Category design

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

Contents

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]

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]

See also

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References

  1. 1 2 "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". Archived from the original on 2017-08-01. Retrieved 2017-07-25.
  10. ↑ Pedeliento, Giuseppe; Andreini, Daniela; Dalli, Daniele (July 2020). "From Mother's Ruin to Ginaissance: Emergence, settlement and resettlement of the gin category". Organization Studies. 41 (7): 969–992. doi:10.1177/0170840619883366. hdl: 10446/151077 . ISSN   0170-8406. S2CID   210485306.
  11. ↑ Gollnhofer, Johanna; Bhatnagar, Kushagra (February 2021). "Investigating Category Dynamics: An Archival Study of the German Food Market". Organization Studies. 42 (2): 245–268. doi:10.1177/0170840620980245. ISSN   0170-8406. S2CID   229394104.
  12. ↑ Anand, N.; Jones, Brittany C. (September 2008). "Tournament Rituals, Category Dynamics, and Field Configuration: The Case of the Booker Prize". Journal of Management Studies. 45 (6): 1036–1060. doi:10.1111/j.1467-6486.2008.00782.x. S2CID   146564280.
  13. ↑ Delmestri, Giuseppe; Wezel, Filippo Carlo; Goodrick, Elizabeth; Washington, Marvin (July 2020). "The Hidden Paths of Category Research: Climbing new heights and slippery slopes". Organization Studies. 41 (7): 909–920. doi:10.1177/0170840620932591. ISSN   0170-8406. S2CID   220392540.
  14. ↑ Navis, Chad; Glynn, Mary Ann (September 2010). "How New Market Categories Emerge: Temporal Dynamics of Legitimacy, Identity, and Entrepreneurship in Satellite Radio, 1990–2005". Administrative Science Quarterly. 55 (3): 439–471. doi:10.2189/asqu.2010.55.3.439. ISSN   0001-8392. S2CID   154563830.
  15. ↑ Durand, Rodolphe; Khaire, Mukti (January 2017). "Where Do Market Categories Come From and How? Distinguishing Category Creation From Category Emergence". Journal of Management. 43 (1): 87–110. doi:10.1177/0149206316669812. ISSN   0149-2063. S2CID   149810891.
  16. ↑ Categories in markets : origins and evolution. Greta Hsu, Giacomo Negro, Özgecan Koçak (1st ed.). Bingley [England]: Emerald Group. 2010. ISBN   978-0-85724-594-6. OCLC   693772806.{{cite book}}: CS1 maint: others (link)
  17. ↑ Hilkamo, Oona; Barbe, Anne-Sophie; Granqvist, Nina; Geurts, Amber (2021-11-02). "Temporal work by consultants in nascent market categories: constructing a market for knowledge in quantum computing". Technology Analysis & Strategic Management. 33 (11): 1303–1316. doi:10.1080/09537325.2021.1931098. ISSN   0953-7325. S2CID   236395026.
  18. ↑ Edman, Jesper; Ahmadjian, Christina L. (2017-03-24), Seidel, Marc-David L.; Greve, Henrich R. (eds.), "Empty Categories and Industry Emergence: The Rise and Fall of Japanese Ji-biru", Research in the Sociology of Organizations, Emerald Publishing Limited, vol. 50, pp. 109–140, doi:10.1108/s0733-558x20170000050004, ISBN   978-1-78635-915-5 , retrieved 2023-03-24
  19. ↑ Sharkey, Amanda; Kovács, Balázs; Hsu, Greta (January 2023). "Expert Critics, Rankings, and Review Aggregators: The Changing Nature of Intermediation and the Rise of Markets with Multiple Intermediaries". Academy of Management Annals. 17 (1): 1–36. doi:10.5465/annals.2021.0025. ISSN   1941-6520. S2CID   248212860.
  20. ↑ Coslor, Erica; Crawford, Brett; Leyshon, Andrew (July 2020). "Collectors, Investors and Speculators: Gatekeeper use of audience categories in the art market". Organization Studies. 41 (7): 945–967. doi:10.1177/0170840619883371. hdl: 11343/241430 . ISSN   0170-8406. S2CID   213927815.
  21. 1 2 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.
  22. ↑ Zwilling, Martin. "Bold Entrepreneurs Now Create New Market Categories". Forbes. Retrieved 2017-06-27.
  23. ↑ Guttman, Amy. "'If There's A Playbook For Building The Next Google...This Is It': 4 Founders' Favorite Books". Forbes. Retrieved 2017-07-16.
  24. ↑ "How to Design a Business That Dominates Its Niche". Inc.com. 13 Jun 2016. Retrieved 2017-07-16.
  25. ↑ Griffith, Liz (2017-04-19). "First came behavioural economics – Now it's time for behavioural marketing". Linkedin Pulse. Retrieved 2017-06-27.
  26. ↑ Stebbings, Harry (11 October 2016). "Floodgate's Mike Maples on what makes category kings | TechCrunch" . Retrieved 2017-06-27.
  27. ↑ Lee, Roger; Lu, Jeff; Ravichandran, Deepak (5 February 2017). "Keys to ascending the consumer-internet throne | TechCrunch" . Retrieved 2017-06-27.
  28. ↑ "The 6–10 Law: Data Science Reveals How Age and Money Impact Startup Value Creation | Sandhill". sandhill.com. 14 June 2016. Retrieved 2017-06-27.
  29. ↑ "Unicorns and Other Mythological Creatures". harvardpolitics.com. 11 August 2015. Retrieved 2017-06-27.
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