This week's Commoncog piece is members-only; next week's piece will be free.
How Moats Are Built(members-only) — About two weeks ago, a Commoncog member asked if “all successful businesses really so simple/dull that they all cleanly map to the 7 Powers?”
The 7 Powers, of course, was investor and business academic Hamilton Helmer's framework for 'sustainable competitive advantage.' Some folks — most notably investors Warren Buffett and Charlie Munger — call this a 'moat'.
This was a good question. It seems a little ridiculous that one can look at a successful business and so easily identify which of the 7 Powers are present. But the short answer is that yes, it is quite simple to identify the Powers post-facto. Unfortunately, no, this doesn't mean that it's easy to build one of these Powers.
This week's piece breaks this question to two parts:
First, how hard it is to identify the Powers in practice? (Not very hard! Most folks will find it easy; many Commoncog members have had a go at it over the years!)
But more importantly: how are such Powers built in the first place, anyway? And here we are helped by the fact that there are enough cases in the Commoncog Case Library that we can answer this using examples.
And of course the answer here isn't that surprising. Building a moat requires you to hide from your competition, and it requires you to do trial and error under uncertainty. We've already covered what that looks like — the framework that best describes this approach is effectuation (covered in When Action Beats Prediction and How to Run Smart Experiments When You Just Don't Know).
Note: Members may leave a comment at the bottom of the piece. Login instructions for the forum are available here.
💡 The Commoncog Membership:for the discerning businessperson. Get full access to paywalled articles, curated events, a rich and growing case library, and an exclusive, members-only forum.
The Commoncog members-only forum is a private place for sensemaking on business and markets.
Here are a couple of members-only discussions I'd like to draw attention to:
A member is hosting a live Tactical Decision Game on July 22nd (tomorrow, basically) 7pm Pacific time. If you're a Commoncog member, you get dibs. Sign up above.
Is McKinsey's competitive advantage mostly branding (in the 7 Powers sense)? Members think it is.
"New approaches to instruction: because wisdom can't be told" — this is a thread about a paper. The paper has a banger of a conclusion: "Perhaps wisdom arises from the opportunity to experience changes in our own beliefs and assumptions — changes that help us realize that the ideas and priorities that seem so clear today will probably be modified as a function of new experiences. These realizations seem healthy. They help us maintain some degree of humility with respect to our current beliefs, and they provide us with the conviction that we will not run out of things to discover and understand."
A member has an epic rant in response to The Network Always Beats the Castle by Sam Shillace.
I pitch The Luxury Strategy as a worthwhile book to read. "Everything that is done in luxury is designed to achieve one particular outcome: to convince you that the brand cannot be compared to others." More below.
Note that you'll have to be logged in as a member to view many of these threads. You may login here.
Elsewhere On The Web
A Bill Bensley Interview — About a month ago, a friend of mine attended a wedding at the JW Marriott in Phú Quốc. He said the resort was incredibly weird — designed as a fictional French-colonial university. Which ... what? I'd heard stories about this resort, on Vietnam's most famous holiday island, but I hadn't thought about it all that much.
What the hell was Marriott trying to do with a fictional design?
So I watched a YouTube video about it and found that it really was as bizarre as my friend described. As it turns out, the JW Marriott Phu Quoc, the Intercontinental Danang, the Capella Ubud and the Hotel de la Coupole Sapa — along with a whole bunch of other hotels across Asia and Southeast Asia — were all designed by the same celebrity designer: Bill Bensley. And, yes, Bensley's signature thing is that he creates these over-the-top, maximalist, over-designed luxury hotels at the very high end of these hotel chains.
Here are a few photos so you get a feel for the kind of design Bensley is known for:
The JW Marriott Phu Quoc, imagined as a fictional French-Colonial era university. The hotel bar is the Department of Chemistry, naturally.
Intercontinental Danang — a resort split between four levels: 'sea', 'earth', 'sky', and 'heaven'. Apparently, on the heaven level, you get to eat in upside-down Vietnamese nón lá (the iconic pointy, conical hats), hanging on the outside of the restaurant
Yen Tu MGallery — a hotel designed as an isolated monastery in the sacred mountains of Yen Tu, birthplace of Vietnamese Buddhism. I mean ... what?
The Capella Ubud — "tells the story of the first settlers of Bali". It's basically a bunch of tents in the jungle, and was built without destroying a single tree on the property. Which, ok, genuinely impressive. This hotel was awarded best hotel in the world in 2020.
The swimming pool at the Hotel de la Coupole Sapa — inspired by a vintage French couture piece that Bensley found in Paris, that happened to be patterned with Vietnamese hill tribe designs. Yeah, LOL, I don't know, man.
Now of course my internal Chinese businessman was screaming — how does one get these bean-counter hotel chain types to go with your crazy designs?
Anyways. This is an interview with Bensley, and I think I can see where he's going with this, and why he's been able to convince so many luxury hotels to try his ideas:
The trend Bensley is glad to see catching on is that travelers are much more conscious of how they spend their money, “much more than 10 years ago,” he says. “They’re concerned about who is paying back in the community, who is treating their people right, who is doing conservation and doing the right thing in the world.”
That’s so important because, no matter how exotic the design, you cannot impress wealthy guests with design alone. After all, their homes in many cases out do the 5-star hotels they stay in.
“The experiences we create have very little to do with decoration,” says Bensley. “What I strive for is to teach people something in each particular place. If someone can come away and they’ve learned something new, they’re going to remember your hotel. It’s learning about conservation or how poor a lot of South-east Asia is. People might come from nicer places than the hotels we’ve built but they’re not going to learn the same things.”
Hmm. This does seem aligned with the luxury strategy!
It seems that Western cities are comparatively risk-averse. They don’t really like distinctive or maximalist art or architecture or any urbanism. Would you say your work would be possible in the West?
Absolutely. We’re doing work in Connecticut and the reason that we’re there is because they know that we’re going to reinterpret a 250-year-old architectural history into something which is super-layered, probably maximalist. And then at the end of the day, it’ll look like it’s been there for 100 years. And it’ll be commercially viable.
You created your vision in Southeast Asia. Now you will be able to expand that in the West? It seems like various factors trap designers into the universal glass box style that dominates basically every city now.
The longer I do this, the easier it gets. And why? Because of my track record. So, the people come to me because they know pretty much what they’re gonna get. And they know pretty much to leave me alone during the process. Except for the Saudis.
Patagonia's Philosopher King (archive.is link) — A 2025, long and absolutely wonderful profile of Patagonia's Yvon Chouinard, in case you want more of Patagonia. (Our case, published a few weeks ago, may be found here).
We've recently upgraded the search on the Commoncog site. Searching now works with the full text of both posts and cases.
I'm currently more sleep-deprived than usual, as we're grinding towards the release of the audio functionality on the Commoncog website. I'll say more about that when we're done with the release. 🔊
The other big thing I'm working on is closing up all of the unfinished series on Commoncog. But that's actually coming along nicely, given a more sane content calendar.
I hope this newsletter finds you safe, sane, and healthy. See you next week.
Warmly,
Cedric
⛪️ The Commoncog Membership: "Like church for business nerds" Get full access to paywalled articles, curated events, a rich and growing case library, and an exclusive, members-only forum.