folder categories in a draw

Is Creating New Categories Really `Too Hard`?

Written by Jonathan Simnett

We’re often approached by companies and their financiers, who currently operate in a broad de-facto software category such as Accounting, eCommerce, CRM, ERP and so on.

They are typically experiencing difficulty in differentiating their product or service in the eyes of current and potential partners and/or customers. They have realised their firm, or protégées’, Total Addressable Market is huge, but limited by the sheer size of the generic competition. It is a moment of truth for Categories.

They know in this situation their market is already ripe for consolidation and their customers are pre-destined to migrate to the `industry standard` sooner or later. At this point, their Category is consigned to slow death, existing as merely a component of a generalist Big Tech suite, where product development competes for resources with many other codebases.

That’s, at best, a shame for their loyal customers. But viewed from the supplier point of view, it’s a tragedy. Unless you are already the leader in an existing `de-facto` Category your ultimate destiny is decline or sale and, the latter almost certainly not on your terms.

Binary Choice
So those who know the existential threat they face contact us, whilst they still have a choice. The choice is simply to continue to play on the same pitch, or to change the rules of the game. It’s that binary.

Much has been written recently on the subject and we regularly hear risk-averse arguments that creating new Categories is too hard. Their idea is that technology markets magically ‘emerge’ as customers develop colloquial product and service Category names.

The flawed logic is that startup and scaleup founders thinking about creating a new product Category should `lean in` to those names that customers may be already calling those product and service Categories. After all, the naysayer argument goes, gaining any position in customer’s brains, no matter what the category, is `INCREDIBLY` difficult in the first place, so you should follow rather than lead. 

They may have a point. Achieving Category Leadership is a big ask. Were it easy, everyone would have cracked it. After all, the Harvard Business Review showed a decade ago the competitive advantage Category Leaders eventually enjoy.

Moon Shots

But just because something is a challenge it doesn’t mean you should not do it. Particularly when the payoff could be huge. It was ballsy for US President John F Kennedy to announce a programme to land a man on the moon within a decade. NASA did it with months to spare.

They succeeded because they had a clearly defined, simply understood goal, were fully committed to achieving it and planned to ensure that they did.  Whilst the Soviets were complacently still basking in their early success of beating the Americans to put a man into Earth orbit, the USA decided to change the entire space game.  NASA created, and ultimately owned, the brand-new Category of Moon Shots and drove the massive technology ecosystem that supported it.

Like a professional Category Design programme, the original Moon Shot strategy combined a compelling vision, the best available people and their experience, and a determined plan to succeed.  An intense, iterative, approach to gaining the new knowledge needed plus the proactive management of the risks involved.    

Simply Solving Customer Problems

When they get Category creation right, companies, and their backers, quickly find competitors trying to get on their coat-tails and in doing so, helping them build the new category for free. In NASA’s case the Soviets’ increased bluster and spending confirmed the necessity of the programme but, ultimately, they were unable to compete with NASA’s game-changing ambition and focus. NASA won the Category.

Our work to describe the current ecommerce environment as `chaotic`, or helping identify the key issue in cyber security as `automated validation` were not accidents.  Client companies in the ecommerce and security spaces, Germany’s Productsup, and Israel’s Pentera work to create their Categories. They changed the way customers think about the issues they face and offered compelling new potential solutions to their urgent problems. 

Hard and Soft Lessons

So Category design and deployment is not for the faint hearted and, ultimately, it’s about winning both hearts and minds. A hard methodology is nothing without the soft judgement that comes from decades of experience in the global tech industry.

For instance, Asana’s attempt to move from being regarded as just another Project Management Software vendor to defining the Work Management Platform Category starts with a high chance of success, if only because it defines simply and exactly what it’s attempting to do and is readily understandable across buyer disciplines. 

In contrast, potential Asana rival, is currently advertising as a ‘better’ solution and has a ‘Sales CRM’ offering, surely a category owned a decade earlier by After raising almost half a billion dollars and with customers looking to declutter their tech stacks, now is the time when an ownable and, crucially, different, category, one which overlaps with as few others as possible, would be really valuable.

The Biggest Risk is Doing Nothing 

As Mark Twain said, “I apologise for such a long letter – I didn’t have time to write a short one.” Delivering the pithy breakthroughs that ultimately change industries doesn’t happen overnight. It takes time, resources and courage to create, refine, test and publicise a compelling new category name and narrative. The Strikes that embed it in the market demand leadership, commitment and coordination on a scale most teams cannot even fathom without help .    

But none of this makes Category `too hard`. Believing this simply reveals a lack of ambition, experience or resolve in solving a Category challenge. Why take the risk they say? We say, why not? The biggest risk is doing nothing. 

But while many are called, few are chosen. But if you want to be one of the chosen few, we would love to help you decide, design and deliver your Category.

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