The idea of flywheels is very simple but very hard to implement:
Create something that has a compound growth, you are creating a system that feeds growth – this makes it hard for competitors to catch-up.
Few important things in designing flywheels:
- Velocity in flywheel: how fast is the business executing the growth cycle? Same as velocity of money where you measure money goes from one hand to another cycling through system, it's important how fast a cycle of growth is executed
- Flywheel should not be based on technology or feature - they change all the times. It rather should be based on things that don't change much. In the example of Amazon: more products, cheaper price and faster delivery. If people experience at a high level, it's psychologically very hard for them to accept a lower level next time.
- Sometimes buying a business could be seen as part of flywheel
It many businesses, the hardest thing is to find true cost of a transaction which is a very important factor in understanding the design of flywheel.
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