#36 Cornered Resource, 6th of the 7 Powers
I posted my book “Wisdom from the Bezos Letters” to Product Hunt
This is the sixth post on a series that summarizes the book 7 Powers by Hamilton Helmer.
This post discusses the sixth possible source of power for a business - cornered resource.
What is cornered resource? - preferential access at attractive terms to a coveted asset that can independently enhance value.
Why does a cornered resource result in Power?
Benefit: The asset is able to offer unique benefits. Examples: preferential access to a valuable patent for a drug, cost-saving production manufacturing approach
Barrier: Agreement or law that prevents competition from preferential access to the asset
Five tests to determine if an asset is a cornered resource:
Idiosyncratic: The firm is able to repeatedly access coveted assets at attractive terms
Non-arbitraged: If a firm gains access to a coveted resource but pays the "full price", then it would fail the persistent differential margins test
Transferable: The asset should be able to create value if deployed in another firm
Ongoing: Once the coveted asset is deployed in a firm, it's contributions become embedded in the business
Sufficient: The cornered resource must be sufficient for continued differential returns assuming operation excellence
The power intensity determinants for a cornered resource:
Industry Economics: Price and/or cost increment/decrement due to the cornered resource
Competitive Position: Preferred access at a non-arbitraging price
You can read a short summary of the entire book here