{"id":975,"date":"2020-06-24T13:01:07","date_gmt":"2020-06-24T13:01:07","guid":{"rendered":"https:\/\/sellingsherpa.com\/?p=975"},"modified":"2020-06-24T13:01:18","modified_gmt":"2020-06-24T13:01:18","slug":"7-powers-the-foundations-of-business-strategy-book-summary","status":"publish","type":"post","link":"https:\/\/sellingsherpa.com\/index.php\/2020\/06\/24\/7-powers-the-foundations-of-business-strategy-book-summary\/","title":{"rendered":"7 Powers: The Foundations of Business Strategy (Book Summary)"},"content":{"rendered":"
\n

7 Powers: The Foundations of Business Strategy <\/a>by Hamilton Helmer<\/a><\/p>\n\n\n\n

INTRODUCTION<\/strong><\/h2>\n\n\n\n
  • Power: the set of conditions creating the potential for persistent differential returns<\/li>
  • Powers much have benefits & barriers:
    • Benefit: Some condition which yields material improvement in the cash flow of the Power wielder via reduced cost, enhanced pricing and\/ or decreased investment requirements.<\/li><\/ul>
      • Barrier: Some obstacle which engenders in competitors an inability and\/ or unwillingness to engage in behaviors that might, over time, arbitrage out this benefit.<\/li><\/ul><\/li><\/ul>\n\n\n\n
        \"\"<\/figure>\n\n\n\n

        PART I: STRATEGY STATICS<\/strong><\/h2>\n\n\n\n

        CHAPTER 1 SCALE ECONOMIES – SIZE MATTERS<\/strong><\/h2>\n\n\n\n
        • A strategy must meet the high hurdle of \u201cA route to continuing Power in a significant market.\u201d<\/li>
        • The quality of declining unit costs with increased business size is referred to as Scale Economies.<\/li>
        • Scale Economies emerge from a number of sources:
          • Fixed costs<\/li><\/ul>
            • Volume\/ area relationships.<\/li><\/ul>
              • Distribution network density.<\/li><\/ul>
                • Learning economies.<\/li><\/ul>
                  • Purchasing economies.<\/li><\/ul><\/li><\/ul>\n\n\n\n

                    CHAPTER 2 NETWORK ECONOMIES – GROUP VALUE<\/strong><\/h2>\n\n\n\n
                    • Network Economies occur when the value of a product to a customer is increased by the use of the product by others.<\/li>
                    • Industries exhibiting Network Economies often exhibit these attributes:
                      • Winner take all.<\/li><\/ul>
                        • Boundedness.<\/li><\/ul>
                          • Decisive early product.<\/li><\/ul><\/li>
                          • A common twist I have not covered are indirect network effects (also called demand side network effects). If a business has important complements and these complements are somehow exclusive to each offering, then a leader will attract more and\/ or better complements.<\/li><\/ul>\n\n\n\n

                            CHAPTER 3 COUNTER-POSITIONING – SCYLLA AND CHARYBDIS<\/strong><\/h2>\n\n\n\n
                            • Counter-Positioning: A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.<\/li><\/ul>\n\n\n\n

                              CHAPTER 4 SWITCHING COSTS – ADDICTION<\/strong><\/h2>\n\n\n\n
                              • Switching Costs arise when a consumer values compatibility across multiple purchases from a specific firm over time.<\/li>
                              • Switching Costs can be divided into three broad groups:
                                • Financial.<\/li><\/ul>
                                  • Procedural.<\/li><\/ul>
                                    • Relational: Tolls which would result from the breaking of emotional bonds built up through use of the product and through interactions with other users and service providers.<\/li><\/ul><\/li><\/ul>\n\n\n\n

                                      CHAPTER 5 BRANDING – FEELING GOOD<\/strong><\/h2>\n\n\n\n
                                      • Branding is an asset that communicates information and evokes positive emotions in the customer,<\/li>
                                      • A strong brand can only be created over a lengthy period of reinforcing actions<\/li><\/ul>\n\n\n\n

                                        CHAPTER 6 CORNERED RESOURCE – MINE ALL MINE<\/strong><\/h2>\n\n\n\n
                                        • Cornered Resource: Preferential access at attractive terms to a coveted asset that can independently enhance value.<\/li><\/ul>\n\n\n\n

                                          CHAPTER 7 PROCESS POWER – STEP BY STEP<\/strong><\/h2>\n\n\n\n
                                          • Process Power: Embedded company organization and activity sets which enable lower costs and\/ or superior product, and which can be matched only by an extended commitment.<\/li><\/ul>\n\n\n\n

                                            PART II: STRATEGY DYNAMICS<\/strong><\/h2>\n\n\n\n

                                            CHAPTER 8 THE PATH TO POWER – \u201cME TOO\u201d WON\u2019T DO<\/strong><\/h2>\n\n\n\n
                                            • Operational excellence is not strategy.<\/li><\/ul>\n\n\n\n

                                              CHAPTER 9 THE POWER PROGRESSION – TURN, TURN, TURN<\/strong><\/h2>\n\n\n\n
                                              • Your business must attain Power. Operational excellence by itself is not enough.<\/li>
                                              • By and large the Power Progression is borne out:
                                                • Origination: Counter-Positioning and Cornered Resource<\/li><\/ul>
                                                  • Takeoff: Scale Economies, Network Economies and Switching Costs<\/li><\/ul>
                                                    • Stability: Process Power and Branding<\/li><\/ul><\/li><\/ul>\n<\/div>","protected":false},"excerpt":{"rendered":"

                                                      7 Powers: The Foundations of Business Strategy by Hamilton Helmer INTRODUCTION Power: the set of conditions creating the potential for persistent differential returns Powers much have benefits & barriers: Benefit: Some condition which yields material improvement in the cash flow of the Power wielder via reduced cost, enhanced pricing and\/ or decreased investment requirements. Barrier: […]<\/p>\n","protected":false},"author":1,"featured_media":978,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_import_markdown_pro_load_document_selector":0,"_import_markdown_pro_submit_text_textarea":"","_monsterinsights_skip_tracking":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-975","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uncategorized","entry"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t