The difference between a good business and a great one often comes down to a single word: power. Not the power of a charismatic founder or a well-funded balance sheet, but structural power—the kind that compounds over time and makes competition increasingly futile.
Hamilton Helmer's framework identifies seven distinct sources of power: Scale Economies, Network Effects, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power. Each represents a different mechanism by which a company can capture value rather than merely create it.
Scale Economies emerge when per-unit costs decline as volume increases. Amazon's fulfilment network exemplifies this—each additional package shipped reduces the average cost, creating a widening gap between Amazon and smaller competitors.
Network Effects occur when each additional user makes the product more valuable for all users. LinkedIn's professional network becomes more useful as more professionals join, creating a self-reinforcing cycle that's nearly impossible to replicate.
Counter-Positioning is perhaps the most elegant form of power. It exists when a newcomer adopts a business model that incumbents cannot copy without damaging their existing business. Netflix's streaming model forced Blockbuster into an impossible choice: cannibalise their profitable store network or cede the future.
The key insight is that power is not a binary state but a spectrum. Your job as a founder is to identify which forms of power are available in your market and systematically build towards them.