Flywheels Everywhere

I have become obsessed with The Flywheel Effect.

The effect was initially popularized by Jim Collins in his book Good To Great – and made famous by Jeff Bezo’s adoption of it at Amazon.

As Brad Stone describes it in The Everything Store:

“Drawing on Collin’s concept of a flywheel or self-reinforcing loop, Bezos and his lieutenants sketched their own virtuous cycle, which they believed powered their business. It went something like this: Lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. Feed any part of this flywheel, they reasoned, and it should accelerate the loop.”

Lance Peppler also does a good job of summarizing the concept here.

I am obsessed with The Flywheel Effect because, once you start thinking in terms of virtuous cycles (flywheels), almost every strategic issue in your business can be analyzed through this prism.

I am currently working with four distinct companies – and as I think about how to help build these businesses – all need to start by identifying or clarifying their unique flywheel. And then execute, execute, execute!

This article is the start of The Flywheel Series. In this series I am going to take on a different business each week. Analyze their flywheel. And as a result, identify the key drivers they should be relentlessly focused on.

Now, just knowing what these key drivers of growth are is just half the battle – as we still need to figure out how to implement the strategy. But as Jim Collins originally pointed out, if you don’t understand your growth drivers – or are not focused on them – then you have lost before even beginning the race.

So buckle up! We’re about to begin spinning the wheel.

With momentum,

Joel