(notes on) 7 Powers: Foundations of Business by Hamilton Helmer

TLDR

The business strategy (small s) is a route to continuing power in significant markets. Being there (statics) is one thing, but getting there (dynamics) is quite another.

My Notes

Strategy (capital S): the study of the fundamental determinants of potential business value

  1. Strategy Statics (7 Powers) : ‘Being There’. What makes a business so valuable for so long?

Power 1: Scale Economies.

A business in which per unit cost declines as production volume increases.

Power 2: Network Economies

The value of a service to each user increases as new users join the network.

Power 3: Counter Positioning

A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.

  1. Denial
  2. Ridicule
  3. Fear
  4. Anger
  5. Capitulation

Power 4: Switching Costs

The value loss expected by a customer that would be incurred from switching to an alternative supplier for additional purchases.

Power 5: Branding

The durable attribution of higher value to an objectively identical offering that arises from historic info about the seller.

Power 6: Cornered Resource

Preferential access at attractive terms to a coveted asset that can independently enhance value.

Power 7: Process Power

Embedded company organisation and activity sets which enable lower costs and/or superior product.

Strategy Dynamics: The Path To Power

How to get to power?

  1. Competitive Position: an attractive new service caused sign ups, resulting in scale advantage.
  2. Industry Economics: originals and exclusives. Converted top content from variable to fixed cost, creating scale economies

Strategy Dynamics: The Power Progression

Timing. Intel 8088 processor story. The takeoff period is key.

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Chris Stoneman

Chris Stoneman

Dad, Hub, LDN/E17 resident. Strategy @Spotify. ex Universal Music. Here I share my thoughts or things I learn, please help me understand them more. @CWStoneman