What is the Flywheel Effect, and How Can I Use it to my Company’s Advantage?

Most entrepreneurs know the path to success is paved by hard work, but there is a common misconception that it only takes a single action or accomplishment to take an average company to greatness. The truth is, success rarely happens overnight. A great company or product takes a lot of time and effort to build. 

However, it is true that the positive results of small victories often have a compounding effect. As you start to accumulate small wins and achievements, you start to build momentum and small steps start to have larger impacts.

This is a concept known as The Flywheel Effect. The first few turns of a flywheel can take a tremendous amount of effort, but you eventually reach a point where you break through the resistance, gain momentum, and the wheel finally turns with ease. This same idea applies to nearly everything in the business world, and as consultants, we frequently remind leaders about The Flywheel Effect when attempting to drive business growth.

What Is The Flywheel Effect?

The Flywheel Effect describes the process of achieving success in the business world, which looks a lot like that of a flywheel – momentum finally comes after ongoing, relentless effort to turn the wheel. For example, the first turn of the wheel may take a significant amount of time and effort; however, the momentum makes that effort compound after each turn of the wheel.

The concept suggests that there is no single action, event, or effort that drives success. In other words, strong performance and business outcomes are driven by a collection of small, habituated wins. The Flywheel Effect concept was coined by business advisor Jim Collins, who wrote the book “Good To Great”.

How Can The Flywheel Effect Benefit My Company?

The benefits of the Flywheel Effect can be observed in nearly every aspect of business, but here are three specific examples of how your company can use this concept to drive business growth:

Sales and Marketing

One of the business areas where The Flywheel Effect is most easily observed is in sales and marketing. For a company with a new product and low brand equity, acquiring customers is expensive. But as you delight your customers and build brand awareness, acquiring customers becomes significantly cheaper. Over time, satisfied customers will refer their friends and family, consumers will start to feel a sense of loyalty to your brand, and acquiring customers becomes easier and less expensive… in other words, the flywheel becomes easier and easier to turn. 

The same principle applies to specific channels or sales tactics. Consider Search Engine Optimization (SEO) practices. There isn’t a single thing you can do to organically rank on page 1 of Google; however, as the age of your domain, the links to your website, and the quality of your pages mature, it ultimately makes it easier to outrank the competition.


Building a best-in-class product isn’t a one-and-done deal, rather, it takes an iterative approach. Building the foundation for your product is often the hardest part (the first turn of the flywheel). As you release the underlying infrastructure and ultimately an MVP, you can begin to adopt users.

With user feedback, you can continue to add features that enhance the user experience until you’ve ultimately launched a market-leading product. As you gain momentum, new features become easier to identify and build…you just have to set the foundation for growth.

Company Culture

Implementing the right company culture is one of the most important aspects of driving business growth, and as business consultants, this is often where we see leaders fail. However, the Flywheel Approach is just as applicable here. Changing your company culture is challenging and it doesn’t happen overnight. But as you start to make small, positive changes in your leadership and management style, those changes will slowly permeate through your organization. Over time, those small changes will lead to happier employees. Happier employees will be more invested in doing their part to maintain a positive company culture.  Over time, the prevailing attitude at the business will be one of positivity.

Great things in life never come easy, and very few entrepreneurs can build a great company overnight. By keeping the Flywheel Effect in mind, you can be prepared to devote time, energy, and resources to building small wins, gaining momentum, and driving long-term business growth.

For more tips on how to build a great company, contact us at Lilly Consulting Group today. We’ve worked with businesses of all sizes to drive transformation and significant growth.

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