7 Powers

7 Powers is arguably the best book on business strategy currently available today.

This is a summary of a 🌳 tree book, arguably the best book on business strategy currently available. 7 Powers is very good, remarkably well written, but deceptively easy to read; the framework that the book develops is ‘simple without being simplistic’. To my mind, 7 Powers supplants Michael Porter, shores up several holes in Clayton Christensen’s disruption theory, outshines Bruce Greenwald’s Competition Demystified, and makes Richard Rumelt look like a child playing with strategy toys. If you must read only one book on business strategy, make it this one.


This is a companion discussion topic for the original entry at https://commoncog.com/7-powers-summary/

7 Powers is arguably the best book on business strategy currently available. It develops a complete theory of business strategy, but is written for the practitioner.


This is a companion discussion topic for the original entry at https://commoncog.com/blog/7-powers-summary/
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Just a quick note to say that I’ve updated the section on Switching Costs with excerpts from Helmer’s interview with Patrick O’Shaughnessy. Both post and PDF are now updated.

Bravo! This finally pushed me over the edge of buying the book, despite my wondering what could possibly be of value that is not included in your post.

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A couple of edits and corrections.

The Surplus Leader Margin equation for Scale Economies is this:

(I wrongly put the -1 in the second term under the denominator. Special thanks to @rishabhsriv for noticing that it didn’t make sense).

I’ve added an extra paragraph under Power Progression:

This turns out to be really useful! Helmer writes:

The key strategic questions for you are: (1) “What Power types do I now have?” and (2) “What Power types do I need to worry about establishing now?” The 7 Powers informs you that there are only seven possibilities for (1) and usually you can quickly rule out several. The Power Progression informs you that at any given growth stage the maximum number of new Powers that you might explore is 3. (emphasis added) This focusing is very valuable. If you cannot see a route to one of these 7, your strategy problem is not yet solved.

And I’ve added an endnote:

Are there just 7 Powers? To the best of Helmer’s knowledge, yes. He writes: ‘In the 200+ strategy cases I have led over my career, these seven were sufficient. This is also true of all the cases studied by my students, probably another 200 or so.’ I have no reason to doubt him. It is plausible that a new one might emerge (Process Power emerged in the 70s, for instance), but discovery of a new Power should be regarded as an unlikely event.

I’ve updated both the post and the PDF.

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I look forward to reading this book. I’ve been on a strategy kick lately, slowly going through Lawrence Freedman’s history of the term. From what I’ve read, there is a dearth of good practical tools to developing strategy; most of the discussion is ontological (i.e., what is strategy, versus, say tactics). I bought the book based on your recommendation and I look forward to using the PDF to guide my reading.

Cheers

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Been a long time reader but this is the post that pulled me over to becoming a paid subscriber. Am pitching for a bigger job and planning to use the 7 Powers framework to build my case as a strategic thinker.

I got the book years ago on the recommendation of a fund manager who had the book recommended to him. Liked it but clearly didn’t fully appreciate it. Looking forward to digging in.

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Welcome Jason! Glad to see you here! :bowing_man: