Category design
From Wikipedia, the free encyclopedia
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]
In academic terms, category design fits within research on the dynamics of product and market categories,[10][11][12][13] such as the historical emergence of new categories[14][15][16] vs. entrepreneurial efforts to valorize a new category of product or market.[17][18] Different forms of gatekeeping are also relevant to categories of markets and products, from critics who determine which books are deemed to belong to a genre,[19] to art gallerists who decide which customers are worthy to buy a high value artwork.[20]
History
Category design was first proposed in the book Play Bigger.[21] The book lays out a justification for why category creation is an important strategy,[22] and includes a step-by-step guide to applying design thinking to category creation:[23]
- 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).[24]
The concepts tie back into recent writings about how our brains work, particularly cognitive biases as described by Daniel Kahneman.[25] 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.[26]
The book, "Play Bigger" was co-authored by Christopher Lochhead, Dave Peterson, Al Ramadan, and Kevin Maney.[21]
The 6–10 law
Data research shows that "category kings" (companies that dominates a market category)[27] 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.[28][1] This was discussed in a Harvard Business Review article titled "How Unicorns Grow".[29]