#25 The 7 Powers Behind the World's Top Companies
From the book of Hamilton Helmer's "7 Powers"
I am a huge fan of Lenny’s Podcast and been listening to it from the last 2 years which helped me a lot to — think about product, think about growth mindset, think about how thinking can be improved with different dimensions.
So, during one episode I heard this term “7 Powers” from one of the quests and Lenny has also acknowledged this — and then I thought I might have missed it and have no idea what it is.
It happened again in another episode — and this time they mentioned “Hamilton Helmer” who wrote about these 7 powers in his book
It keeps happening over every other episode and that tells me how much this has influenced or became a light cone for many founders and leaders in their product building and scaling journeys.
Finally, I am able to learn about these and also started listening to one of the Hamilton Helmer’s episode with Acquired podcast. (hopefully I could complete this weekend)
Who is Hamilton Helmer?
Hamilton Helmer is a renowned strategy consultant and author who has spent decades studying the secrets behind the world's top companies.
In his book "7 Powers: The Foundations of Business Strategy", Helmer shares his years of research and experience into a comprehensive framework for understanding what drives the success of the world's most successful companies.
The book is the result of a decade-long research project that involved analyzing over 100 companies, including Amazon, Walmart, Google, Facebook, and Microsoft, to identify the key patterns and strategies that have enabled them to achieve and sustain success.
At the heart of the book is the concept of the "7 Powers", which are the seven key patterns that Helmer has identified as the foundations.
What are the 7 Powers?
1️⃣ Counter-Positioning <> This power involves creating a product that challenges the status quo and offers a unique value proposition that sets it apart from competitors.
Examples
Tesla's electric cars, which counter-positioned themselves in the market by offering a sustainable alternative to traditional gas-powered vehicles.
Dollar Shave Club, which also counter-positioned itself in the razor market by offering a subscription-based service that challenged the traditional model of buying razors at a store.
2️⃣ Cornered Resource <> This power is about securing a valuable resource, such as a patent or exclusive partnership, that gives your product a sustainable competitive advantage.
Examples
Google's search algorithm, which is a cornered resource that gives the company a competitive edge in the search market.
Amazon's 1-Click ordering, which is a patented technology that makes it easy for customers to make repeat purchases.
3️⃣ Brand Habit <> This power is all about creating a product that becomes a habitual choice for customers, making it difficult for competitors to gain traction.
Examples
Apple's iPhone has become a habitual choice for many customers who are loyal to the brand and willing to pay a premium for the latest device.
Coca-Cola has created a brand habit by becoming a huge presence in many people's lives and making it difficult for competitors.
4️⃣ Switching Costs <> This involves creating a product that is so valuable, customers are willing to pay a premium to avoid switching to a competitor.
Examples
Salesforce's customer relationship management (CRM) software creates high switching costs by becoming deeply integrated into a company's sales and marketing processes.
Adobe's Creative Cloud creates high switching costs by offering a suite of creative applications that are deeply integrated and difficult to replace.
5️⃣ Network Economies <> This power is about creating a product that becomes more valuable as more users join, making it difficult for competitors to replicate.
Examples
Facebook's social network became more valuable as more users join and create content.
Airbnb transformed into a valuable platform as more hosts and guests join and create a network effect.
6️⃣ Process Power <> Creating a proprietary process that drives efficiency, quality, or innovation in your product development, giving you a competitive edge.
Examples
Amazon's logistics and delivery process, which is a proprietary system that drives efficiency and speed in getting products to customers.
Intel's chip manufacturing process, which is a proprietary system that drives innovation and quality in the production of microprocessors.
7️⃣ Scale Economies <> This is about achieving economies of scale that allow you to produce your product at a lower cost than competitors.
Examples
Walmart's retail operations achieved economies of scale by providing value with everyday low cost all the times.
Microsoft's software development — by spreading the cost of development across a large number of users.
Conclusion
These 7 Powers offer a powerful framework for understanding what drives the success of the world's top companies.
Now, think about a product or company and that definitely could be mapped to one of these or a combination of powers (Eg: AWS is a combination of Scale Economies and Process Power and has also become Network Economics because more users started using it, which is increasing it’s network effect)
By applying these patterns to your own product/business, you can unlock new opportunities for growth, innovation, and sustained success.
What do you think? Is there a particular power that resonates with you, or one that you are struggling to apply?
Share your thoughts in the comments below!
Thanks for reading
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