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Inventing New Product Categories
The Most Effective Path to Creating A Disruptive, Winning Product
When it comes to developing a product strategy (I.E. outlining what we want to focus on to win in a market), most product teams follow one unquestioned, dangerous belief:
That we want to build pretty much something that exists, but do it better.
For example, if we want to disrupt Google Calendar (a calendar app), let’s build a calendar app, but make it better. That might mean faster, more enjoyable, cheaper, easier to use.
Now for some products, that strategy works really well. Superhuman, for example, promises “the fastest email experience ever” & delivers on that product with a much-loved product. It is also able to compete in a market with Gmail & charge $30/month for its product. That, however, comes down to exceptional execution & a laser-like focus on delivering on its promise.
For most products, however, it’s really hard to actually deliver a better experience. It’s easy to promise better, but delivering requests a truly exceptional team.
It is therefore generally a better strategy to focus on the following:
I.E. Creating an innovative product - one that your target market is curious about & gets value from in practice - by creating a whole new type of product that is perceived to be entirely different from other existing solutions.
The Limits of Variation
When we fail to try to invent a whole new category, products tend to fail.
A “variation” of what already exists (e.g. a calendar app, but better) just runs into fierce competition & limited differentiation.
That’s because the product will perceived to be very similar to others in the market (e.g. other calendar apps) & will be judged in relation to those other products. For example, if your calendar app doesn’t provide a certain feature & a competitor does, why would they pay for you? If you’re more expensive than them, but seem to offer the same kinda thing, why would they spend more on your product? If the outcome you promise is the same as Google Calendar, why would they switch to your product.
Even if your product is demonstrably better in some way than the competition, your target customers may still perceive your product to be more or less the same as the competition. And, unfortunately, perception drives purchasing decisions.
This ultimately leads to an inability to capture market share ("Blue Ocean Strategy", W. Chan Kim and Renée Mauborgne).
The Power of Category Creation
Category creation is ultimately about creating a new way of solving a problem, not just an improvement on an existing solution.
Returning to our calendar example:
Avoid “a calendar app, but better”.
Focus on asking: “How might we address time management in a completely different, more effective way?”
And, by doing so, we are able to strongly differentiate ourselves from the competition. This means users perceive us to provide unique value, and helps us avoid struggling against fierce competition in a crowded market.
A great example of this in practice was Salesforce in the early days. As Marc Benioff outlines in Behind The Cloud, rather than providing a standard Customer Relationship Management (CRM) static software package to its users (remember floppy disks & installable CDs?), it created a new category by providing the first Software as a Service (SaaS) for CRM: Cloud-based, flexible, and, importantly, different.
Embracing Category Creation
My team are currently attempting to create a new category.
Rather than creating “another presentation tool, just better”, we’ve decided to revisit the assumptions that under-pin this category & find a new, different way of solving the problem.
We’ve asked ourselves questions like:
Creating a presentation (solution) is really about effective communication (the problem). Therefore, how might we solve the problem in a better, unique way?
Are presentations still an effective medium to communicate in 2023? What might have changed since the inception of tools like Powerpoint? AI? Asynchronous work? Remote work?
Even if there is a better alternative to presentations, how big a role does company culture play in allowing for experimentation with any new solution? Can we realistically gain access to the market?
Who might be the right early target market for any alternative solution? Why?
And, by doing so, we’ve come up with a new, unique way of empowering teams to communicate effectively.
The new offer?
Rather than promising “presentations, but better/faster/cheaper”, we have pivoted to this:
That new offer is focused on:
A more specific market: We are focusing on Product Managers, as we have 1) access to the market through my personal LinkedIn following & my business. 2) From our initial survey results, we know that a majority of PMs are presenting at least once per week to their team and/or stakeholders
Different challenges: Furthermore, we are focusing on teams that primarily work remotely & are asynchronous to some extent (i.e. they don’t communicate primarily through meetings, but through Slack, email & video updates). That means traditional in-person/video-call presentations just don’t fit their needs
One specific use case: Rather than trying to solve all communication challenges, we are focusing on one specific use case - sharing product updates - as an acute, regular challenge these Product Managers face
How You Can Embrace Category Creation
In order to build products that can win in a market, it’s important to push to create a new category - and to escape the fierce competition of “this, but better”.
In order to do so, here are a few specific tips:
Understand Your Customer Needs: The more interaction & testing with your target customer, the more unique insights you will get from them. The more unique insights, the more likely you are to come up with a differentiated solution (i.e. one that is different, but also valuable for those customers). For example, it took us 2 months of discovery & testing 4 different value propositions to have that “aha” moment where we feel we have a concept for a new category. Slack was successful, for example, because they had the insight that team communication could be better by moving away from traditional email.
Experiment: Category creation is something you rarely get right first time. If you look at most successful companies, they took a lot of iteration to discover the right solution. Twitter moved all the way from being a podcast platform to the solution it is today through testing - not through endlessly brainstorming.
Question Convention: As we did with the presentation category, it’s essential to ask “why”. Why is the existing solution dominant? Is it because it’s just because a convention to follow? Or because it’s genuinely the best way to solve the problem? And what has changed since it became the convention? We still need to fully build our prototype to know whether questioning convention in our category will be successful. However, there are many examples of companies who have succeeded by questioning convention: Tesla with questioning the convention of petrol cars; Loom or Slack by questioning the convention of communication by email or video call; Amie questioning the convention of managing one’s time through just a calendar.
Address A Known Problem: We don’t want to completely reinvent the wheel. With category creation, there needs to be a known problem with a known solution to disrupt. For example, we enjoyed music before Spotify. We found vacation rentals before AirBnB. We messaged coworkers before Slack. We just need to focus on the uniqueness of the solution.
Category creators grow more than 3 times faster than companies that focus on variations of an existing category (Harvard Business Review).
In a world where we have 16x the competitors than just 10 years, you simply cannot afford to be working on a product that is perceived to be the same as the competition.
That product will fail.
And it won’t look good on your CV.
P.S. Are you a Product Manager? Want to automate your product updates?