7 Powers: The Foundations of Business Strategy

by Hamilton Wright Helmer

Strategy: the study of the fundamental determinants of potential business value

Strategy: the study of the fundamental determinants of potential business value

Following a line of reasoning common in Economics, Strategy can be usefully separated into two topics: Statics—i.e. “Being There”: what makes Intel’s microprocessor business so durably valuable? Dynamics—i.e. “Getting There”: what developments yielded this attractive state of affairs in the first place?

Following a line of reasoning common in Economics, Strategy can be usefully separated into two topics: Statics—i.e. “Being There”: what makes Intel’s microprocessor business so durably valuable? Dynamics—i.e. “Getting There”: what developments yielded this attractive state of affairs in the first place?

The goal of this book is ambitious: to enable such flexibility by making the discipline of Strategy relevant to you in those high-flux formative moments. But standing in the way is a daunting challenge: the core concepts of Strategy must be distilled into a framework that is simple but not simplistic. Only then can it serve you as such a real-time cognitive guide.

Network Economies occur when the value of a product to a customer is increased by the use of the product by others.

Disruption, of course, is one consequence of invention.

Branding is an asset that communicates information and evokes positive emotions in the customer, leading to an increased willingness to pay for the product.

Post-it notes emerged as a highly profitable business for 3M only because Dr. Spenser Silver tirelessly sought commercial application for his not-so-sticky glue. Once the Post-It application was established, the business’ differential returns were not predicated on him and his unique glue, but rather a different—in part, at least—Cornered Resource: U.S. Patent 3,691,140. U.S. Patent 5,194,299 and the Post-It Trademark.

all Power starts with invention.

The saga of Netflix’s ascent exemplifies intelligent adaptation over an extended period in the face of daunting uncertainty. The terrain of entrepreneurs, not planners.

The nature of flux demands that it unfolds in fits and starts, so any company wishing to capitalize on these new conditions must invent—again, by crafting, not design.

So if you want to develop Power, your first step is invention: breakthrough products, engaging brands, innovative business models. The first step, yes, but it can’t be the last step. Had Netflix invented the streaming product without introducing originals, they would have been left with an easily imitated commodity business. There would have been no Power and little value in the business. This is where the 7 Powers figures in. In the midst of invention, you need to be ever watchful for Power openings.

Invention not only opens the door to Power, it also fuels market size, the other half of the Fundamental Equation of Strategy.