This is not a new approach per se. However, especially with regard to a go-to-market (market entry), it makes sense to examine one’s own idea under the aspects of category design and to uncover optimization potentials.
So how do companies identify customer needs and recreate some of them – to create a completely new product or service that satisfies those very needs? Al Ramadan, Dave Peterson, Christopher Lochhead and Kevin Maney, four founders from Silicon Valley, addressed these questions. The result is their work Play Bigger and a theory known as Category Design.
Category Design carries with it the concept of “category.” This is precisely what is central to the book and the theory. Ramadan et al. refer to an innovative product or service – i.e., a real solution – to a problem as a category. What makes it special is that the category is legendary. It has never existed like this before. Anyone who designs a category develops an innovative solution in a niche market.
That is how you succeed in becoming a category king. Category kings “dominate” their niche and lead it. Ramadan et al. cite Amazon, Uber and IKEA as examples. They all have a unique selling proposition and thus stand out elementarily from the rest of the market. A basic prerequisite for this is an understanding of the customer and, as a result, customer centricity. Only those who understand what customers need (or could need) can tailor their offerings accordingly.
Category design is not a new approach. What is new, however, is the dedicated examination of the topic of innovation and the market, as carried out by Ramadan et al. In fact, numerous successful companies have created their own category, i.e., their own market for their products. The prerequisite for this was to create solutions to problems that customers were often not even aware of.
Usually, the creation of solutions starts in a niche first, but then spreads quickly (as you can also read in our whitepaper on disruption). Popular examples are Uber or AirBnB. Who would have thought that the sharing economy offers so much potential? But also more “traditional” companies like IKEA (“we produce beautiful, affordable furniture that is practical”) have filled a gap in the market.
In a nutshell, Category Design looks to abandon old paths and tread new ones – to create innovations that promise real potential for success.
Category Kings create real solutions, true innovations. Category design is not about making existing things better (i.e., doing better business). It’s about opening up new markets with solutions to a problem we didn’t even know we had. All of this sounds a lot like startups and Silicon Valley, which is where the theory originated. But even with a regular go-to-market, you benefit from three key insights from Play Bigger.
The product or service you offer must have real added value. Only then will it sell well. Therefore, you should know which obstacles and adversities your customers have to deal with. There are numerous ways to deal with the so-called “pains” of the target group – for example, through a customer empathy map or by creating a buyer persona. In the B2B environment, you should be familiar with the buying center. These are the decision-makers who buy your product or service.
Niche markets offer plenty of potential. Although it may not look like it at first glance. But entering a niche market has one major advantage: the barriers to entry are relatively low. If you also design it sensibly and use resources sparingly (for example, by launching a Minimal Viable Product – MVP for short), you will be offered great potential.
Before entering a market and the associated costs and risks, you should critically examine yourself and your idea. Our article on the go-to-market plan provides you with a lot of input and challenges that founders are confronted with when entering the market. If you deal with them in time, you can avoid risks. You still have to ask yourself whether you have reached product-market fit – but with the right preparation, there will probably be no rude awakening.
Looking at Category Design and the work Play Bigger, it becomes clear that seldom has anyone devoted so much attention to the strategy of innovative companies. The findings are not new, but they are valuable – especially when it comes to meaningfully scrutinizing one’s own go-to-market and uncovering potential for improvement.
As a founder and entrepreneur, I experience on a daily basis how important customer centricity is for companies.
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