Process Power, the most elusive of the 7 Powers - hard to define, hard to capture, and hard to identify. Hamilton Helmer defines Process Power as

“Embedded company organization and activity sets which enable lower costs and/or superior product, and which can be matched only by an extended commitment.”

At first blush, Process Power seems a lot like Cornered Resource; however, Process Power cannot be captured in IP or a small set of individuals within a company like a Cornered Resource. Process Power stems from company culture combined with a deep operating history to create those embedded systems and processes that Hamilton refers to. 

Deep operating history is critical, startups and growth stage businesses cannot have Process Power. Achieving Process Power often takes decades.

Benefit of Process Power

A company with Process Power is able to improve product attributes (Superior Deliverables) and/or lower costs (Production / Distribution Approach) as a result of process improvements within the organization. 

The canonical example is the Toyota Production System. Today, the best example is TSMC, which rose from a small time semiconductor manufacturer to the world’s leading semiconductor company. TSMC undoubtedly has IP and cornered resources, but that alone cannot explain their sector leadership. Process Power explains a lot.

Barriers of Branding to challengers

TSMC and Toyota’s Process Power is nearly impossible to replicate due to the complexity of the internal processes, systems, and culture underpinning the Power as well as the opaqueness of how these companies came to develop said Power. Ultimately, the barrier to Process Power is hysteresis, as the Power is achieved over a long period of sustained execution and evolution of the organization.

When it comes to startups, as Ian Rountree of Cantos Ventures says, Process Power is...

“largely a write off as it is idiosyncratic, difficult to identify, and accumulates so late in companies’ lives as to be irrelevant to startups.” 

Suffice it to say, I don’t know if any of my investments will develop Process Power and I don’t expect it - it would be icing on the Power cake if they do.

That’s a wrap for 7 Powers, though it is a strategic framework that I will continue to use and refer to going forward. Below is Hamilton’s visualization of the 7 Powers all in on graphic.

Up next, I am going to harness my inner Charlie Munger and dive into key mental models for early stage investing.