#37 Process Power: 7th of the 7 Powers
This is the seventh post on a series that summarizes the book 7 Powers by Hamilton Helmer.
This post discusses the seventh possible source of power for a business - process power.
Process power - organization and activity sets that are embedded within a company that enables lower costs and/or superior product, and which can be matched only by an extended commitment.
Why does process power result in Power?
Benefit: A company with process Power is able to improve product attributes and/or lower costs as a result of process improvements
Barrier: Process advances are difficult to replicate and can only be achieved over a long time period of sustained evolutionary advance. Some of the key reasons the time period to achieve the benefits cannot be crunched
Complexity: If the process improvements touch many activities that are interconnected and spread across different departments within a company, and across suppliers it takes time for employees to adapt to the changes and hone them so that any negative impact is reduced or eliminated
Opacity: Many of the "Powerful" process changes are initiated bottom up and the fundamental tenets are not formally codified. Hence, it takes a long time for the company making these process changes to understand it's impact and Power (let alone competition). For example, automobile companies who copied the visible aspects of Toyota’s processes like andon cords and kanban were not able to replicate it’s results.
The power intensity determinants for process power:
Industry Economics: Time constant and potential magnitude of process power effect
Competitive Position: Relative duration of process power advances