7 Powers: The Foundations of Business Strategy by Hamilton Helmer

Great news, readers; I have another book recommendation for you. Today’s offering comes courtesy of author Hamilton Helmer and is titled: 7 Powers: The Foundations of Business Strategy. Using his decades of experience as a business strategy advisor, active equity investor, and Stanford University teacher, Helmer has penned a no-holds-barred book that lights a fire under entrepreneurs, simply not allowing any excuses for not following through and executing.

In fact, execution is one of the fundamentals to success that Helmer points out. To make a company valuable and maintain, sustain, and continually build upon that value, Helmer points to the dynamic duo of strategy and execution.

So what exactly do we mean by strategy? Basically, strategy is the art of choosing what to do. It is the process for how we come to a decision based on logical and linear data and means. In the pages of 7 Powers, Helmer helps us understand what good strategy looks like by offering us real-world examples from his many years as a strategy advisor. Gleaning from these examples, we can have a clearer vision of what we want as we build our own set of mental models to think through our own individual strategy.

And as for execution? That simply means doing it. Following through on that strategy you’ve just so carefully laid out.

But what I love most about Helmer is that he doesn’t just tell you that you need to do something and explain why it’s important; he walks you through it, providing a strategic framework that helps you know exactly what to focus on next—and on and on.

Now, on to the 7 Powers, which are business models provided—and explained—by Helmer, highlighted and summarized below:

·     Scale Economies: A business where per unit costs decline as volume increases.

·     Network Economies: A business where the value realized by a customer increases as the userbase increases.

·     Counter Positioning: A business adopts a new, superior business model that incumbents cannot mimic due to the anticipated cannibalization of their existing business.

·     Switching Costs: A business where customers expect a greater loss than the value they gain from switching to an alternate.

·     Branding: A business that enjoys a higher perceived value to an objectively identical offering due to historical information about them.

·     Cornered Resource: A business that has preferential access to a coveted resource that independently enhances value.

·     Process Power: A business whose organization and activity set enables lower costs and/or superior products that can only be matched by an extended commitment.

Helmer also points out the dependence every power has upon invention. In fact, he claims invention is the catalyst of every power and exactly what can lead to your business nabbing a bigger piece of the pie (read: a bigger chunk of the value chain). And according to Helmer, it’s the 7 Powers that will determine precisely how big of a slice of that pie you get.

I will end with my official recommendation: Read it. Strategize. Execute. And feel the power(s).