Do You Have What It Takes To Be A Category Creator?

It has never been easier to bring a product to market. Right now, that’s true in most every industry from consumer goods to SaaS products. Technology has lowered the barriers so much that anyone with an idea, a little money, and determination can enter the fray.

In my experience, people starting companies don’t go at it with the aspiration to be a solid mid-tier competitor — better than some but not as good as others. No, what I hear around conference tables is a lot of aspiration to bury the competition and “dominate” the market. But in reality, few companies make it there.

With the horde of “makers” with big ideas crashing the gate, the dream of becoming an unrivaled industry leader is harder than ever before. This challenge is leading to an increasing awareness of the concept of “category” in the marketplace.

The Importance of Market Categories

When we are confronted by a seemingly infinite number of offerings, we get overwhelmed. In those moments of pending change and uncertainty, our brains revert to a set of preformed cognitive biases. We tend toward decisions that are more instinctual than fact-based or logical. It is the way our brains cope when we are in overdrive — like when we’re making business buying decisions. That is why categories are so important.

A well-formed market category surrounds a need/problem and defines it with remarkable (and comforting) lucidity. That clarity inherently drives demand. When something or someone defines our problem better than we have seen it defined before, or uncovers an existing problem that we never fully saw or understood, our natural inclination is to want to solve that problem — and our assumption is that the one who best defined the problem must hold the best solution. That assumption is an incredibly powerful market force.

Here is what that power looks like in action. In 2013, the Harvard Business Review looked at Fortune’s lists of the 100 fastest-growing U.S. Companies from 2009-2011. They discovered that the “13 companies that were instrumental in creating their categories accounted for 53% of incremental revenue growth and 74% of incremental market capitalization growth” in the timeframe they examined. That is 13 companies out of hundreds they examined! The message is clear: Effectively create or define your a category around a real market problem and you are positioned to win big.

The message is clear: Effectively create or define a category around a real market problem and you are positioned to win big.

Three Essentials for Category Creation

You can consider this article an introduction to the seminal work on the topic: the book Play Bigger by Dave Peterson, Christopher Lochhead, Al Ramadan and Kevin Maney. These guys did a huge favor for me (and you) in defining and distilling in a well-structured and supported treatise on things that we see in action every day in the course of our work with clients. However, in our experience, the road to becoming being crowned what the Play Bigger crew call the “Category King” is not easy. Here are three critical requisites for getting started:

COURAGE

Seriously, don’t even start the conversation unless you are willing to take some risks because designing a new category and introducing it to the market is not for the faint of heart. It will require lots of time, energy, and resources, but that is just the start.

It will also ask you to drop comfortable assumptions and sacred cows and muster the willingness to explore what really is. You will need the guts to say things no one has ever said before and be okay with some people thinking you are crazy. If you do your homework and know your stuff, it could work but there are still no guarantees. Category design is not the work of the timid.

CLARITY

It all starts with having something to offer that is clearly different. It may be your product itself or it may be your approach, but whatever you are bringing has to be real and focused on a visceral problem that, when identified, will elicit a response. Then there has to be a story.

Your story has to flow from the marrow starting with leadership and reaching every corner of the organization. Play Bigger does a great job of delineating the importance of what they term “Point of View”. You can think about it like a personality: Humans are relational beings and, as such, our relationships are anchored in personalities. There is comfort there. My friend’s personality helps me know what to expect from him. I know he responds to things in certain ways and he expresses himself in ways I understand and enjoy. I know something about how he sees the world and I appreciate his point of view because it compliments my own. That is why we are friends.

Companies with a strong market presence understand this dynamic and carefully structure their market persona in ways that are consistent with the personality of the company and attractive to their target. The point of view is the message, attitude, personality, and strategy that comprise the company. It’s their North Star. It needs to drive the category design, steer product development, and be ever-present in the company culture. Once that foundation is set, you are primed explore category creation.

COMMITMENT

Once the first two aspects are in place, you then are positioned to explore category design. Designing a new category is not a slow, evolutionary trudge. It is an intense deliberate process that lands with a dramatic and powerful declaration. You will be staking both your own and your companies’ reputation in getting it right. You have to be ready to draw some lines and say goodbye to anyone who can’t cross over to join you.

Announcing your market category can’t just trickle out. It needs to be an unmistakable storm of communication across a variety of appropriate channels. You and your company need to be ready to go “all in.” It is a real, high-stakes commitment that circles back to courage. If you don’t have the stomach or the resources to go big, then wait until you do. Half-baked efforts here will be doomed to fail.

If you feel like you have these 3C’s covered or with some intentional work you can see there from here, then you are in an exciting place. There is a lot to do, but when done right the process can be amazing. We’d love to hear your story.