#business #economic Created at 2022-12-18 # [Anonymous feedback](https://www.admonymous.co/louis030195) # [[Epistemic status]] #shower-thought #to-digest # Related - [[Business/Entrepreneurship/Scale Economies]] - [[Readwise/Books/Hamilton Helmer - 7 Powers]] - [[Readwise/Articles/Jony Ive - 7 Powers The Foundations of Business Strategy by Hamilton Helmer]] - [[Business/Business 🔨]] - [[Readwise/Podcasts/The Knowledge Project with Shane Parrish - 106 Josh Kaufman — Maximizing Our Locus of Control]] - [[Hamilton Helmer - 7 Powers|7 Powers]] # TODO > [!TODO] TODO # 7 Powers 7 Powers" by Hamilton is a book about how to unlock the seven essential capabilities of any successful business. It helps readers to understand the hidden forces that drive success and how to use those forces to create a powerful organization. The book is filled with practical advice and inspiring stories of successful businesses - a must-read for entrepreneurs and business leaders alike! ![[Pasted image 20221220073538.png]] > **_Power:_** the set of conditions creating the potential for persistent differential returns > ~ [[Hamilton Helmer - 7 Powers|7 Powers]] ![[Pasted image 20221219071147.png]] ![[Pasted image 20221221065219.png]] ## Execution ![[Pasted image 20221222070353.png]] ## Resources >**Resources**. You must start with the abilities you can bring to bear. Using the academic convention, I will call these “resources.” They might be as personal and idiosyncratic as Steve Jobs’ aesthetic sensibilities, or as corporate as Google’s vast stores of organized data. For Netflix, their original DVD-by-mail business endowed them with numerous resources relevant to streaming, including such directly transferable skills as their recommendation engine, their UI, their customer data and their relationships with content owners. Equally important was the platform of their existing business, which allowed them to easily offer streaming as a complement to DVD-by-mail, rather than a standalone service. This was far more important than you might think, as it silenced potential complaints about the initial small streaming catalogue that could have driven fatally negative word-of-mouth. Conversely, though, there were also many abilities Netflix had to develop, and as they moved aggressively into originals, this set of required competencies expanded considerably. >~ [[Hamilton Helmer - 7 Powers|7 Powers]] It is like an artist who is familiar with painting being given the opportunity to try their hand at sculpting. They have the aesthetic sensibilities and the experience of creating art to bring to the task, but they must also develop new skills in order to succeed. With practice and perseverance, the artist will be able to create works of art in a new medium. ## External conditions >**External conditions**. These resources then intersect an opportunity set driven by evolving external conditions: technological, competitive, legal and so on. For Netflix, an advancing technology frontier opened up the potential for streaming: Moore’s Law in semiconductors, plus similar exponential advances in optical communications and storage. The embodiments of these trends were high-speed Internet connections, acceptably costed digital storage and a broad dispersion of devices with adequate performance (displays, storage, graphics processing and connectivity). If Netflix had bet the company on streaming any earlier, they would have been dead in the water—external conditions were not yet ripe. >~ [[Hamilton Helmer - 7 Powers|7 Powers]] It is like planting a seed in the ground without proper soil, sunlight, and water. If the conditions aren't right, the seed won't grow, much like Netflix wouldn't have been successful if they had tried to launch streaming services before the external conditions were ripe. ## [[Invention]] >**Invention**. For Netflix, the inventions were their new product directions: streaming and originals and all the associated complements. Crafted, not designed. Note in Figure 8.4 that the arrows from Resources and External Conditions are dotted not solid. The potential for invention may be there but someone must seize it. >~ [[Hamilton Helmer - 7 Powers|7 Powers]] A chef is like Netflix in that they must identify potential resources and external conditions and craft them into something new and innovative. Just as Netflix crafted streaming and originals, the chef crafts ingredients into a delicious meal. The potential for invention is always present, but it takes creativity and skill to seize it. ## Power >**Power**. The final step was the thrust into exclusives and originals. By bringing to rein the cost of content, Netflix forged powerful Scale Economies and hence Power. Note also in Figure 8.4 that the connection from Invention to Power is also dotted. Most inventions don’t assure Power. As I have discussed, operational excellence—really a constant process of re-invention—does not result in Power. >~ [[Hamilton Helmer - 7 Powers|7 Powers]] It is like a carpenter building a house. The carpenter may have the skills to build the house, but without the right materials and tools, the house will not be completed. The same is true for a business that wants to gain power. Without the right invention, operational excellence, and scale economies, it will not be able to achieve its goals. ## 7 Powers - [[Scale Economies]] - [[Network Economies]] - [[Counter Positioning]] - [[Switching Costs]] - [[Branding]] - [[Cornered Resources]] - [[Process Power]]