value for customers with Signify Lighting Services | Signify Company Website