The virtuous cycle is a positive loop or a set of positive loops that trigger a non-linear growth. Indeed, in the context of digital platforms, virtuous cycles – also defined as flywheel models – help companies capture more market shares by accelerating growth. The classic example is Amazon’s lower prices driving more consumers, driving more sellers, thus improving variety and convenience, thus accelerating growth.
Epic Games Flywheel
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What is a virtuous cycle?
A virtuous cycle is a positive feedback loop that aligns with a company’s long-term strategy. The virtuous cycle, over time, builds momentum and enables compounded growth for the organization carrying it. For example, Amazon’s virtuous cycle starts with a wide selection at a low price, driven by customer experience. This drives more sellers on the platform, thus enabling more variety and convenience. In turn, Amazon re-invests these resources to further lower customer costs and increase variety, further enhancing this positive feedback loop.
What are some examples of virtuous cycle?
Some examples of virtuous cycles or flywheels are:
- Platform Business Models In A Nutshell
- Network Effects In A Nutshell
- What Are Diseconomies Of Scale And Why They Matter
Other resources for your business:
Amazon Business Model, Epic Games Business Model, Etsy Business Model, Uber Business Model, Uber Eats Business Model, DoorDash Business Model.