Discussing Helmer’s 7 Powers

Laura Escobar and David Haynes are colleagues at Ravn who enjoy reading nonfiction and posting book suggestions on our internal Slack channels. The two recently discovered Hamilton Helmer’s book 7 Powers: The Foundations of Business Strategy. Although 7 Powers received little recognition when it was first published, many in the business world now herald it as a hidden gem. With numerous favorable reviews and 4.6 stars on Amazon, Helmer’s unique business guide earned a spot on Ravn’s bookshelf, and Laura and David were eager to pick it up.

As it turned out, our resident bookworms enjoyed the venture. They found 7 Powers to be a compass to understanding the practical strategies of power that enable a business to unlock differential returns. We asked them to share a conversation about what they learned on the Ravn blog. For context, Laura leads the UX/UI design team, and David is a partner at the firm.

What follows is a summary of their conversations about the book and its use within the domain of digital product design.

Laura: David, let’s start with a question I enjoy asking colleagues. How would you explain this book to a five-year-old?  

—David chuckles—

David: That's a very good question. Perhaps an analogy about people will work for our fictitious preschooler. Companies are like people: each is unique. And, like it is with people, some differences are important. The writer of the book shares 7 powers (like super powers) that help companies to be strong and live long lives. He wants companies to learn and use these powers so they can stand out against other companies.

Laura: You know what I'm glad about? I’m glad you finished the book first and mentioned that the math equation parts of the book are not vital to understanding the framework. Although I did enjoy math during elementary school, I find it unnecessary when you're just getting started on business strategy. I think the equations may scare off readers who are not so patient when entering unfamiliar territory.

David: The math sections felt like an addenda to elevate the gravitas of the author’s thoughts. I like quantitative analysis, but these sections served little purpose. I am glad you skipped them.

So, Laura, what was the most meaningful part of the book for you?

Laura: By far the revelation of how power is achieved: the dynamics of power. I often hear comparisons like “X company is better than the others,” but what I truly want to know is how to become company X, and then guide business projects to success.

David: True, the book promises that a business with 7 easy-to-understand characteristics will be strong and lasting. This is exciting because it seems achievable. I thought it was an excellent summary of how to evaluate a business strategy and improve it. The author makes strategy formulation accessible and systematic. It is a perfect primer.

Laura: What made 7 Powers stand out for you?

David: The book is relatively short (about 200 pages), offers credible and relevant examples and is understandable by a layperson. And, perhaps best of all, it does not use unnecessary jargon.  

Armed with the knowledge and insights from 7 Powers, Laura, what would you do differently in your work at Ravn?

Laura: I'm a product designer, and my clients are usually trying to build software applications to advance strategic initiatives. These initiatives are part of larger business strategies. With this wonderful introduction to business strategy, I'll definitely be more attentive to the stage of the business I’m working with and how the software they’re trying to build fits into the big picture.  

At Ravn, we often work with young companies. At its early stages, a company is fast-paced but vulnerable in many ways. You could say it is on a power prologue, and so every decision it makes should be intentional towards the goal of achieving power. 7 Powers provides a solid foundation to ensure the company is constantly moving toward the desired destination. Every case is unique, and strategies should be addressed properly for each client, but businesses must also be going somewhere—dare I say it—powerful.

You mentioned something about this book being a good introduction to strategy, David. Can you recall a time before you read the book when you used the principles shared by Helmer?

David: Absolutely. I have used many 7 Powers concepts prior to reading the book. I believe it was Isaac Newton that said if he had seen further, it was by standing on the shoulders of giants. Helmer also stands on some powerful shoulders, like those of Michael Porter, Peter Drucker and Clayton Christensen. I have profited from the work of these authors for decades. I see 7 Powers as a work of synthesis, organization and communication more than a product of ideation. Almost all of the concepts presented in the text have been well-discussed by business academicians. The book’s most prominent characteristic is its ability to communicate semi-complicated concepts with brevity and clarity. In this respect, it is an excellent and highly recommended text.

Laura: Did you see any weaknesses in the content?

David: I take issue with Helmer’s view that operational excellence is not a power. The reason he offers is that operational excellence is easy to copy. My experience would strongly suggest that operational excellence is, in fact, very hard to reproduce. The vast majority of commercial exchanges have discontinuities and suboptimal processes. Many firms have successfully used quality as a distinctive advantage. I believe operational excellence is very powerful, and Helmer’s arguments to the contrary are not persuasive. Further, although he emphatically states that operational excellence is not a power, his process power approximates the value of operational excellence. I wonder if perhaps the book should be retitled 7+ Powers.

I also felt the seven powers (scale economies, network economies, counter positioning, switching costs, branding, cornered resource and process power) came up a little short because too many powers were offered as if your company were alone on an island. This seems like a weakness in Helmer’s framework. Every strategic decision should be made in relation to other companies or the competitive landscape. For instance, Michael Porter’s classic, Competitive Strategy, is hyper-aware of the interdependence of companies, regulation, suppliers and customers.

Laura: I see where you’re coming from. Although counter positioning considers the competitive environment, I think it’s the only one of Helmer’s powers that is dependent on the actions of other companies.  Hmm . . . this is a bit of a problem, isn’t it?  

With that being said, I thought counter positioning was complex and fascinating. With counter positioning, a business can adopt a model that its direct competitors will find difficult to imitate—an attempt to do so would contradict their own singular positions. Netflix versus Blockbuster is a wonderful example offered in the book. Blockbuster could not follow Netflix into streaming for fear that it would subvert its own business. It was quite the conundrum. In chess, there is a word—zugzwang—that describes when no possible move increases the strength of your position. Blockbuster couldn't do anything to counterattack Netflix that wouldn't reduce their own established power in the short term. It was by all means a brilliant play.

David: All things considered, do you recommend the book?

Laura: Without a doubt—especially to UX designers looking to dive deep into the business side of product design. It wasn't long ago when I realized that in order to share how design creates a tangible impact on the bottom line, I must learn how to speak the language of stakeholders and business partners. Most designers might see their work as a nice addition to the branding identity and service they provide customers, but its true potential, though often overlooked, is so powerful.

True human-centered design isn't only about a desirable product: it should also take into account technical feasibility and viability from a business perspective. By identifying not only these fundamental power types but also how and when they can create a competitive advantage, product designers become more valuable allies in developing new business opportunities. 7 Powers definitely broadened my perspective on software application design.

David: It is a profitable investment in time. Highly recommended.