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Business strategy with Hamilton Helmer (author of 7 Powers)

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May 5, 2024

Guest

Hamilton Helmer

Hamilton Helmer, a world-renowned expert on business strategy and author of "7 Powers: The Foundations of Business Strategy," dives deep into the essence of competitive advantage. He discusses the essential powers startups should cultivate and debunks common myths about business strengths. Helmer distinguishes between moats and true powers, highlights how AI reshapes competitive barriers, and offers practical strategies for all levels of leadership to harness these insights for growth and success.

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ADVICE

Strategy Timing

Always think about strategy, even before product-market fit.
Consider how your business propositions might enable future power.

insights

INSIGHT

Strategy Definition

Strategy focuses on fundamental business value determinants.
This value-driven focus makes strategy a long-term concept.

insights

INSIGHT

Power Informs Strategy

Power, by offering cost or price advantages, drives business value.
Durability of these advantages turns them into power, creating defensible value.

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Strategic Thinking for Founders

04:31 • 25min

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Understanding Power and Moats in Business Strategy

29:02 • 4min

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Leveraging Business Powers for Strategic Product Management

33:09 • 5min

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Enhancing Strategic Thinking for Product Leaders

37:52 • 2min

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Generative AI and Business Strategy

39:24 • 15min

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Economic Inequality and the Debate on Government Intervention

54:49 • 2min

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The Power of Entrepreneurship and Inspiration

56:32 • 12min

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#48342

Michelangelo, God's Architect

William E. Wallace

This book explores Michelangelo's later years, where he transitioned from sculpture to architecture, culminating in his work as the chief architect of St. Peter's Basilica. It delves into the challenges he faced and his determination to leave a lasting legacy despite knowing he would not see the project completed in his lifetime.

#3840

• Mentioned in 7 episodes

This book is a historical biography of the human genome, detailing the scientific quest to understand heredity from ancient times to the present day. It weaves together stories of key scientists such as Gregor Mendel, Charles Darwin, Francis Crick, James Watson, and Rosalind Franklin, along with the author's personal family history of mental illness. The narrative explores the ethical implications of genetic research and its potential to change human fates and identities. Mukherjee's writing combines science, social history, and personal narrative to create a compelling and accessible account of one of the most significant scientific concepts of our time.

#2125

• Mentioned in 12 episodes

The Road to Reality

A Complete Guide to the Laws of the Universe

Roger Penrose

#76

• Mentioned in 123 episodes

Poor Charlie's Almanack

The Essential Wit and Wisdom of Charles T. Munger

Charles T. Munger

Peter D. Kaufman

Originally published in 2005, Poor Charlie's Almanack is a collection of eleven talks delivered by Charles T. Munger between 1986 and 2007. Edited by Peter D. Kaufman, this book draws on Munger's extensive knowledge across various fields to provide a framework for rational and rigorous approaches to life, learning, and decision-making. It is renowned for its sharp wit and rhetorical flair, making it an essential read for investors, entrepreneurs, and anyone seeking to enhance their wisdom and critical thinking skills.

#20148

7 Powers

The Fundamentals of Business Strategy

Hamilton Helmer

In '7 Powers: The Foundations of Business Strategy,' Hamilton Helmer provides a detailed framework for identifying and developing the seven key sources of competitive advantage. These powers include Scale Economies, Network Economies, Cornered Resource, Process Power, Branding, Counter-Positioning, and Switching Costs. Helmer draws on his extensive experience as a strategy advisor, investor, and professor to illustrate how companies can create and maintain these powers through real-world examples. The book emphasizes the importance of strategy in conjunction with execution to build enduringly valuable businesses.

• Mentioned in 860 episodes

1984

George Orwell

Published in 1949, '1984' is a cautionary tale by George Orwell that explores the dangers of totalitarianism. The novel is set in a dystopian future where the world is divided into three super-states, with the protagonist Winston Smith living in Oceania, ruled by the mysterious and omnipotent leader Big Brother. Winston works at the Ministry of Truth, where he rewrites historical records to conform to the Party's ever-changing narrative. He begins an illicit love affair with Julia and starts to rebel against the Party, but they are eventually caught and subjected to brutal torture and indoctrination. The novel highlights themes of government surveillance, manipulation of language and history, and the suppression of individual freedom and independent thought.

Hamilton Helmer is one of the world’s leading experts on business strategy and the author of the seminal book 7 Powers: The Foundations of Business Strategy, which provides a comprehensive framework for understanding what it really takes to achieve and sustain a competitive advantage. With more than three decades of experience in the strategic consulting industry, Hamilton has advised over 200 companies—from burgeoning startups to Fortune 100 giants—on how to identify, build, and leverage their unique strategic powers. In our conversation, we discuss:

• Potential sources of power that startups should develop from an early stage

• Common misconceptions among companies about the types of power they possess

• How power relates to strategy

• The difference between a moat and a power

• Practical strategies for non-leaders to leverage insights about power and strategy in their work

• AI’s impact on competitive advantages and barriers to entry

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Find the transcript and references at: https://www.lennysnewsletter.com/p/business-strategy-with-hamilton-helmer

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Where to find Hamilton Helmer:

• X: https://twitter.com/hamiltonhelmer

• LinkedIn: https://www.linkedin.com/in/hamilton-helmer-42983/

• Website: https://7powers.com/

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

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In this episode, we cover:

(00:00) Hamilton’s background

(04:08) When power becomes important

(08:24) How strategy relates to power

(12:09) How power informs strategy

(14:46) The sequence of powers

(21:13) Common misconceptions

(24:39) Network effects vs. network economies

(26:58) Uber’s success

(29:16) Moats vs. powers

(31:12) Strategies for non-leaders to leverage power and strategy

(37:51) Advice on how to become a strategic thinker

(39:27) AI’s impact on the seven powers

(45:43) Why moving fast is not a power

(50:24) Three things that create value in a company

(51:16) The debt trajectory of the U.S.

(56:35) Optimism for the future

(59:25) Lightning round

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Referenced:

• 7 Powers: The Foundations of Business Strategy: https://www.amazon.com/7-Powers-Foundations-Business-Strategy/dp/0998116319

• John von Neumann: https://en.wikipedia.org/wiki/John_von_Neumann

• Pearl Harbor: https://www.history.com/topics/world-war-ii/pearl-harbor

• Where the Japanese Went Wrong at Pearl Harbor: https://pearlharbor.org/blog/where-japanese-went-wrong-pearl-harbor/

• The ‘7 Powers’ of business success—from one of Netflix’s early investors: https://www.qualitycompounders.com.au/post/the-7-powers-of-business-success-from-one-of-netflix-s-early-investors

• 7 Powers: Foundations of Business Strategy (Key Takeaways): https://www.linkedin.com/pulse/7-powers-foundations-business-strategy-key-takeaways-nikita-maloo/

• Strategy Capital: https://strategycapital.com/

• Warren Buffett: https://www.forbes.com/profile/warren-buffett/

• Charlie Munger: https://www.forbes.com/profile/charles-munger/

• Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger: https://www.stripe.press/poor-charlies-almanack

• Bill Gates reveals why Warren Buffett was an invaluable source of support during the stormiest period of his career: https://www.businessinsider.com/bill-gates-interview-warren-buffett-support-microsoft-antitrust-lawsuit-2019-6

• Billionaire Warren Buffett’s Secret Love Affair With Castles, Revealed: https://www.thestreet.com/opinion/billionaire-warren-buffett-s-secret-love-affair-with-castles-revealed-14290973

• Netflix didn’t kill Blockbuster—how Netflix almost lost the movie rental wars: https://www.cnbc.com/2020/09/22/how-netflix-almost-lost-the-movie-rental-wars-to-blockbuster.html

• Michael Porter on LinkedIn: https://www.linkedin.com/in/professorporter/

• What Is Strategy?: https://hbr.org/1996/11/what-is-strategy

• TSMC: https://www.tsmc.com/english

• Toyota Production System: https://en.wikipedia.org/wiki/Toyota_Production_System

• America will be left with ‘severe, irreversible scars’ if national debt goes unchecked. Now, a blockbuster report warns the bill is higher than believed, hitting $141T by 2054: https://fortune.com/2024/04/01/america-social-economic-scars-us-debt-gomes-price/

• Ben S. Bernanke: https://www.federalreservehistory.org/people/ben-s-bernanke

• Forty-four of 50 U.S. states worsen inequality with ‘upside-down’ taxes: https://www.theguardian.com/us-news/2024/jan/10/states-wealth-inequality-taxes

• Joseph A. Schumpeter: https://en.wikipedia.org/wiki/Joseph_Schumpeter

• Theory of Economic Development: https://www.amazon.com/Theory-Economic-Development-Science-Classics/dp/0878556982

• The Road to Reality: A Complete Guide to the Laws of the Universe: https://www.amazon.com/Road-Reality-Complete-Guide-Universe/dp/0679776311

• The Gene: An Intimate History: https://www.amazon.com/Gene-Intimate-History-Siddhartha-Mukherjee/dp/147673352X

• American Fiction on Prime Video: https://www.amazon.com/American-Fiction-Jeffrey-Wright/dp/B0CQKR72NX

• Farahan Sarouk rugs: https://nazmiyalantiquerugs.com/persian-sarouk-farahan-rugs/

• Rory Sutherland on LinkedIn: https://www.linkedin.com/in/rorysutherland

• Ogilvy: https://www.ogilvy.com/

• Clint Eastwood quote: https://www.brainyquote.com/quotes/clint_eastwood_168005

• Winston Churchill: https://en.wikipedia.org/wiki/Winston_Churchill

• Michelangelo, God’s Architect: The Story of His Final Years and Greatest Masterpiece: https://www.amazon.com/Michelangelo-Gods-Architect-Greatest-Masterpiece/dp/0691195498

• The Last Judgment: https://en.wikipedia.org/wiki/The_Last_Judgment_(Michelangelo)

• Theodore Roosevelt: https://www.whitehouse.gov/about-the-white-house/presidents/theodore-roosevelt/

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Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

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Lenny may be an investor in the companies discussed.

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