What is a Flywheel? In a simple graphic, a flywheel explains the success formula for a company or system. As X increases, it leads to more of Y, which in turn increases Z. As Z increases it flows back to X and the cycle begins anew. I believe that behind every successful company is a flywheel that is well understood—at least internally.

A company’s flywheel explains why it becomes easier to run a business as it continues to operate. Like compounding interest, investments in one area of the business flow through to every other area of the business. These set off a series of accumulating advantages that the company enjoys over time. A company that understands its own flywheel can identify where the wheel is spinning smoothly, and where a little bit of grease might come in handy.