What is the Flywheel concept?

The Flywheel concept is a metaphor used to describe a self-reinforcing loop that gains momentum over time. Jim Collins, who popularized this concept, explains that it involves a series of interconnected steps that build on each other to produce and sustain momentum.

Collins provides an example using a company like Amazon: The process starts with lowering prices, which increases customer visits, attracts more third-party sellers, expands the store, extends distribution, and grows revenues per fixed cost. This success then allows the company to lower prices further, reinforcing the cycle and creating a compounding effect of growth and efficiency.

The key to a successful flywheel is ensuring that each component is executed well because failure in any part can slow down or stop the momentum. Additionally, the flywheel should not just be about profit extraction but should fuel further growth and create long-term, sustainable success 1.

The Flywheel concept emphasizes the gradual build-up of momentum through consistent, incremental success, rather than seeking immediate outcomes 2.