'Category kings are not a recent phenomenon. Before the 1920s, there existed no such category as "frozen foods." Clarence Birdseye—yep, that was actually his name—created it.' (Page 4)
Think of a time before Uber existed. What changed to take us from then, to now? From a pre-Uber world to a post-Uber one? Before the concept of "ridesharing" existed, you had to stand and wait for a cab to turn up. Or call one, long in advance, to book it. Now, you just tap your phone and a car appears, prepaid automatically and ready to take you to an exact location.
This is category creation.
How big are the problems that we can understand, frame, and solve? These are the fundamentals of new categories. Before Uber, taxis were not thought of as being a problem. But once you knew of the existence of the new category and the problem it was solving, it was hard to see how things could be any other way.
'The most exciting companies create. They give us new ways of living, thinking, or doing business, many times solving a problem we didn't know we had—or a problem we didn't pay attention to because we never thought there was another way. Before Uber, we hailed a cab by standing perilously close to traffic with an arm in the air. After Uber, that just seemed dumb.' (Page 9)
A "Category King" is the one and only leader in any given category, new or old. Xerox, Google, Ikea, Netflix. All of them are the front-runners in their categories and three of them are synonyms with the activity themselves as well.
Category kings tend to make a lot of money because they essentially form a monopoly. People want to invest in a winner, and only buy the "best" in any given category. So being the king is important.
The flywheel effect of being in this position means that you are also able to gather better data, too. This can give you an unfair advantage in how you continue to grow, and compete with others.
They argue that "category design" is a new strategy (but fail to go into detail on this for some time yet).
'Starting a company and launching a product are cheaper and easier than any time in history, and that means that for every well known problem, hundreds of solutions can instantly appear out of nowhere.' (Page 28)
Categories are an organising principle for customers/buyers. When they know the problem is there they demand a solution, and latch onto the most popular one that is available to them.
The option that is perceived to be the best is the one that then wins. Every problem-solver in a newly-understood category and problem creates an "anchoring effect" around which others then feel the need to organise.
'Your number one job is to change the way people think. Your product, your company culture, your marketing, everything has to be aligned with transforming the way potential customers think. If you change the way they think, they will change their buying behavior.' (Page 35)
Three pillars on which to create a category:
Before you can design a category, you need to know it's there. With any business idea, answer the following questions (Page 72):
The best ideas seem to come from the sense that something is "missing" in the world, and the business you are in is interested in filling that particular void. There are two types of insights that lead to this void being filled:
Understanding the category insight is the next step here, but few seem to take it.
'[Entrepreneurs] seem to have an unquestioned belief that once the world sees their new product, the world will "get it," and so these innovators leave the category to chance.' (Page 78)
Before embarking on category design work, it's important to understand fundamental aspects of the market in which you're operating and how your company works right now.
Vision mission: the original insight or "dream" that led to your company's creation
Customers: who's buying now? Who could be buying in the future?
Problem statement: what problem gets solved by your product?
Use cases: what are the specific ways your product is used to solve for different variations of the same problem?
Product/solution: details of what it can do now, and what it will be able to do in the future
Ecosystem: who else is operating in the same space? What control points do they have?
Competition: who else is doing something similar?
Business model: how does it change what the customer is able to do and how they operate as a business?
GTM: B2B or B2C pricing, sales, channels, buying journey etc.
Organisation: what is it right now, and how does it help or hinder your goals? What's the culture like?
Funding: what's your main source of cash? Funding? Revenue? Impending IPO?
A 'zed' is someone who acts sceptically towards the whole idea of category creation. The writers advise you to identify these people, give them the opportunity to change their minds, then swiftly "exit" them if they don't come around.
'Category design is the discipline of creating and developing a new market category, and conditioning the market so it will demand your solution' (Page 56)
Category design is company strategy, product development, marketing, and public relations all rolled into one. This effort is bigger than one single VP or exec and must be driven by the CEO if it's to be successful.
Once you have the fundamentals listed above, design can begin. It starts with a workshop, ideally over the course of a full day, with the leadership team. Topics of discussion:
The aim of this is to get the general outline and shape of the new category and what it means, but also how it differs from the status quo.
After this, the authors recommend writing up five things to help guide the design, perhaps only with a slide each:
Stories have a kind of infinite power, a magic about them, that can do incredible things. They frame the problem the new category identifies, and set you and your product up as the answer. They can define culture and guide a company's priorities.
Your story can't be too much in the present because it won't be ambitious enough. It can't be too far in the future, because it will be too long before it ever comes to pass. It needs to be somewhere in the middle, in the sweet spot that seems reachable because it is.
Again driven by the CEO, this needs to be written and re-written. Refined and re-refined. It should be short, punchy, and strong.
Publish it online, launch it at an all-hands, make sure people read it and understand it and can play it back to you. Make it part of your culture. (Those who don't adopt it? They might be a "zed" - see above.)
Soon comes the time to make things actually happen. This takes a lot of effort from the entire company, but can be dragged down by a single thing the authors call "gravity."
Gravity is the day-to-day grind of simply doing business. It's the needs of current customers who want bespoke features in spite of massive engineering time, it's the leads who might disappear because you don't meet an obscure requirement, it's too many meetings, it's quarterly targets, it's the temptation to keep selling the way you've always sold because you know it works and it keeps the lights on.
Gravity drags you down, but this is the way you end up building faster horses when what you really wanted was a Model T.
Better instead to have the company work towards a "lightning strike," a pivotal moment 3-6 months after adopting the POV that becomes the main focus of everyone in the business.
It aims to align everyone behind the same priority and, hopefully, stop people doing a bunch of pointless crap in the process. ALL teams should be focused on it, and it could be your event or someone else's. You should be able to make enough noise, and get everything else aligned behind it beforehand/on the day:
The authors recommend creating four documents to guide decisions throughout the entire company from the most detailed product decisions, all the way through to opinions put out by comms.
What can people expect, over time, from this new category? What does it look like when it's "mature"? What are the kinds of things you'll be able to do? What are the kinds of results you'll be able to get? What are the overall possibilities? This is not what your product does now, but what it may eventually be able to do. This should ideally be published freely on your website, perhaps as a white paper or even as a longer-form video. The aim is to make your argument for what things should be, setting the tone for everyone else who comes afterwards.
Having considered the blueprint, what does this mean for the words we use when describing the product itself? How do you name things at different hierarchical levels? Do you need to rename things? Do you need to coin new terms for things that already exist but don't have names? Do you need to name concepts that are understood by few, but need to be communicated to others later? People will (hopefully) one day be searching for all of these things, what are the keywords you'll be creating as part of this? This will be a challenge for what is likely to be an already busy product team, but this is the fight against gravity the authors speak about.
Again thinking in terms of the blueprint, what does the future ecosystem of the category look like? What are other companies that you build partnerships with, and why? What are the other companies that rely on the existence of your product, and why? How do they make money? Are they consultants? Third-party developers? What are the conferences and events that spring up in relation to this new category?
Different to the classic example of a product use case, use cases are more like the uses we create or define when solving this new problem in the way the category defines it. What is different to today? How do people actually use your product, what reasons do they have?
A useful thought exercise is to imagine all of the above in terms of something like "operating systems" like Windows or OS X, what the blueprint would have been, what are all the new terms coined, what the ecosystem looks like, use cases for people using operating systems etc.
'Nobody can hide in a mobilization. Products that don't work, marketing that sucks, an engineering team that's too shallow, sales teams that promise too much, burn rates going too fast-any obstacle to the lightning strike will become obvious now. If the CEO and the board don't have the stomach to create a category that doesn't yet exist it will become obvious now. If the leadership team has a weak link-it will become obvious now. We've seen many CEOs melt like a Popsicle dropped on a summer sidewalk at this stage. They dilute the whole thing with a week or two to go and end up executing a run-of-the-mill marketing campaign, not a lightning strike.' (Page 138)
A lightning strike itself should be the culmination of multiple different efforts at once, for maximum impact. Here are some elements of a typical lightning strike:
The book cites multiple examples, including Sensity creating the 'light sensory network' category through a week-long lightning strike that coincided with two major news events (one planned, one unplanned that was hijacked on their behalf) and a major international conference in the lighting industry.
'A lightning strike is an efficient way to start altering brain patterns and establish the idea that your company is the category leader. A strike hits hard and fast. It is designed to burrow into the highest number of targeted brains as possible in as short a time as possible, immediately putting competitors on the wrong end of the Experience Curve' (Page 156)
Messaging and content should be "big, bold, and different enough" to get into people's brains. Otherwise, it will be ignored, or simply forgotten.
Assuming you dominate in one category, what do you do next? Do you find ways to do it again, or do you sell out and buy a boat for your early retirement?
Look at Google. Started out as search (and what they're still best known for), but expanded into dominating another (new) category of online search ads. Then, also:
Signs your category is out of momentum and you need to do something new is a demand to switch to profit creation for the sake of investors. Another is simply running out of available clients for something like this.
Companies who have created a category (and been crowned king) broadly have two options: do it again, or "harvest" the rewards of that category. Harvesting is keeping the ship on an even keel and making as much money as possible.
The authors highlight personalities like Gates and Jobs as great category creators and, in Gates' case, his successor (Steve Ballmer) as a great "harvester." That is, someone who can collect cheques and grow the bottom line but won't have what it takes to create further categories. They leave open the question of whether or not Tim Cook, Steve Jobs' successor, will be able to keep on creating categories as many times as Jobs was able to. So far, he doesn't seem to be doing this—unless of course he makes a success of VR.
All of the tools and strategies listed in this book? Use them on yourself too, say the authors.
'Design yourself, what you can do, and your category together. Designing yourself might involve developing a personal set of beliefs and a way of conducting your life that fits with what you do and the category you address. Design the "product"—that is, your offering to the world—by developing your skills. And design the space around you so it fits your capabilities but also challenges you.' (Page 220)
Write your POV, design your ecosystem, and perform a lightning strike (such as it would be for an individual). Then, presumably, dominate.
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