7 Powers: The Foundations of Business Strategy Kindle Edition

This book isn't particularly polished compared to most hardcover business books. It looks like the author basically took the lecture notes from his course and published them as a book. And what a book it is! The content is pure gold. Unlike the "fad of the month" or "if it worked for me it'll work for you" or just plain "gee whiz" of many books on business strategy, the concepts and method set out in this book are highly skeptical and therefore thoroughly rigorous. The ideas feel like they've been tested in the most challenging competitive environments (the author refers to his work at the most senior levels of Netflix). The book is not always easy to absorb, and tying everything back to an equation of economic value may be more interesting in theory than in practice (the author assigns great value to this Theory of Everything integration), but the book is worth a dozen of the books churned out by business strategy consultants. If you're interested in or must understand business strategy, this lesser-known book is a must-read. It has earned a place in my permanent collection, next to Sun Tzu.

“Any strategy framework, to be broadly useful to a businessperson, must address all the key strategy issues facing an organization. Hamilton has long been been aware of the deficiencies in existing frameworks. His solution? To forge ahead with entirely novel conceptual advances, and then to bind these together into a united whole.” This is what Reed Hastings, CEO and co-founder of Netflix, writes in the book introduction!The book is an absolute must read if you are a founder building a business or a long-term investor and betting on the durable long-term competitive strengths of the business. Hamilton Helmer, the author, defines the meaning of strategy and power:Strategy: The study of the fundamental determinants of potential business valuePower: The set of conditions creating the potential for persistent differential returnsand then goes to show that a business derives its Potential Value = [Market Scale] * [Power]. Hamilton lays out the seven sources of Powers for a business, all from first principles, and illustrates these with very good examples from the real world. The seven powers: Scale economics, Network economics, counter-positioning, switching costs, branding, cornered resource, process power.My favorite power is the one called “Counter-Positioning”. I have read all the popular strategy books and I don’t think I have come across this concept as clearly articulated in any other book. He defines Counter-Positioning as follows: “A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.”Here is what Reed Hastings says about Counter-Positioning in the book’s introduction. “Throughout my career I have often observed power incumbents, once lauded for their business acumen, failing to adjust to a new competitive reality. The result is always a stunning fall from grace. A superficial thinker might pin this on lack of vision and leadership. Not Hamilton. By inventing the concept of Counter-Positioning, he was able to peel back the layers into the deeper reality of these situations. Rather than lacking vision, Hamilton established, these incumbents are in fact acting in an entirely predictable and economically rational way. Our earlier battle with Blockbuster bore out this notion”Hamilton is not only an author and an academic. He was also an early investor in Netflix and had tremendous impact on the strategy at Netflix and many other organizations. This book is a must read. I strongly recommend it!

Rehashed Porter, which was rehashed basic micro. The juice ain't worth the squeeze.

I first heard of Helmers from the Acquired Podcast, so I jumped into the book after having read a lot from Greenwald (Competition Demystified), Porter (5 Forces), and others discussing strategy. I really liked how Helmers and his team simplified a framework without giving up the important nuances of what really matters to business's long-term success/growth/defensibility. Id highly recommend people read this book

I work as a venture capitalist in Silicon Valley, and first heard about this hidden gem of a book from a fellow VC. Having now read it, I can say it is more than just a gem - this is one of the very best business and strategy books written in the past 30 years, up there with Innovator's Dilemma, Lean Startup and Good to Great. As you can see from the photo, I've covered nearly every page in notes and highlights. In reading it, I found Hamilton providing both:1) Incisive theoretical frameworks for dynamics that I'd observed intuitively in my work as an investor and board member for startup companies but couldn't quite put my finger on explaining. E.g., that individual company leaders are not sources of sustained competitive advantage ("cornered resources" in Hamilton's terms) because their services can be bought and sold and thus their value is arbitraged by the market. (Note this applies even to company founders - "superstar" teams will typically raise capital at much higher prices than "unknowns". Very often the price paid by investors for this talent does not adequately compensate for the market risk still faced by the fledgling company.)and 2) whole new ways of thinking about the relationship between market opportunities (what most startups and VCs blindly chase), and the potential for sustainable, differentiated value to be built by a single firm within that market opportunity (Hamilton's concept of "Power"). I can't wait to apply these lessons to my own career going forward, and will be recommending Hamilton's ideas to all companies and entrepreneurs I work with from now on!

The book contains valuable information about several strategic advantages for businesses along with examples of how they work. However, it's an unpleasant read. It would have been just as valuable if written in a much more readable manner by avoiding big words and unnecessary math.

This book should be a new mantra in valuing a business. It provides 7 types of “Power” that any business can tap into for superiority