Business

The Flywheel Concept

If you’ve read Good to Great: Why Some Companies Make the Leap…And Others Don’t by Jim Collins, then you will have already known about the Flywheel Concept. It is such a powerful concept that successful business owners use to make their business a great venture. One of such people is Amazon’s founder and CEO, Jeff Bezos. He applied the Flywheel Concept and launched the Amazon Prime streaming subscription services. The story is written in the Amazon bio book – The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone.

 
flywheel-conceptA Flywheel is a big wheel that requires tremendous energy for it to get moving, but once it starts, momentum carries it forward with far less effort. Jim Collins used this concept to illustrate a pattern he found in companies that made the leap from being good to great. During Jim Collins research, he found out that the companies that leaped from good to great significantly out performed their competitors and the industry they operate in simply because the run on the flywheel concept.

 
The structure of these companies are created in such a way where their business systems were all designed to reinforce each other. With each improvement in one system came a boost to the overall performance of all the systems, creating a magnifying effect. This resulted in the flywheel spinning faster and faster, supercharging momentum, and turning these companies into leaders in their industry by a large margin.

 

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