Generating Power from Partnerships

In my last post about how moats can turn into traps I mentioned Geoffrey Moore’s book Escape Velocity: Free Your Company’s Future from the Pull of the Past. One of the core frameworks in the book is what Moore calls the “Hierarchy of Power”. He orders the levers of strategy from the most fundamental to the most tactical: category power at the top, then company power, market power, offer power, and execution power at the bottom.

In simple terms the key question for each one are:

• Category power – Are you spending your time and money in categories where demand and profit pools are actually growing.

• Company power – Within those categories, are you seen as one of the defining players or as an interchangeable option.

• Market power – Are you winning the specific segments and geographies that matter most within those categories.

• Offer power – Are your products and experiences genuinely differentiated or are you in a feature and rate race.

• Execution power – Can you actually deliver what you promise, consistently, at scale.

I prefer to visualize them as a pyramid, with the most fundamental on the bottom:

In my view, traditional financial institutions are structurally and regulatorily constrained in the most fundamental powers of Category Power and Company Power. They will always be anchored to the core business of relying on low-to-no cost deposits as a primary source of funding and lending out excess funds as the primary source of revenue.

Competitive margin pressures significantly limit these powers, and FIs can’t make wholesale moves or major asymmetrical allocations of resources, like IBM moving from mainframes to PCs to services, etc.

Still, leaders must consciously reallocate resources to increase their organization’s power wherever it can.

Market Power and Offer Power are where banks and credit unions can still create real competitive advantage, and fintech partnerships are an effective and efficient way to win the most important customer segments. Most FIs are already pretty good at Execution Power, but these skills and resources must be refocused on the right priorities.

For many leaders this is uncomfortable, because it often means confronting the fact that:

• Your biggest businesses are in low-growth or no-growth categories.

• Your strongest brands are anchored in markets that are aging or shrinking.

• Your most sophisticated products target segments that are numerically small.

You can be “winning” in yesterday’s category while quietly losing the future.

What It Takes to Reach Escape Velocity

Reaching escape velocity is not just about reallocating budget, it’s about reallocating power. Here's how to start:

1. Name the black holes

List the top five forces that keep pulling you back to the past:

• Products that are politically untouchable

• Customers or segments that consume outsized resources relative to their growth

• Internal metrics or incentive plans that reward the wrong behaviors

• Untouchable “third rails” in the org chart

• Legacy platforms that drive every technology conversation

Sometimes, simply naming these constraints has power. It converts a vague sense of “we are stuck” into a concrete set of issues you can redesign around.

2. Change the planning question

Instead of asking, “What can we afford to add on top of what we already do”, they ask, “What must we stop or shrink in order to fund the future at a meaningful level.”

Moore is explicit here. To build material positions in next-generation categories, you must reallocate resources in “deliberately asymmetrical” ways. You cannot sprinkle small amounts of money across everything and expect to escape gravity.

That usually means:

• Pruning marginal products and activities

• Exiting low-growth, low-return niches

• Reducing the number of “strategic priorities” to a few real ones

3. Define a portfolio of activities, not a bag of projects

We frame this in terms of Extending the Line (defend and extend the core legacy business), Bending the Line (shifting resources to higher growth markets and activities), and Transcending the Line (testing and learning to create viable options for the future)

The critical move here is to manage these as a portfolio, with explicit expectations, funding levels, and leadership for each horizon, rather than treating every initiative like a side project fighting for scraps.

4. Change the scorecard

If every leader’s incentive plan is 100 percent tied to current-year performance in the existing portfolio, you should expect them to defend the past at all costs.

Leaders who reach escape velocity carve out part of the scorecard for future power:

• Progress on building the next generation of category positions

• Penetration in priority future segments

• Milestones for de-risking future bets

• Evidence of resource recycling from low-power to higher-power parts of the portfolio

You get the behavior you pay for.

If you want leaders to move at the speed of the world, you need to reward them not only for hitting this year’s numbers, but also for improving the long-term power of the franchise.

5. Create real governance for the future, not just more meetings

Finally, there is an organizational piece. In Moore’s later work he talks about different “zones” inside an enterprise that serve different purposes: performance, productivity, incubation, and transformation. More on that later.

You do not need to adopt his exact model, but you do need to acknowledge that:

• The team optimizing the current legacy business operations is not the same team that should be designing a new growth category.

• The cadence, metrics, and tolerance for ambiguity must be different.

• The board needs a structured way to oversee both performance and transformation, rather than treating the latter as an occasional agenda item.

Without this, the urgent work of today will always crowd out the important work of tomorrow.

Escape velocity is not about becoming a different company overnight. It is about making sure you are not a prisoner of your own success.

The past should inform your judgment, not dictate your trajectory.