What is a Virtuous Cycle (or Positive Feedback Cycle) in business, and how can Human Resources benefit from this phenomenon?
It is an extremely powerful concept that is perhaps most easily explained using a successful company like Amazon as an example.
In this example, We’ll begin with the Low Prices offered by Amazon. People are drawn to the value offered and become Customers, and obtaining more customers allows Amazon to have a much higher volume of products sold.
Selling a high volume of the product makes Amazon valuable to Suppliers, allowing Amazon to renegotiate their cost of goods and increase their profit margins, which helps Amazon move prices lower.
The cycle continues this way, low prices attract customers who create high-volume sales on the site, allowing Amazon to re-negotiate with suppliers and lower their prices to capture even more customers.
It isn’t difficult to see how quickly this can be beneficial to a company and promote rapid success and growth.
The same can be applied to HR using slightly different pivot points throughout the cycle.
This post originally appeared on SelectSoftware’s blog where we write about the latest in HRTech.