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7 Powers: The Foundations of Business Strategy

4.32  ·  Rating details ·  1,028 ratings  ·  81 reviews
What are the secrets to making a company enduringly valuable?

7 Powers breaks fresh ground by constructing a comprehensive strategy toolset that is easy for you to learn, communicate and quickly apply.

Drawing on his decades of experience as a business strategy advisor, active equity investor and Stanford University teacher, Hamilton Helmer develops from first principles a
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Paperback, 210 pages
Published October 25th 2016 by Deep Strategy
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Zhou Fang
I really think this book is overrated. A lot of people in Silicon Valley seem to love this book and it's highly recommended by Reed Hastings, who wrote the foreword. If you find it too cumbersome to read Porter, Christensen, and Greenwald, then this book is not a bad summary of some of the bigger ideas in their works. However, a lot of the text is circular theory dressed up with Econ math to explain some tangentially relevant cases. It reads like an Econ PhD wanting to show the business world th ...more
Cedric Chin
Sep 07, 2020 rated it it was amazing
Quite possibly the only book about business strategy you ever need to read.

This is miles better, and more practical than Rumelt or Porter, and it resolves for me some of the edge cases with Christensen’s disruption theory.

It’s great.
Joshua Auerbach
Dec 20, 2017 rated it liked it
This book is a good starting point to think about business strategy, but has a few flaws and over-generalizations.

My biggest personal annoyance that pervades the book is a conflicting view on markets that is never reconciled. In one chapter Helmer proclaims that passive etfs are superior to other forms of investing, but later posits that his methodology has allowed him to outperform the market. The examples are cherry-picked to fit a narrative and the book primarily focuses on all or nothing st
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Vikrama Dhiman
Oct 15, 2020 rated it it was amazing  ·  review of another edition
Mind-blowing

Simply, the best book on Strategy and strategy.
Pick it up.
Read it once a year before the yearly planning.
Tanner
May 13, 2021 rated it really liked it
Audible. Found this book super pragmatic. I've read and discussed strategy a lot in my life that doesn't engrain itself into my thinking fully. Hamilton's 'simple, not simplistic' framework just feels very useful.

Listening to it means I didn't dive as deep into the math or some nuances, yet the 7 powers and associated examples are great to get me started. Most helpful business book I've read in a while.
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Dickson Pau
Dec 31, 2020 rated it it was amazing  ·  review of another edition
Awesome

One of the best books on competitive advantages. More complete than Competition Demystified in my opinion. Love it that the author is a successful investor himself.
Lam
Oct 31, 2020 rated it it was amazing
Provide a totally new angle about strategy. Need to think much when reading this one. Will re-read this book for sure
Christopher Howarth
Oct 14, 2020 rated it really liked it
I’m torn between the fact that the basic framework is pretty useful and the fact that the author’s tone and writing style is insufferably smug. We are treated to lengthy derivations of pretty straightforward formulas (the author can rearrange equations!) and a whole Appendix where the author investigates how successful his own investing experiences have been.

At least I’ll give the author credit for making bold and falsifiable claims, e.g. that his framework is an exhaustive account of all the st
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John
Jul 21, 2021 rated it it was amazing
Shelves: business
Synopsis

The value of a business can be measured as a function of the size of its industry’s market (that is, total possible customers and how much they buy), its permanent share of that market, and its permanent ability to earn money over and above what it pays on money it borrows and what the owners could get on their money elsewhere (cost of capital). For businesses with a large positive value, the author calls these last two items taken together ‘Powers’.


There are seven (and only seven) Powe
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Robert
Jun 07, 2020 rated it really liked it
This is the kind of book I had envisioned when people (especially technical folks like software engineers) make jokes about MBAs and their love of strategy books. There is a tonne of jargon and most of the book is spent reframing the world in the author's framework.

This all sounds very critical but the truth is that I really enjoyed it. The 7 Powers is a digestible but comprehensive look at the subject of "competitive advantage" – value investors endlessly preach about the value of finding a moa
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Brian Sachetta
Jun 09, 2021 rated it liked it
I heard about this one through the “Acquired” podcast. The hosts of that show regularly work Helmer’s “7 powers” into their discussions, so, after listening to several episodes, I felt I had to check this book out for myself.

In the end, I found it to be okay. The work is centered around seven ways that companies can create power (the ability to realize persistent and sustainable returns). I won’t spoil those seven subjects for you here, otherwise, I’d be giving away the bulk of the book.

And that
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Abi Tyas Tunggal
Mar 04, 2021 rated it it was amazing
7 Powers is my favorite book on strategy.

Hamilton Helmer provides real world examples grounded in decades of experience as a strategy advisor, active equity investor, and Stanford University professor that help us build a set of mental models to think through strategy.

The crux of 7 Powers is a business can try to improve its strengths, mitigate its weaknesses, eliminate competitor risk, better serve its customers, maximize shareholder value, or take advantage of its pricing power.

But there are v
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Alexej Gerstmaier
Apr 30, 2021 rated it it was amazing
Thiel recommends this, was *really* good, even practically useful as a simple compass.

Seven Powers are

Scale Economies
Network Effects
Counter Positioning
Switching Costs
Branding
Cornered Resource
Process Power

Out of these, I found CP and PP to be most interesting/surprising.

The points regarding the Toyota Production System were super interesting as I already read a bunch of books about that topic:

"TPS is not what it seems. On the surface, it consists of a fairly straightforward variety of interloc
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Vincent Chan
Aug 29, 2020 rated it it was amazing
What makes this book stand out from the others is its focus on using strategy to build a meaningful and lasting business, not just purely drive business growth. In the tech industry nowadays, people are so obsessed with product/market fit and try to drive growth via rapid optimization but there was not much discussion about what companies should do beyond product/market fit. Why some of those post P/M fit companies became great (10x) but some could barely survive (10%)? This book will tell you t ...more
Jaime
Business strategy condensed into an easy-to-remember framework. A "power" is what drives lasting dominance - it is the combination of a benefit, and a barrier that prevents a given competitor from attaining that benefit. Though there are many strategies that provide a benefit to a company, there are only a limited set that _also_ have a barrier sufficient to prevent a competitor from attaining that same benefit and therefore reducing profit margin through competitive arbitrage.

The author descri
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Matthew
Jan 01, 2021 rated it really liked it
4.5/5 stars.

Excellent book on business strategy, particularly since it covered the topic through a novel lens. Helmer described each ‘power’ first with a case study of a company, then by describing the intricacies of it, and finally with a proof how each power drives continued excess profitability it in the chapter appendix. The mix of anecdotes and a mathematical derivation of how wielding each power gives a company the ability for excess profits (i.e. "alpha") made this book the whole package.
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Richard I Porter
Sep 15, 2021 rated it really liked it
Who should read this? Business people. Product People. Those interested in building a company that makes money, that delivers on a mission with enduring, repeatable, differentiated success.

This book is more rigorous than most books about "business strategy." You will find equations, derivations, formal definitions and explicit inclusion and exclusion based on that. This is likely to be expected given the author's work as a professor at Stanford Economics department. But also from his focus as a
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Ben Van Horn
Dec 06, 2020 rated it really liked it
For any business to succeed in the long term, they must have a durable business model. The notion of Power that Helmer writes about in this book is comprised of two aspects. A Benefit and a Barrier. The benefit is something that your company does that is highly valued or better than most of your competitors in your industry. A barrier is such that you have a position in the marketplace that cannot be arbitraged. Something that no other competitor can take away from you. Helmer shares a deep dive ...more
Lee
Oct 15, 2020 rated it it was amazing  ·  review of another edition
Best business strategy book I’ve read, and it’s not close

I’ve read most of the popular business, strategy, and investing books through my career as an investor thus far. While many of those texts are worth the time and effort, 7 Powers clearly stands alone as the most comprehensive and cogent work that intertwines business strategy with value creation.

I could write quite a bit more about this book, but suffice to say, just buy it and read it (then read it again). It’s that good.
Marco
Nov 11, 2021 rated it really liked it
I'm halfway through the book, the content is interesting, but this professor/author takes the extra step to make the things sound super difficult to learn.
He said in the intro that he liked to keep things simple but not simplistic, but his prose is awful.
Tons of paragraphs could have cut, ton of words might have not been used and he could have expressed a thought with much less words.
My perception is that he wants to sound super smart and wants to make the reader feel like someone who's having
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Valentine
Jul 16, 2020 rated it really liked it
Shelves: 2020
Read this in preparation for the Acquired.fm book club. I think it will be most useful as a kind of guidebook, a Hitchhiker's Guide to the Whiteboard if you will, for diagnosing different businesses and their strategies. I also think it'll be interesting to apply its principles to startups and side hustles that aren't your typical tech fare like Netflix or Intel et al. Also, the formula parts went way over my head. I should read a math book... ...more
Yechan
Jan 06, 2021 rated it liked it  ·  review of another edition
At the end of the day, this book is basically Michael Porter x Bruce Greenwald with fancier language and more up-to-date case studies. Helmer does provide a better framework than these two professors did. However, attempting to create a simple framework, he often over-generalizes and uses quasi-mathematical formulas that seem contrived. Nonetheless, it is a book worth skimming through for those new to the concepts.
Yun Teng
Feb 23, 2021 rated it really liked it
“Simple but not simplistic”. Framework for thinking about what makes a business last and how to get there. Was a relatively quick read with helpful charts but paused at parts to digest and apply learnings. Really liked the framework overall, was a new angle of evaluating businesses that I hadn’t seen before - some questions around generalizability of framework and clear distinction between the 7 powers, but overall still helpful
Lucas Watson
Feb 26, 2021 rated it really liked it
The book gives an impressive and informative step by step walk through on how a business gains power and retains it. I understand Helmer’s goal in writing this was to denote the process of power in a “simple but not simplistic” way, however his language gets a little complicated in the appendixes of each chapter breaking down the mathematical expressions on how each power is formalized for the average reader thus the 4/5 star.
Brad Bevers
Apr 22, 2021 rated it really liked it
Not what I thought it would be, but a good read for both entrepreneurs and investors. The author does a great job of making a systematic argument for strategy. The charts and and tables that he produces with his theory are easily worth the cost of the book. Despite its short length, this will be more of a reference book for me going forward, especially as a help when evaluating investments at an early stage.
Karthik L
Nov 25, 2021 rated it liked it
Shelves: strategy
Overall I found the book to be pretty useful in understanding and identifying strategic moves for your own business. I docked a couple of stars because the book could have been edited better. The Netflix examples shine the best. The content can be tough to absorb in a few places and some ideas like Cornered Resource could have been eliminated altogether without diluting the ideas in his book. A good editor would have made the book easier to read.
Gaurav Juneja
Dec 13, 2017 rated it it was amazing  ·  review of another edition
Good framework for analysing business staretgy

Very clear framework for determining the industry economics and competitive positioning of a business. Case studies are empirical evidence of the Powers in action. Specially suitable from looking at a business from the angle of an investor. Believe the equation / math stuff was not really needed / useful.
John
Jan 20, 2019 rated it it was amazing
I liked the book as a great short hand to think through what creates sustained, differentiated profits and at what point in the product life cycle each type of barrier or benefit is usually created.

It's given me a few shorthand "rules of thumb" on questionable tactics based on either a product's maturity or a competitor's position.
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Bernard Leong
Jun 20, 2020 rated it it was amazing
Shelves: business
The best business book that I have read so far this year. The only problem with Hamilton Helmer is that he did not read Clayton Christensen's 2nd book "The Innovator's Solution" that addresses his understanding of the innovator's dilemma. It's a book that I will re-read constantly similar to Robert Greene's "48 Laws of Power", "33 Strategies of War". ...more
Chanh Nguyen
Nov 02, 2020 rated it it was amazing
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

1. 1st principle thinking will lead to unbox the combination of resolution
2. Don't underestimate the not-to-do list
3. Avoiding stupidity is easier than seeking brilliance
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Hamilton Helmer has spent his career as a practicing business strategist. At Helmer & Associates (later Deep Strategy), a strategy consulting firm he founded, he has led over 200 strategy projects with major clients such as Adobe Systems, Agilent Technologies, Coursera, Hewlett-Packard, John Hancock Mutual Life, Mentor Graphics, Netflix, Raychem, and Spotify. In the last two decades he has also ut ...more

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“Suppose a company has a significant scale advantage in a Scale Economies business. Smaller firms would spot this advantage, and their first impulse might be to pick up market share, thus improving their relative cost position and erasing some of this disadvantage while improving their bottom line. To get there, however, they would have to offer up better value to customers, such as lower prices. In an established” 0 likes
“This disconnect might tempt you to reject Statics as a means of understanding Dynamics, but that would be folly. In a prescient article of two decades ago, Professor Porter saw past this error to the underlying premise that inspired my approach: A body of theory which links firm characteristics to market outcomes must provide the foundation for any fully dynamic theory of strategy. Otherwise dynamic processes that result in superior performance cannot be discriminated from those that create market positions or company skills that are worthless.87 In other words, to assess which journeys are worth taking, you must first understand which destinations are desirable. Fortunately the 7 Powers does exactly that: it maps the only seven worthwhile destinations. Accordingly, we can look back to my” 0 likes
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