Category design

Category design is a business strategy and discipline that helps companies create, develop, and dominate new categories of products and services.

Category design extends beyond a leadership team's narrower focus on products, company culture and business models. Taught in academia as a business and market strategy,[1][2] it is explicitly deployed by disruptive innovation companies like Uber, Airbnb and other start up brands.[3][4][5] Business magazines such as Harvard Business Review and Inc. have published articles on the value of category design.[6][7][8] Marc Benioff is an aficionado.[9]

History

Category design was first proposed in the book Play Bigger.[10] The book lays out a justification for why category creation is an important strategy,[11] and includes a step-by-step guide to applying design thinking to category creation:[12]

  • discovering and defining a category problem,
  • creating a clear story (called a point-of-view) that explains and sells the category idea,
  • defining a category blueprint,
  • driving the category strategy across a company's stakeholders (mobilization),
  • shaping customers' thinking (lightning strikes).[13]

The concepts tie back into recent writings about how our brains work, particularly cognitive biases as described by Daniel Kahneman.[14] Good category takes advantage of cognitive biases such as the choice supportive bias and groupthink bias.

After the book was published in June 2016, Mike Maples, a founding partner of Floodgate, published articles supporting the concept.[15]

The book, "Play Bigger" was co-authored by Christopher Lochhead, Dave Peterson, Al Ramadan, and Kevin Maney.[10]

The 6–10 law

Data research shows that "category kings" (companies that dominates a market category)[16] that go public when they are between six and ten years old create most of the value among all VC-funded tech companies. Companies that go public sooner than six years old often lose value; companies that IPO after ten years old create little value for shareholders. The reason is thought to be that categories take around six years to develop, and most of a category's growth happens in that six to ten year timeframe. After ten years, a category is established and growth slows, so share prices level off.[17][1] This was discussed in a Harvard Business Review article titled "How Unicorns Grow".[18]

See also

References
  1. "Dave Peterson: The Journey of Category Design | Stanford eCorner". ecorner.stanford.edu. Retrieved 2017-07-16.
  2. "Jennifer Johnson | Go-To-Market And Category Design Fundamentals | Heavybit". Heavybit. 2017-03-29. Retrieved 2017-07-16.
  3. Snyder, Michelle (2015-06-17). "5 Essentials for Creating a New Market Category". Entrepreneur. Retrieved 2017-07-25.
  4. "Creating Category Of One Brands | Branding Strategy Insider". Branding Strategy Insider. 2015-10-30. Retrieved 2017-07-25.
  5. "7 Strategies To Create New Business Categories". Branding Strategy Insider. 2014-01-17. Retrieved 2017-07-25.
  6. "Why It Pays to Be a Category Creator". Harvard Business Review. Retrieved 2017-07-25.
  7. "How to Create a New Category for Your Product". Inc.com. Dec 2014. Retrieved 2017-07-25.
  8. "Category Creation Is the Ultimate Growth Strategy". Harvard Business Review. Retrieved 2017-07-25.
  9. Development, PodBean. "022: Entrepreneur Roundtable: How to Design & Dominate Your Category w/Rhonda Smith - Part 2". Retrieved 2017-07-25.
  10. Lochhead, Christopher; Peterson, Dave; Ramadan, Al; Maney, Kevin (2016-06-13). "How to Design a Business That Dominates Its Niche". Inc. Retrieved 2019-03-07.
  11. Zwilling, Martin. "Bold Entrepreneurs Now Create New Market Categories". Forbes. Retrieved 2017-06-27.
  12. Guttman, Amy. "'If There's A Playbook For Building The Next Google...This Is It': 4 Founders' Favorite Books". Forbes. Retrieved 2017-07-16.
  13. "How to Design a Business That Dominates Its Niche". Inc.com. 13 Jun 2016. Retrieved 2017-07-16.
  14. Griffith, Liz (2017-04-19). "First came behavioural economics – Now it's time for behavioural marketing". Linkedin Pulse. Retrieved 2017-06-27.
  15. Stebbings, Harry. "Floodgate's Mike Maples on what makes category kings | TechCrunch". Retrieved 2017-06-27.
  16. Lee, Roger; Lu, Jeff; Ravichandran, Deepak. "Keys to ascending the consumer-internet throne | TechCrunch". Retrieved 2017-06-27.
  17. "The 6–10 Law: Data Science Reveals How Age and Money Impact Startup Value Creation | Sandhill". sandhill.com. Retrieved 2017-06-27.
  18. "Unicorns and Other Mythological Creatures". harvardpolitics.com. Retrieved 2017-06-27.
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