The Flywheel Effect is a framework that shows how businesses become great by building a virtuous cycle.

Jim Collins defined it in his book Good to Great after his research on patterns of successful companies.

In this article, you’ll see how Jeff Bezos’s meeting with Collins shaped Amazon’s fate. And how to use the flywheel effect for your business.

In 2001, Amazon was in trouble.

The dot-com bubble had popped.

And all tech stocks were crashing to the bottom.

Every week, the news covered a tech company going out of business.

Amazon’s stock also dropped 90%.

So reporters expected Amazon to join other failed companies.

As an optimist, Jeff Bezos believed Amazon could survive the crisis.

But the severity of the crisis created some doubt.

Did Amazon grow only thanks to the dot-com bubble?

Or was it different than other tech companies?

The same year, consultant Jim Collins wrote his book Good to Great.

He had researched the patterns that turn good companies into great ones.

And documented his findings in the book.

It quickly became popular in business circles.

Bezos was hungry for any idea that could help, so he invited Collins to Amazon’s headquarters to get his advice.

Collins spent a few days with Bezos and Amazon’s leadership team.

And explained his insights from the book.

After the meetings, Bezos had one thing in mind.

The flywheel.

Turning the flywheel

Collins’s research showed that great companies were never born with a single breakthrough.

It was never a miracle product, innovation, or restructuring that made the difference.

They all found a competitive advantage (remember moats).

And built everything around it over the years, until it became a virtuous cycle — where each part of the business amplified the advantage even more.

Collins called it the flywheel effect.

Why did he call it after a mechanical tool?

Because it was like pushing a heavy flywheel.

Flywheel barely moves at first.

But as you push, it slowly gains its momentum.

And if you keep pushing in the same direction for enough time; its weight starts to turn it faster.

Even though you still push with the same force, everything gets easier and easier.