3 Key Insights from '7 Powers' by Hamilton Helmer

I just finished "7 Powers" by Hamilton Helmer, and three insights from the book keep spinning in my mind

1. It’s never too early to think about Power.
2. Powers originate from innovation.
3. Operational excellence vs Power.

A bit of context. 

The core assumption of 7 Powers is that exceptional businesses that generate high returns while consistently warding off competition, have something in common.

This “something” is called Power and is defined as 

The set of conditions creating the potential for persistent differential returns. 

‍Persistent and differential results mean that a Power must

• create a barrier that prevents competitors from arbitraging out the benefit. (hence persistent)
• deliver a benefit that significantly improves the business (hence differential)

Helmer identifies seven types of Powers:

1. Scale economies
2. Network economies
3. Counter-positioning
4. Switching costs
5. Branding
6. Cornered resource
7. Process power

Instead of digging deeper into each power, I will focus on the three insights that I found particularly meaningful

1. It’s never too early to think about Power. 
   Even though not all Powers are available at every stage of a business (some only emerge at scale), it is critical for companies at any stage to evaluate whether the foundational characteristics of the business can lead to any Power—and which one.
2. Powers originate from inventions. 
   The first cause of any power type is invention. Whether it's in product, process, brand, or business model, invention is the true engine behind the creation of Power.
3. Operational excellence vs power.
   Operational excellence alone doesn’t qualify as Power because competitors can easily replicate it. However, it can evolve into a “process power” if it involves something extremely hard to replicate and the time to replicate it (hysteresis) is extremely long.