Hamilton Helmer: preference

Transcript context

…Awesome. You mentioned this word strategy. I want to set a little foundation here. How does strategy relate to power when people are thinking about these two concepts? And then do you have just a nice definition of what strategy is? Everyone's always just like, "What the heck do you mean when you're talking about the strategy?" As I said, I'm a concept person and so when you develop concepts, you have to be very highly constrained by their usefulness. I'm a great fan of the great mathematician, John von Neumann, and he had a view which really irritated a lot of mathematicians, which is that if mathematics wasn't guided by what was useful, it would become, I think the word he used was aesthetic to aesthetic. And so any concept developments like that, it needs to be guided by usefulness. And so in dealing with strategy, the question is what domain of things do you want to include in that conversation? Because the term is ubiquitous in business. I mean do a Google search sometime. I've done one recently on Google Scholar for the word strategy and you'll get a million, I'm not exaggerating, a million hits. And so strategy for some people might mean everything that gets to the pile, it gets to the top of a pile in terms of what you have to do that year. Everything is... And that's a perfectly legitimate definition, but what I have found is that there is a very important narrowing that makes it much more useful. So that's coming back to what I was saying [inaudible 00:10:17] makes it much more useful to the business. So my view is that you want to focus, it's very useful for a business to focus on the fundamental determinants of business value and that's an arbitrary choice. It could be something else, but I can tell you from decades of business experience that that narrowing is very useful. And then so once you make that... Once you reach that understanding, it tells you some important things. So if you understand what drives business value, I mean if you do the math of it right, it's NPV of cash flow, right? Expected cash flow. And what that tells you is that strategy is a long time concept. You're looking far out in the future. So think of Pearl Harbor, Pearl Harbor for the Japanese was this enormous tactical success. They just destroyed the US ability, naval ability in the Pacific Ocean and the worst possible strategic move because it completely solved Franklin Delano Roosevelt's problem of how he could get the US citizens on board to attacking Hitler. The strategy of it was US's industrial might would eventually win the war and population. And the difference there is time constant, tactical short, strategy long. And so if you focus on value that narrows what you think about and allows you to get rather concise and offer up advice to founders about what they need to pay attention to. So then how specifically is power informing strategies? Like the way you think about it, focus on your power and that will inform your strategy?…

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