[PMC Weekly Insight] Where does power come from?

Philip Morgan

(Programming note: I'm taking a 2-week break from my lengthy series on survey marketing and research to talk about today's topic.)

Where does power come from?

It depends on what domain you're looking at.

Ben Thompson has done an excellent job modeling how this works online at large scale. Aggregators, as he calls them, create power by controlling access to a huge audience.

Google controls access to a massive audience of web searchers, and those that want to show ads or be placed in search results cow-tow to Google to gain access to Google's audience of users.

Netflix controls access to a massive audience of folks seeking professional level video entertainment, and show creators work for the most part on Netflix' terms.

Here is a really interesting Bloomberg article with the stories of three companies that got in early with YouTube and then watched in horror as YouTube rolled out increasingly unfavorable terms of engagement -- often materially harming their businesses --which YouTube did as it could afford to, meaning as its power increased with its growing userbase: www.bloomberg.com/news/articles/2019-07-15/youtube-s-trampled-foes-plot-antitrust-revenge

The following quote from the article great, because often in these situations what you see is some PR-type person distorting the truth. YouTube's spokesperson doesn't feel the need to do that. She just lays it out real plain:

"YouTube said its tactics were sensible. 'Like any business, we make changes to how we operate to reflect the current climate,' Faville said. 'We make all these decisions with the same goal: to improve the YouTube experience for our users, creators, and advertisers.'"

All three of the companies profiled in the Bloomberg article above are neither YouTube users, creators, or advertisers. They're competing middlemen, and YouTube -- and any other Internet Aggregator -- most definitely does not have their best interest at heart.

The bit of nuance that is missing from Faville's statement is this: the actual priority order in which YouTube attempts to improve things is for 1) their users, 2) their advertisers, and 3) their creators (her statement list them in a different order). If YouTube can amass more power by making things better for #1 and #2 at the expense of #3, they will. But generally, YouTube and other Aggregators will try to make things better for all three if they can because they know that without the power that comes from controlling access to a very large, loyal audience, they can't maximize revenue from #2 (their advertisers) or attract a good supply of content from #3 (their creators).

When you play the SEO game, or when you publish stuff on social media in an effort to connect with prospective clients, you are a "creator". You supply content to an Aggregator, and you do so on their terms.

Remember your place in this relationship. You are the least important constituency to Google, YouTube, LinkedIn, or whatever Aggregator/Aggregator-Wannabe company you're using to distribute your content. You're a member of that Aggregator's least important and therefore least powerful constituency.

So that's how power works at the large end of the spectrum.

What about the small end, where you and I run our businesses?

If we rough out a list of our sources of power, we would come up with 7 (or more):

  1. Controlling access to something that is scarce but valuable.
  2. Being generous with #1 in order to improve businesses/lives of a specific audience. Brand power, in other words.
  3. Direct access to an audience. The power of freedom from intermediaries.
  4. Insight into a market combined with flexibility and scrappy motivation to serve that market. IOW, the power of agility.
  5. The power of margin: the profitability of a really good services biz creates "margin" -- money and time you can invest into the future of the business.
  6. The power of intellectual property (IP). This comes from packaging our expertise.
  7. The power of an unregulated profession. There are pros and cons of course. We don't have barriers to entry (paid training, licensing, etc.) keeping the supply low, but as a countervailing benefit, we do have extreme flexibility and a lack of oversight that frees us up in interesting ways.

A few thoughts on each of these sources of power:

Controlling access

We don't generally think of the Democratic Republic of the Congo (DRC) as a powerful nation. But, in the domain of lithium-ion batteries, the DRC has power because mines there are a source of the vital -- and not easily substituted -- mineral Cobalt.

Find a small enough market that has an important job they need done and become their preferred source of expertise -- or an irreplaceable source of expertise -- for getting that job done and you will have power 1.

Being generous

Somewhat paradoxically, being both controlling and very generous with specialized, valuable expertise is a source of power. Being controlling with how clients access your expertise is a source of financial power.

Being generous with giving access to this expertise is a source of brand power, which leads to future financial power.

Aside from giving Alan Weiss $100 once for access to a 1-hour long teleseminar, I've never given the guy much money. Most has been in the form of buying a book or three, which transfers price of book - distributor's cut - publisher's cut to Alan. What's that, maybe $10 per book?

My feeling is that I have access to some of the most valuable aspects of Alan's thinking: the evergreen-enough stuff that was worth codifying into a book. What I don't get for this price is individual application of Alan's thinking. That costs a whole lot more.

But what I do get is some access to his thinking, and that still has great value. In fact, the ROI of this form of Alan's thinking might be much greater than the ROI of individually applied thinking, at least at an early stage of someone's business. In other words, if a $30 book helps me make an additional $10,000 in revenue, the ROI on that is spectacular compared to the ROI on $3,000 of coaching that produces the same revenue increase.

Anyway, giving away for free (via a podcast, email list, or other form of content marketing) or selling for very little money (traditionally published books are one prime example of this) access to a generalized version of your expertise is a source of power because it can help you build a brand.

Direct access

Direct, relatively unmediated access to a group of potential clients is also a source of power for you. This might look like:

  • An email list
  • A D2C subscription business
  • A community you've built
  • Events you host
  • 1:1 relationships that you use email or the phone to nurture

Direct access is a source of power because you receive all the information about your audience that an Aggregator would normally keep for themselves. This information can lead to the next source of power...


Insight into a market combined with flexibility and scrappy motivation to serve that market gives you the power of agility. Your insight into the market gives you an ability to see and understand the important jobs that market needs done. If they're emerging, new jobs the market needs done, you can see their emergence early on, perhaps giving you a first-mover advantage. Even if they're established jobs the market needs done (ex: lead generation), insight gives you the power to create a _better_solution for getting that job done.


Some services businesses can be extremely profitable. This can give you the power that comes with margin:

  • Power to invest money or time in your business, which often looks like investing in yourself or your expertise or your future ability to create value.
  • Power to say "no" to clients, which can preserve your health, happiness, or sanity, all of which preserve your future earning potential.
  • Power to innovate, which is a "wasteful", speculative activity. We don't innovate when the wolf is at the door; we look for the closest weapon and grab it and tense up. This tense posture is incompatible with the posture of innovation.


Out of a posture of investment and innovation can flow intellectual property (IP), which -- in the services business context -- is expertise packaged and made usable by non-experts.

IP can significant contribute to the power of margin (profitability), can deepen your insight into a market (I'm thinking here of IP-as-diagnostic-tool), can increase your ability to be generous in a powerful way, and can increase the power that comes from controlling access to your packaged expertise.

Unregulated profession

Finally, although the lack of regulation on our profession can be a drawback, it can also be an advantageous source of power.

It's been interesting to work with this real estate developer Mark here in Taos. He's selling us 1.2 acres of land we're going to build on, and as we've asked him for recommendations for other professionals, he's often said: "It's illegal for me to recommend anyone, but if you bring me a list, I can veto." I'm sure there is at least one good reason for the regulations that cause him to say that, but it's a reminder that regulations do have a cost, and sometimes that cost is born by a larger group than intended. I'd rather get a recommendation from Mark for a good source of a construction loan, but instead I have to do that research myself because of some regulation he as a real estate broker is subject to. I'm not generally anti-regulation, but this is a case where I bear the cost of this regulation, and I wonder if that was part of the intent of the regulation?

Anyway, the lack of regulation of the kind of businesses you and I run can be a source of power for us. We can focus on opportunity, value, and impact with more degrees of freedom than regulated professionals might be able to.


I wonder if you feel powerful in your business?

Because you have lots of potential sources of power! Maybe feeling powerful is as simple as remembering all the sources of power you actually have. There are at least 7, but probably more.

Or more likely, feeling powerful in your business is a matter of investing with the goal of leveraging one or more of those 7 sources of power.

What's holding you back from that sort of investment in yourself?


Here's what's been happening on my paid Daily Insights email list:

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  1. And for a fuller treatment of this topic, please read David C. Baker's "The Business of Expertise".