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What is “Virtuous cycle”?
The technology company that I work with has a “virtuous cycle” concept that is organically included in the interviews of the CEO and executives, and in the speeches of our product leaders.
For example, an excerpt from Google CEO Sundar Pichai’s interview with MIT Technology Review about quantum supremacy 🔎 “For example, us building our own data centers is what allowed us to build something like TPUs [tensor processing units, specialized chips for Google’s deep -learning framework, TensorFlow], which makes our algorithms go faster. So it’s a virtuous cycle.”
Well, what is this “virtuous cycle”? A recurring cycle of events, the result of each one being to increase the beneficial effect of the next, the opposite of a vicious circle (a situation in which one problem causes another problem which then makes the first problem worse). The term has been translated into Turkish language as “efficient cycle”, “fertile cycle”, “sequence of benefits”.
What does the ‘virtuous cycle’ mean for companies?
Today’s technology giant Amazon was built on the customer experience-oriented “Virtuous Cycle” concept twenty years ago. Jeff Bezos, founder and CEO of Amazon, painted one of the most iconic business models on the back of a paper napkin. The drawing of Bezos, dubbed the “Virtuous Cycle,” shows the idea that success begins with a great customer experience. A great customer experience will attract more customer traffic, customers will bring more sellers to the system, these sellers will provide more product selection. More options will ultimately reduce the cost of product and innovation and create a positive wheel effect… The effect of the positive wheel results in the growth that Bezos put forward in the drawing and this is how the term virtuous cycle becomes popular.
The ‘GROWTH’ put forward by Bezos forms the basis of the strategy of many start-ups today. Gaining more customers, building loyalty, creating a network effect and enabling products to reach larger audiences and maintaining growth with a sustainable business model at the end of the day.
There was an virtuous cycle for start-up Uber, which we know with its rapid growth in different countries, the workforce it creates and the good user experience it offers. In 2014, David Sacks shared Uber’s virtuous cycle…
