Finance:Category design

From HandWiki

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]

See also

References

  1. ↑ 1.0 1.1 "Dave Peterson: The Journey of Category Design | Stanford eCorner". http://ecorner.stanford.edu/videos/4231/The-Journey-of-Category-Design. 
  2. ↑ "Jennifer Johnson | Go-To-Market And Category Design Fundamentals | Heavybit" (in en-US). Heavybit. 2017-03-29. https://www.heavybit.com/library/video/go-to-market-and-category-design-fundamentals/. 
  3. ↑ Snyder, Michelle (2015-06-17). "5 Essentials for Creating a New Market Category" (in en). Entrepreneur. https://www.entrepreneur.com/article/246784. 
  4. ↑ "Creating Category Of One Brands | Branding Strategy Insider" (in en-US). Branding Strategy Insider. 2015-10-30. https://www.brandingstrategyinsider.com/2015/10/creating-category-of-one-brands.html#.WXcN_YiGPIU. 
  5. ↑ "7 Strategies To Create New Business Categories". 2014-01-17. https://www.brandingstrategyinsider.com/2014/01/7-strategies-to-create-new-business-categories.html. 
  6. ↑ "Why It Pays to Be a Category Creator". Harvard Business Review. https://hbr.org/2013/03/why-it-pays-to-be-a-category-creator. 
  7. ↑ "How to Create a New Category for Your Product" (in en). Inc.com. Dec 2014. https://www.inc.com/aj-agrawal/how-to-create-a-new-category-for-your-product.html. 
  8. ↑ "Category Creation Is the Ultimate Growth Strategy". Harvard Business Review. https://hbr.org/2011/09/why-category-creation-is-the-u. 
  9. ↑ Development, PodBean. "022: Entrepreneur Roundtable: How to Design & Dominate Your Category w/Rhonda Smith - Part 2" (in en). https://legendsandlosers.podbean.com/e/entrepreneur-roundtable-how-to-design-dominate-your-category-wrhonda-smith-part-2/. 
  10. ↑ Pedeliento, Giuseppe; Andreini, Daniela; Dalli, Daniele (July 2020). "From Mother's Ruin to Ginaissance: Emergence, settlement and resettlement of the gin category" (in en). Organization Studies 41 (7): 969–992. doi:10.1177/0170840619883366. ISSN 0170-8406. http://journals.sagepub.com/doi/10.1177/0170840619883366. 
  11. ↑ Gollnhofer, Johanna; Bhatnagar, Kushagra (February 2021). "Investigating Category Dynamics: An Archival Study of the German Food Market" (in en). Organization Studies 42 (2): 245–268. doi:10.1177/0170840620980245. ISSN 0170-8406. http://journals.sagepub.com/doi/10.1177/0170840620980245. 
  12. ↑ Anand, N.; Jones, Brittany C. (September 2008). "Tournament Rituals, Category Dynamics, and Field Configuration: The Case of the Booker Prize" (in en). Journal of Management Studies 45 (6): 1036–1060. doi:10.1111/j.1467-6486.2008.00782.x. https://onlinelibrary.wiley.com/doi/10.1111/j.1467-6486.2008.00782.x. 
  13. ↑ Delmestri, Giuseppe; Wezel, Filippo Carlo; Goodrick, Elizabeth; Washington, Marvin (July 2020). "The Hidden Paths of Category Research: Climbing new heights and slippery slopes" (in en). Organization Studies 41 (7): 909–920. doi:10.1177/0170840620932591. ISSN 0170-8406. http://journals.sagepub.com/doi/10.1177/0170840620932591. 
  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" (in en). Administrative Science Quarterly 55 (3): 439–471. doi:10.2189/asqu.2010.55.3.439. ISSN 0001-8392. http://journals.sagepub.com/doi/10.2189/asqu.2010.55.3.439. 
  15. ↑ Durand, Rodolphe; Khaire, Mukti (January 2017). "Where Do Market Categories Come From and How? Distinguishing Category Creation From Category Emergence" (in en). Journal of Management 43 (1): 87–110. doi:10.1177/0149206316669812. ISSN 0149-2063. http://journals.sagepub.com/doi/10.1177/0149206316669812. 
  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. https://www.worldcat.org/oclc/693772806. 
  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" (in en). Technology Analysis & Strategic Management 33 (11): 1303–1316. doi:10.1080/09537325.2021.1931098. ISSN 0953-7325. https://www.tandfonline.com/doi/full/10.1080/09537325.2021.1931098. 
  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" (in en), Research in the Sociology of Organizations (Emerald Publishing Limited) 50: pp. 109–140, doi:10.1108/s0733-558x20170000050004, ISBN 978-1-78635-915-5, https://www.emerald.com/insight/content/doi/10.1108/S0733-558X20170000050004/full/html, 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" (in en). Academy of Management Annals 17 (1): 1–36. doi:10.5465/annals.2021.0025. ISSN 1941-6520. http://journals.aom.org/doi/full/10.5465/annals.2021.0025. 
  20. ↑ Coslor, Erica; Crawford, Brett; Leyshon, Andrew (July 2020). "Collectors, Investors and Speculators: Gatekeeper use of audience categories in the art market" (in en). Organization Studies 41 (7): 945–967. doi:10.1177/0170840619883371. ISSN 0170-8406. http://journals.sagepub.com/doi/10.1177/0170840619883371. 
  21. ↑ 21.0 21.1 Lochhead, Christopher; Peterson, Dave; Ramadan, Al; Maney, Kevin (2016-06-13). "How to Design a Business That Dominates Its Niche". Inc.. https://www.inc.com/play-bigger/the-key-to-designing-your-company-success-category-king.html. Retrieved 2019-03-07. 
  22. ↑ Zwilling, Martin. "Bold Entrepreneurs Now Create New Market Categories". Forbes. https://www.forbes.com/sites/martinzwilling/2016/06/22/bold-entrepreneurs-now-create-new-market-categories/#7c5197fb7dab. 
  23. ↑ Guttman, Amy. "'If There's A Playbook For Building The Next Google...This Is It': 4 Founders' Favorite Books". Forbes. https://www.forbes.com/sites/amyguttman/2017/06/30/if-theres-a-playbook-for-building-the-next-google-this-is-it-4-founders-favorite-books/#7de82c5e3c6c. 
  24. ↑ "How to Design a Business That Dominates Its Niche" (in en). Inc.com. 13 Jun 2016. https://www.inc.com/play-bigger/the-key-to-designing-your-company-success-category-king.html. 
  25. ↑ Griffith, Liz (2017-04-19). "First came behavioural economics – Now it's time for behavioural marketing" (in en). Linkedin Pulse. https://www.linkedin.com/pulse/first-came-behavioural-economics-now-its-time-liz-griffith. 
  26. ↑ Stebbings, Harry (11 October 2016). "Floodgate's Mike Maples on what makes category kings | TechCrunch". https://techcrunch.com/2016/10/10/floodgates-mike-maples-on-what-makes-category-kings/. 
  27. ↑ Lee, Roger; Lu, Jeff; Ravichandran, Deepak (5 February 2017). "Keys to ascending the consumer-internet throne | TechCrunch". https://techcrunch.com/2017/02/05/keys-to-ascending-the-consumer-internet-throne/. 
  28. ↑ "The 6–10 Law: Data Science Reveals How Age and Money Impact Startup Value Creation | Sandhill" (in en). 14 June 2016. http://sandhill.com/article/the-6-10-law-data-science-reveals-how-age-and-money-impact-startup-value-creation/. 
  29. ↑ "Unicorns and Other Mythological Creatures" (in en). 11 August 2015. http://harvardpolitics.com/online/unicorns-mythological-creatures/. 



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