Paradigms, Categories and Ecosystems

Paradigms, Categories and Ecosystems

Written by Jonathan Simnett

The word Paradigm traces to a Greek verb meaning “to show,” and has been used in English to mean “example” or “pattern” since the 15th century.

In my career spanning the world of academia, science, technology, and business the word has come up a lot.

When used correctly, it’s most often used to describe a standard, perspective, or set of ideas.  But in tech it’s best thought of as a dominant force that enables conditions all related economic activity around it.  Historically think the succession of horse power, water power, steam power, electrical power. In tech think mainframe, minicomputer, PC, smartphone, internet, www and cloud.

Category vs paradigm

Category is different. It exists within paradigms and describes a class of product usually with an attribute directly related to its function. But, more than that, the most successful categories encapsulate an ecosystem of vendors and products, all combining to deliver value to customers. 

That’s vitally important when considering Category design – to define and lead the ecosystem and avoid just becoming one of its many constituents. Category capture starts with very broad thinking about the nature of the opportunity that is presented and a rigorous analysis of the nature of the problem(s) being addressed.

Expansion vs compression

It’s fundamentally important that the Category should have the seeds of its own expansion contained within it and not of compression whereby the scope of the Category becomes ever narrower with the actions of players within the ecosystem constantly marginalising its impact.

Consider the Category P2C (Product to Consumer).  It sits within the paradigm `ecommerce` but encapsulates B2C, B2B, D2C, C2C, B2B2C and so on, defining every product and service within the ecosystem that connects product to consumer.  It’s an expansive Category, based on the reality of a common delivery platforms – the mobile and wired internet and – growing as new entrants competing to enable different facets of the journey and supports waves of M&A consolidation as leaders build complete products sets within the ecosystem in the fight to maintain P2C leadership.


Compare this to the world of neobanks, a phenomenon within the financial services paradigm challenging the Category of traditional retail banking organisations. Considered a new pseudo-Category in financial services. I say `pseudo` because it is already limited by the term `bank` so it can only hope to define itself by reference to what already exists and at best offer a `better` service that those familiar banks already in the market.  There is no `different` the very definition of what a category should provide. 

Ultimately, neobanks compete with other neobanks in a zero-sum game with no mutually supportive ecosystem and product set is built around them forming a clear competitive target for those that the neobanks are vying to replace.

It’s the opposite of expansive it compresses itself from the start, limiting, rather than creating, opportunity and impact and simply serves as an outsourced R&D function for the incumbents who will then copy or acquire the new players.  And so, the pseudo-category disappears.

Be brave

So, Category creation must be about ambition that stretches over the horizon, about bold risk taking. Crucially it’s about enabling ecosystem development but most of all about creating opportunities solving problems an entirely different way.  Building new markets and new delivery methods for products and services that fundamentally changes the nature of existing paradigms.

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