“7 Powers: The Foundations of Business Strategy” is a book written by Hamilton Helmer released in 2016. It is considered a seminal text in business strategy and has been influential in many industries.

The book presents a framework for understanding, analyzing, and changing a company’s position in the market, whether you’re an entrepreneur, a business veteran, or a student of business strategy. The framework is built around the concept of “7 Powers,” each of which represents a specific business condition that allows companies to sustain profits against rival forces.

The 7 Powers

1. Scale Economies: The company’s costs decline as its volume increases.
2. Network Economies: The value of the company’s product increases as the number of users grows.
3. Counter-Positioning: A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.
4. Switching Costs: It is hard for customers to switch to competitors because of the high costs (economic, emotional, etc.).
5. Branding: Customers trust and therefore prefer the company’s product, allowing it to charge a premium price.
6. Cornered Resource: The company has privileged access to a valuable resource.
7. Process Power: The company has superior methods of production that provide it with a cost advantage.

Each of these Powers can create a barrier to entry for competitors and give the company a competitive edge, allowing it to sustain its profitability over the long term.

The Prepared Mind

There are lots of nuggets in the book, but the biggest takeaway for me was this idea of the prepared mind.

“The Prepared Mind” is a concept put forth by Louis Pasteur, a 19th-century French biologist, who said, “Chance favors the prepared mind.”

“Chance favors the prepared mind.”

Louis Pasteur

In the context of strategy and business decision-making, having a prepared mind means that you are ready to recognize and seize opportunities as they arise. This preparation typically involves having a solid understanding of your environment, including industry trends, market dynamics, and competitive forces. It also includes an understanding of your own organization’s strengths, weaknesses, and strategic position.

Being prepared means that you’ve done the work to analyze different scenarios and understand their potential impacts on your business. This allows you to make better decisions because you have thought about the possibilities in advance and are ready to act when the time is right.

Having a prepared mind means that you are proactively learning, anticipating, and strategically thinking about how to achieve success. It encourages leaders and decision-makers to invest time and resources in understanding their business context deeply, to increase the probability of recognizing valuable opportunities when they emerge.

It’s worth noting that this concept of a “Prepared Mind” is not only applicable to the field of business and strategy but also to various other fields like science, arts, sports, etc. It highlights the importance of continuous learning, foresight, and readiness to adapt and act decisively in a changing environment.

7 Powers for Community Builders

I always take what I read and try to apply it to my work. Here’s how I think of the 7 Powers looking through a community lens: Remember that the goal of the 7 Powers is to create a sustainable advantage—something that your competitors can’t easily copy or overcome, and something that’s valuable enough to your users that it keeps them engaged with your community over the long term. I believe you can’t copy your competitor’s community; it is what defines you in the marketplace.

1. Scale Economies: As your community grows, each new member brings more value to the others, and the costs of managing the community can be spread over a larger user base. This could also relate to your capacity to create content or features: the more users you have, the more content is generated, and the cost per piece of content decreases.
2. Network Economies: In an online community, the value of the community increases as more people join, because each new member can bring new perspectives, information, and connections. This is particularly relevant to social networks, professional networks, or any community based around information exchange.
3. Counter-Positioning: Your community could offer a unique value proposition that other communities can’t easily imitate without losing their existing users. For example, if your community is focused on privacy, a competitor that depends on data monetization might find it hard to replicate your model.
4. Switching Costs: If your community platform has unique features, or if users have built strong relationships and invested a lot of time in your community, it might be difficult for them to move to a new platform. This could be strengthened by exclusive content, earned reputation points, or proprietary tools that members can’t access elsewhere.
5. Branding: A strong brand can make your community more attractive to new members and more resistant to competitors. This might be built through unique values, a distinctive visual identity, thought leadership, or a reputation for high-quality discussions and content.
6. Cornered Resource: This might be exclusive access to certain experts, content, tools, or experiences that your community offers. For example, if your community is the only one that offers access to certain industry leaders, or if you have exclusive educational content, this could be a cornered resource.
7. Process Power: This could be a unique way you manage or organize your community that gives you an advantage. For example, a distinctive moderation system, a unique way of categorizing content, or a proprietary algorithm for recommending connections or content might give your community a competitive edge.

Join my Discord server to keep the conversation going. Let me know what you are reading and how you apply it.

What is a Virtual Community?

A virtual community is a group of people who interact with one another through digital means. Virtual communities can take many different forms, from online forums to social media platforms. They allow people with common interests to connect, communicate, and share ideas, regardless of their physical location. Virtual communities can also provide a sense of belonging and support to their members, helping them to feel less isolated and more connected to others who share their values and interests.

The Earliest Online Community Platforms

One of the earliest online community platforms was Usenet, which was developed in 1979. Usenet was a bulletin board system that allowed users to post and read messages on a variety of topics. Usenet was the precursor to modern online forums, which are still popular today.

Another early online community platform was The WELL founded in 1985 as The Whole Earth ‘Lectronic Link. The WELL was a virtual community that focused on technology, counterculture, and the arts. The WELL was one of the first online communities to charge users a subscription fee, which helped to ensure that the community remained focused and engaged.

The Rise of Social Media

The rise of social media platforms such as Facebook, Twitter, and Instagram has had a significant impact on the way we connect with one another online. Social media platforms allow users to create profiles, share content, and connect with friends and family members. They have also become a powerful tool for businesses to connect with customers and promote their products and services and leverage influencers to get out brand messaging.

The Dominance of Discord

Discord is a chat app that was launched in May 2015 by Jason Citron and Stan Vishnevskiy. The app was initially designed for gamers to communicate with each other during gameplay, but it quickly became popular with other communities.

Before launching Discord, Citron and Vishnevskiy had created an app called Fates Forever, which was a multiplayer online battle arena (MOBA) game. While working on Fates Forever, they realized that there was a need for a chat app that would allow gamers to communicate with each other in real time during gameplay. I remember standing in a long line at Pax East to get Discord swag. It’s an app that I use every day to stay connected with my communities.

Discord was designed to be lightweight and easy to use, with features such as voice and text chat, file sharing, and the ability to create and join servers. The app also has a customizable user interface, which allows users to personalize their experience.

In January 2023, it was estimated that Discord had approximately 563 million registered users, up by over 87 percent compared to the 300 million users reported in June 2020, according to L. Ceci from Statista. The app continues to expand its features and capabilities and has completely leaned into community. Discord is used by a wide range of communities and organizations, from small gaming groups to large corporations and universities. It has become a popular platform for remote work and virtual events.

Why Companies Should Build Virtual Communities

1. Customer engagement: Virtual communities allow companies to engage with their customers on a more personal level, building relationships and loyalty. By providing a platform for customers to connect with each other and with the company, businesses can foster a sense of belonging and create a more engaged customer base.
2. Customer feedback: Virtual communities provide a space for customers to give feedback on products and services, allowing companies to gather insights into customer preferences, pain points, and needs. This information can be used to improve products and services, leading to better customer satisfaction.
3. Brand awareness: Virtual communities can also be used to increase brand awareness and reach. By creating a platform where customers can share their experiences and opinions, companies can reach a wider audience and build a stronger brand reputation.
4. Sales and marketing: Virtual communities can also be used as a platform for sales and marketing. By offering exclusive promotions, discounts, or early access to new products, companies can incentivize customers to join and engage with the community, driving sales and revenue.
5. Innovation and co-creation: Virtual communities can also be a source of innovation and co-creation. By involving customers in product development and ideation, companies can tap into the creativity and knowledge of their customer base, leading to new and innovative products and services.

The Rise of Virtual Communities: In Conversation with Virtual World Pioneers Book

I just got word about a new book by Amber Atherton. Amber’s book is called, “The Rise of Virtual Communities: In Conversation with Virtual World Pioneers“. The book comes out on May 15, 2023, from Apress. It is going to include history, interviews, and insights all related to the online community. The book is for community managers, company founders, and marketers. 

Here are the folks that are featured in the book:

• Randy Farmer & Chip Morningstar – Lucasfilm Games ‘Habitat’ 
• Howard Rheingold – Community expert and member of the WELL
• Stacy Horn – Founder of Echo NYC
• Jim Bumgardner – Founder of The Palace
• Philip Rosedale – Founder of Second Life
• Sampo Karjalainen – Co-founder of Habbo Hotel
• Lance Priebe – Co-Founder of Club Penguin 
• Angelo Sotira – Co-Founder of Deviant Art 
• Caterina Fake – Co-Founder of Flickr
• Alexis Ohanian- Founder of Reddit 
• Kevin Rose – Co-Founder of Digg & PROOF Collective
• Jason Citron – Founder of Discord 
• Trevor McFedries – Founder of FWB & Brud 
• Cherie Hu – Founder of Water & Music
• Michelle Kennedy – Founder of Peanut

I am looking forward to reading the book. The reviews have me sold.

• “Lots of people talk about community, but few know how to build it. To understand the history of internet communities, and be inspired to build your own, this is the book to read.”  – Mike Butcher,  Editor-at-large, Tech Crunch
• “Every start-up founder who goes through Y Combinator sees first-hand the power of being part of a community. Atherton’s book provides a history of valuable insights for the next generation to build legendary communities upon.”  – Michael Seibel, Managing Director, Y-Combinator
• “This book is an excellent read for any founder or leader looking to learn how to build community from the very best.” – Jessica Sibley, CEO, TIME INC
• “Reading this book is a masterclass in managing and designing communities.”.  – @GregIsenberg, Community Expert

Let’s discuss community on our Discord server.

Summary

Marketing Artificial Intelligence: AI, Marketing, and the Future of Business by Paul Roetzer and Mike Kaput tells us how AI is revolutionizing the field of marketing, providing insights into how businesses can leverage AI to drive growth and improve their marketing strategies. The book covers a range of topics related to AI in marketing, including customer segmentation, personalization, predictive analytics, and more. Paul and Mike provide real-world examples and case studies to illustrate the benefits of AI in marketing and highlight the importance of data-driven decision-making. The book is a valuable resource for marketers looking to stay ahead of the curve and take advantage of the opportunities presented by AI.

Five Takeaways

1. AI can help businesses gain valuable insights into their customers and prospects, allowing them to create more personalized and effective marketing strategies.
2. The success of AI in marketing depends on the quality of the data that is fed into the system, so businesses need to focus on data quality and management to maximize the benefits of AI.
3. The ethical use of AI in marketing is crucial, and businesses must be transparent about their use of AI and ensure that their customers’ privacy and data are protected.
4. AI can be used in various areas of marketing, including advertising, content creation, customer service, and product development.
5. While AI can bring significant benefits to marketing, it is not a replacement for human creativity and expertise. Human input is still necessary to ensure that AI-generated insights are interpreted and acted upon correctly.

Rating: Must Read

In chapter 5, Team Selection, the authors being up the Pareto Principal.

You might better know the Pareto Principal as the 80/20 rule where 80% of the success comes from 20% of the resources. They apply the 80/20 rule to talk about how a small segmentation of your community members are going to impact the majority of the community. Further, a very few folks are going to do the heavy lift and they are considered to be critical members of the community.

Generalizations don’t always work for every community effort, but you can use the Pareto Principal as a starting point. Identify your critical community members, give them ownership, and keep them strong. What are their concerns? Aspirations? Do your actions enrich them?

The Associated Press Stylebook gets periodically updated to address the latest trends and refinements to previous styles. The AP is on its 55th edition of its stylebook. I turned to eBay to find an older edition and a cheaper one. I searched and found one. I ended up buying a used one for a few dollars but its description is what sold me.

The eBay product description just read, “Book.” Well, that is all I needed to know. Direct. To the point. No more information needed. I understood exactly what it was. I clicked But It Now and it arrived a few days later. It was indeed a book.