PDF Summary:7 Powers, by Hamilton Helmer

In 7 Powers, business strategist Hamilton Helmer argues that a company’s long-term success hinges on establishing a sustainable competitive advantage. Drawing from decades of experience advising top companies, he identifies seven strategies to help you outmaneuver competitors and achieve long-term success.

This guide explores each of Helmer's seven strategies, detailing how they create unique competitive advantages and when to implement them. Whether you're an entrepreneur launching a startup, a manager in a growing company, or an executive leading an established corporation, Helmer's insights will help you focus your resources on the most effective strategies at each stage of your company's development.

Additionally, we’ll complement Helmer’s ideas with research from management professionals and suggest actionable strategies to help you apply his concepts to your own business.

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How to Scale Production

Helmer suggests that you can effectively scale production by following four methods:

1) Increase production volume: Output more to spread fixed costs over more units. For example, produce more plant-based product variations to distribute manufacturing costs across more product lines.

(Shortform note: Mike Michalowicz (The Pumpkin Plan) suggests a focused approach to increasing production volume. Rather than expanding all product lines equally, identify products with the highest profit margins and greatest customer demand. By concentrating resources on scaling up production of these select items, you’ll boost production volume while minimizing the risk and costs associated with expanding less profitable product lines.)

2) Expand facilities: Upsize existing operational spaces and equipment to boost output without escalating overhead costs. For example, procure a larger warehouse to store more raw materials or larger delivery vans to transport more products at once.

(Shortform note: Carliss Baldwin and Kim Clark (Design Rules) recommend incorporating modular designs (independent units that can be easily scaled or reconfigured) to expand facilities efficiently. For example, build warehouses with standardized sections that enable expansion without structural demolition, or design delivery systems with interchangeable vehicle components that allow for capacity upgrades. This approach reduces the costs and disruptions associated with upsizing facilities, allowing for more agile responses to changes in demand or production.)

3) Streamline supply and distribution: Consolidate and optimize your procurement, logistics, and fulfillment processes to enhance efficiency and reduce variable costs. For example, merge delivery routes from various farms to streamline the collection of raw materials and reduce travel times and fuel costs.

(Shortform note: Adopting the lean supply chain strategy—an approach that focuses on eliminating waste and improving flow throughout the supply chain—can help you effectively streamline supply and distribution. To implement this, first map your entire supply chain. Then, identify areas of waste or inefficiency and redesign them to reduce resource usage.)

4) Negotiate supplier terms: Secure favorable deals with vendors to lower costs for key supplies. For example, buy key ingredients like soy or peas in bulk to secure cheaper prices.

(Shortform note: Supply chain experts argue that there's more to securing favorable deals than negotiating supplier terms. They propose a three-step approach: 1) Identify what you're buying, who you're buying it from, and at what cost. 2) Classify suppliers into two groups—those integral to your business and those providing substitutable goods. 3) Focus on building long-term, mutually beneficial partnerships with integral suppliers. For suppliers of substitutable goods, look around to get the best deal but maintain good relations to ensure supply continuity.)

Strategy #4: Grow Your Customer Base

To grow your customer base, develop products or services that become more valuable as more customers use them. This strategy allows you to charge premium prices and achieve market dominance in two ways:

1) A larger customer base increases benefits for individual users. For example, as more people use your plant-based meat substitutes and contribute to your blog, customers gain access to a wider variety of recipes and tips, enhancing the overall value of your products.

2) A growing customer base attracts third-party contributors. For example, your expanding plant-based community might attract partnerships with nutritionists or kitchen appliance manufacturers, further enhancing your product ecosystem's functionality and value.

According to Helmer, this increased value draws even more customers, creating a self-reinforcing cycle that not only drives your success but also prevents competitors from luring away your customers. He explains that competitors with smaller customer bases can't match the value provided by extensive user communities—and customers accustomed to community benefits are unwilling to switch to competitors offering less valuable alternatives.

(Shortform note: The two value-increasing advantages Helmer describes are commonly referred to as network effects. Business experts add that acquiring more customers can trigger another network effect that further increases value: data network effects. This type of effect occurs when a product or service becomes smarter and more personalized as it collects more data from customers. For example, a fitness app becomes more effective the more workout and health data it collects from its users because it can provide more personalized training regimens. This implies that businesses can create a virtuous cycle of value and growth by expanding their customer bases and leveraging user data.)

How to Grow Your Customer Base

Helmer says you can grow your customer base by practicing five methods:

1) Prioritize quality: Perfect your core product or service before launching new product lines. This helps you satisfy early adopters, laying the groundwork for sustainable growth. For example, ensure your first plant-based meat substitute product is of high enough quality to attract and retain early adopters before introducing additional flavors.

(Shortform note: According to Ash Maurya (Running Lean), the most effective way to perfect your core product or service and satisfy early adopters is to request feedback. This feedback should include early adopters’ overall impression of your offer, its effectiveness in addressing their needs, and their willingness to pay the price you set for it. Then, refine your offer until you’re confident that it includes the essential features your early adopters want, and that your pricing aligns with their expectations and willingness to pay.)

2) Target a single market: Focus your efforts on penetrating your primary customer group instead of wasting resources competing for customers in adjacent markets. For example, instead of dispersing resources to engage broader vegetarian or health food markets, concentrate on developing a strong following within the flexitarian market.

(Shortform note: Osterwalder and Pigneur (Business Model Generation) suggest an approach for identifying and targeting a primary customer group: Define the customers you intend to target before you work on developing your offer. This way, instead of developing an offer and hoping you’ll find interested customers, you can design your offer around customers with specific needs and simultaneously develop your marketing and sales strategies to effectively target them.)

3) Encourage market adoption: Develop partnerships and marketing campaigns to accelerate awareness and acquire customers. For example, form alliances with popular plant-based chefs or influencers to increase your company’s visibility and appeal.

(Shortform note: Everett Rogers (Diffusion of Innovations) suggests focusing on early adopters to accelerate market adoption. These individuals, comprising about 13.5% of any given market, are often opinion leaders who influence others' purchasing decisions through their social networks. To target early adopters, emphasize your product's advantage over existing alternatives and make sure it aligns with their values and needs. For example, appeal to early adopters by highlighting how your plant-based products are not only healthier but also more environmentally friendly than traditional options.)

4) Foster customer participation: Encourage active participation and build a community around your offerings. Engaged customers bring their own insights and experiences to your business, adding value. For example, encouraging customers to share recipes and cooking techniques promotes product usage and fosters a supportive community that boosts customer loyalty.

(Shortform note: According to C.K. Prahalad and Venkat Ramaswamy (The Future of Competition), you can encourage active participation by inviting customers to contribute ideas for new products or improvements to existing ones. This approach makes them feel like active partners in your business, increasing both their engagement and loyalty to your brand. For example, you could create an online platform where customers can suggest and vote on new plant-based product flavors or packaging designs.)

5) Expand your ecosystem: Introduce complementary products, services, and third-party integrations to make your offerings more useful and convenient for your customers. For example, develop partnerships with plant-based ingredient suppliers or kitchen appliance manufacturers to offer packages and discounts that increase the appeal and accessibility of plant-based cooking methods.

(Shortform note: Geoffrey Moore (Crossing the Chasm) offers advice for creating an ecosystem that makes your offerings more useful and convenient: Provide a whole product for your customers. He explains that core offers typically only provide part of the whole solution that customers need—for instance, when a business sells printers (the core offer) without the peripherals or ink cartridges. To identify your whole product, Moore suggests that you consider everything that your offer depends on or has to interact with to solve your target customer’s problem. Then, either provide the whole product yourself or form alliances with other companies that can provide the missing pieces.)

Strategy #5: Lock Customers In

To lock customers in, encourage them to dedicate time, effort, and resources to your products and services. This allows you to charge premium prices and deters competitors from poaching your customer base.

Helmer explains that the more time, effort, and resources customers invest in adopting your products, learning your systems, and building familiarity with your brand, the more resistant they become to trying other options. This resistance stems from customers' reluctance to abandon their investments, the comfort they develop with your brand, and the disruption changing providers would cause to their established routines. These combined factors make it challenging and often unprofitable for competitors to attract your customer base, even if they offer better products or services.

(Shortform note: Christensen (The Innovator's Dilemma) warns that focusing too much on securing existing customers may make you vulnerable to competitors with newer, more innovative business models. He explains that, just as established companies often struggle to challenge innovative business models due to their focus on existing customers (as discussed in Strategy #1), companies that prioritize locking in current customers tend to overlook emerging threats. For example, a plant-based meat company that, in an attempt to increase customer loyalty, encourages customers to purchase specialized cookware for their products might get blindsided by a competitor offering simpler cooking methods that don’t require extra cookware.)

How to Lock Customers In

According to Helmer, you can lock customers in with three methods:

1) Offer multiple benefits: Provide incentives to discourage customers from changing providers. For example, offer loyalty programs with accumulated points, provide specialized cooking equipment optimized for your products, and foster a strong online community of plant-based cooking enthusiasts.

(Shortform note: Byron Sharp (How Brands Grow) challenges Helmer’s advice to offer multiple benefits to existing customers. He argues that incentives such as loyalty programs and specialized offerings fail to impact customer retention or sales growth. This is because people will only buy things when they want or need them, regardless of how many incentives you throw at them.)

2) Leverage customer routines: Integrate your products and services into customers' daily workflows and habits to make your brand indispensable. For example, offer meal planning services such as subscription plans that deliver curated selections of your products, or a meal planning app that integrates with your brand’s smart kitchen appliances.

(Shortform note: Clayton Christensen (Competing Against Luck) suggests that identifying the root motivations behind customer purchases can help you integrate your offers into their routines. To implement this approach, conduct customer interviews to understand the context in which they use your products and services. Then, use these insights to develop solutions that address their underlying needs. For example, if you discover that customers buy your plant-based products to reduce time spent cooking, you might develop ready-to-eat meals or partner with a meal-kit delivery service to make your products more convenient choices.)

3) Ensure ongoing satisfaction: Focus on providing excellent customer service to foster trust and loyalty—happy customers are less likely to consider offers from other providers. For example, provide a forum for customers to share their feedback, promptly address their concerns, and adapt your services to meet their evolving needs and preferences.

(Shortform note: Business experts Ken Blanchard and Sheldon Bowles (Raving Fans) add insight into how fostering trust and loyalty helps you keep your customers. They explain that trust and loyalty are emotional benefits that hold greater significance in customers’ minds than the potential value gained from switching to competitors. According to them, the key to inspiring customer loyalty and trust lies in consistently creating personalized experiences that surpass customer expectations.)

Stage 3: Maturation

Once you've established your business, Helmer advises that you cultivate your brand and create complex operational processes. You can't effectively implement these strategies until your business starts to mature because they require a stable foundation and consistent performance over time. He explains that a strong brand develops from repeated positive customer interactions, while complex operational processes evolve from the insights you gain as you establish your business. Focusing on both strategies during the maturation stage allows you to cement your position in the market, even as industry growth slows and market demand wanes.

(Shortform note: While Helmer suggests focusing internally on your brand and operational processes to foster stability, Moore (Crossing the Chasm) suggests that mature businesses should also explore external opportunities to maintain market growth and relevance. He explains that only focusing internally can cause a business to miss external market trends or shifts that could potentially affect its relevance and competitiveness. However, by exploring external opportunities, a business gains a broader view of the market and can better adapt its strategies to stay ahead, ensuring its continued growth and survival.)

Strategy #6: Cultivate Your Brand

To cultivate your brand, build trust with customers through consistent quality and messaging. This allows you to charge premium prices for your products and services, as customers are more willing to pay more for the perceived value and reliability associated with strong brands.

Helmer explains that competitors struggle to replicate the trust associated with established brands, as this trust stems from years of consistent, positive experiences that foster customer loyalty. This sense of loyalty creates a bond that compels customers to stick with the brands they know and trust, even when competitors offer better or cheaper options.

(Shortform note: In contrast, marketing professor Byron Sharp (How Brands Grow) argues that the majority of consumers don’t care enough about branding for it to impact their purchasing decisions. This is due to over-saturated markets: There are simply too many brands trying to distinguish themselves and appeal to consumers. To cope with this influx of information, consumers completely filter out all of the brand messaging they encounter. So, even with consistent quality and messaging, there’s a chance that your attempts to build trust will get blocked by your audience’s mental filter.)

How to Cultivate Your Brand

According to Helmer, the following five methods can help you cultivate your brand:

1) Align with customer values: Cultivate an identity that resonates with causes your target customers care about. This helps create an emotional connection that makes your brand both memorable and appealing. For example, if flexitarians value sustainability, emphasize how your business uses eco-friendly packaging and sources ingredients from environmentally responsible suppliers.

(Shortform note: Marketing experts confirm that businesses boost brand awareness when they contribute to causes their customers care about. According to market trend reports, 63% of customers want to buy from socially responsible companies, and 54% of customers want to buy from companies that prioritize diversity, equity, and inclusion in their communities and workplaces. Generate ideas for cause or community-driven marketing campaigns by polling your target market about what matters most to them. Then, look for local charities or community programs that align with those issues and determine ways to help them. For example, arrange for team members to volunteer there or donate a percentage of your profits for new projects.)

2) Reinforce your identity: Invest in multi-channel branding to create a strong, recognizable identity and increase recognition. For example, develop a cohesive visual identity and messaging strategy that carries through your product packaging, website, social media presence, and advertising campaigns.

(Shortform note: While reinforcing your brand identity can increase recognition, one drawback is that you’ll find it difficult to reposition your place in the market or reframe your marketing message. This is something you may need to do if you introduce your product or service into different markets or customer groups. For example, Coca-Cola’s distinctive branding worked against them when they attempted to open a wine business in 1977—customers were so used to perceiving them as a soft drink business that they couldn’t imagine them as a wine supplier.)

3) Be consistent: Ensure your products and services always meet the quality standards you’ve promised to reinforce customer trust in your reliability: For example, ensure every batch of your plant-based meat substitutes meets the same high standards for taste, texture, and nutritional value.

(Shortform note: In addition to reinforcing trust, consistency also ensures customer satisfaction, positive reviews, and a reliable source of revenue. Blanchard and Bowles (Raving Fans) explain that customers form expectations based on their past transactions with a business—and they expect future transactions to be just as good, if not better. This means that inconsistent businesses risk disappointing and losing their customers.)

4) Protect your integrity: Preserve customer trust in your brand by evaluating how potential offerings or associations might impact your reputation. For example, carefully vet potential partnerships or product extensions to ensure they align with your brand's core values and quality standards.

(Shortform note: Al Ries and Jack Trout (Positioning) clarify why it’s important to consider how potential strategies may impact your reputation. Your brand name represents the collective essence of everything your business stands for. Thus, the more your brand gets associated with diverse products and companies, the harder it is for a customer to identify exactly what your brand stands for, and so the weaker your market position becomes. Therefore, it’s worth ensuring that new offerings or partnerships reinforce—rather than dilute—your brand identity.)

5) Evolve to stay relevant: Adapt to changing consumer preferences while maintaining your core identity. This prevents your brand from becoming outdated while preserving the brand image you’ve established. For example, if health-conscious consumers become more interested in protein content, adjust your product formulations and marketing to highlight the high protein levels in your plant-based meats without compromising your eco-friendly practices.

(Shortform note: Al Ries and Jack Trout (The 22 Immutable Laws of Marketing) suggest a way to adapt to changing consumer preferences while maintaining your core identity: Use a different brand name for entirely new product or service categories—for example, if you're a cat food company that intends to sell avocado oil. They explain that customers know what to expect from your brand based on how you market your core product. When you change your offer, your customers no longer know what to expect from your brand, and this can cause them to turn to competitors with more familiar alternatives. Introducing a new brand name enables you to tap into consumer trends while minimizing the risk of confusing or alienating your existing customer base.)

Strategy #7: Create Complex Operational Processes

To create complex operational processes, develop interconnected systems that enhance efficiency. This enables you to enhance product quality and reduce costs—making it possible to offer better value to customers while maintaining high profit margins.

Additionally, this strategy insulates your business from competition. Helmer explains that complex operational processes are difficult for competitors to replicate because they evolve organically through years of incremental improvements, rely on intricately interconnected operational elements, and embed tacit knowledge within your company's culture.

(Shortform note: While Christensen (The Innovator's Dilemma) agrees that complex operational processes can provide a competitive advantage, he cautions that they can also make it difficult for companies to adapt to industry changes. He argues that as processes become deeply ingrained in a company's culture, they create a form of organizational inertia that can blind companies to emerging threats or opportunities, especially when these new developments don't align with their established processes. This suggests that companies should balance process optimization with maintaining the flexibility to respond to market shifts.)

How to Create Complex Operational Processes

Helmer recommends four methods for creating complex operational processes:

1) Keep improving: Make continuous, incremental process improvements to enhance efficiency over time. For example, establish a dedicated R&D team to continually refine your plant-based formulations, or regularly seek ways to reduce waste and improve ingredient freshness.

(Shortform note: Josh Kaufman (The Personal MBA) offers advice for making ongoing process improvements. First, outline all of the tasks involved in running your business. Then, consider what steps you can take to save time, effort, and money. This might involve automating some tasks or eliminating unnecessary tasks, cutting intermediaries or changing suppliers, or investing in resources such as equipment or employees. Finally, Kaufman suggests prioritizing the improvements that will make the biggest difference to your efficiency and profits.)

2) Develop integrated processes: Design interconnected systems where improvements in one area amplify the benefits in others. This creates a web of mutually reinforcing activities that’s difficult for competitors to disentangle and emulate. For example, create a closed-loop system where waste from your plant-based meat production is used to fertilize crops for future ingredients, enhancing both sustainability and cost-efficiency.

(Shortform note: How can you develop integrated processes? According to Peter Senge (The Fifth Discipline), you first need to understand how all of the different parts of your business interact with and influence each other. This involves mapping out all your internal processes and identifying how they interconnect. Then, look for ways to make changes that can improve multiple business processes. For example, improving your customer feedback system could enhance both customer service and product development, creating a ripple effect of benefits across all areas of your business.)

3) Cultivate specialized expertise: Embed critical knowledge and best practices into your company's culture to foster expertise that competitors can't replicate. For example, implement a mentorship program where experienced staff guide newer employees in mastering the nuances of plant protein texturization techniques.

(Shortform note: Some business experts suggest that instead of cultivating specialized expertise internally, companies can operate more efficiently by outsourcing specialized tasks to specialized companies. They explain that companies that focus on optimizing one single activity have advantages over businesses that need to divide their resources among multiple priorities. Businesses that then leverage the capabilities of specialized companies gain resources without investing in the development, ongoing management, and integration of different departments and processes. This enables them to focus their resources on increasing productivity and decreasing unnecessary overhead costs.)

4) Encourage employee input: Harness the collective intelligence of your organization by empowering employees at all levels to contribute ideas that may lead to breakthroughs in efficiency or quality. For example, implement a reward system for production line workers who propose modifications that improve the manufacturing process.

(Shortform note: Daniel Pink (Drive) adds to this advice, suggesting that employees who have autonomy over their work are more motivated to contribute valuable ideas. Giving employees control over aspects of their work fosters a sense of ownership and engagement. This increased engagement naturally leads to more innovative thinking and problem-solving, as employees feel personally invested in improving processes they interact with daily. Additionally, autonomous employees are more likely to voice their ideas, knowing their input is valued and could potentially influence their work environment.)