An Inside Look at the Category Design: Josh Lowman

ABOUT THIS EPISODE

Some companies aim to stand out from the crowd. They want to differentiate themselves from companies that walk, talk, and sound the same.

Some companies want to go a step further. They want to compete in a new category.

They embrace a concept called category design in which they define and lead a new market.

In this episode of Marketing Spark, Josh Lowman offers insight into the definition of category design and how one of his clients embraced the concept.

Hi, it's Mark Evans and you'relistening to marketing spark. Most entrepreneurs and companies move into existing markets. Thereare competitors doing the same things, but the entrepreneur believes they've built a bettermousetrap. There's already proven demand for a product or service, so it's simplya matter of letting consumers know that there's a new option available. But whathappens when you have a product in a market that doesn't exist, or perhapsyou're moving into an entirely new space within this within a specific market? Well, you're not only trying to grow a business but create a new category,and that's a huge challenge. Today I'm talking with Josh Lowman, who headsup gold front, a Category Design Studio that specializes in helping a be tobe startups define and lead new market categories. Welcome to marketing spark. Thank you, mark. It's nice to be here. Why don't we start witha high level question? What is category design and who uses it? Whydo why is it important these days? So category design is a discipline oftenused by startups, but could be used by other, many other kinds ofcompanies to define and lead new market categories. And that idea of new market categoriesmeans that you're looking for an entirely new space to compete in and you'renot competing in an existing category. And so there's a whole set of ideasand tools and a whole discipline built around that idea of how do we designa new market category for our for our company? One of the things thatpeople may think about when it comes to category design is that as just thelatest buzz word, it's something new that...

...consultants have rallied behind so that theycan sell different kinds of services. Is Category Design a real thing? Obviouslyit is a real thing, because you're making a living doing it. Yeah, but does it work? Yeah. So in the world of business,startups, marketing, there's always going to be the bsification of any discipline,anything that becomes valuable at all, is going to also have a bunch ofpeople who are saying they're doing it, but they're not really doing it,you know, and they're just trying to make a make a buck off ofsome new trend. Right. But no, category design actually is a real thing. It has real substance to it. In some ways, the you know, the the precursor to it is brand strategy. And when brand strategywas invented there was a number of people who said, if we can definethe central DNA of a company and it's products, then our brand strategy couldbecome the North Star for everything that that company does. Right. Problem isthat if you go into the startup world, chief product officers, people who runsales, people who run HR, people and the people department, theydon't take brand strategy that seriously. The chief product officer is often not goingto look at a brand strategy as like yes, I want this to bethe North Star for our product roadmap. And so in a way category strategyhas come out of that problem that there is no unifying whole company strategy whenit for companies who are really trying to...

...go big and do something new,and so category strategy fills that gap. And so yeah, you could doit in a way that where it's just kind of it's not real and it'sjust kind of like something that marketing, marketing people say, but there's nomeat to it. But when it's done right, you're doing it with theCEO, whoever runs product, the person who runs marketing, person who runssales, all of those executives are agreeing to the central strategy and then they'regoing to change what they do according to what that North Star is, andwhen you do that it's really substantial. One of the things I think aboutwhen it comes to category design is that in theory it sounds amazing. So, for example, if you're a drift and you can actually create conversational marketingand own that category, at least emerge as the leading business because you've movedfirst, that is an awesome way to grow and build a business. Butthe one thing that I would say, I guess, if I was thedevil's advocate, is how hard is it is it to create a category,given that there's so much competition out there? Companies are taking like startups are soagile these days that you can move, you can start, you can starta business really easily. What is that alignment between concept and reality andwhat are the challenges companies face when they try to create a category? Yeah, this is a question that I get all the time and it makes sensethat it's like, Hey, are we really a category creator? Like noteverybody can be a category creator, right, but I look at it a differentway. I know we work with startups and to late stage startups andcompanies that are in tech, companies that just ipoed and people that are inthat world. And in my mind, those companies are all saying we havea really big idea that's going to turn into a very large market or verylarge valuation for our company. They're going...

...to investors saying we've got a bigidea, it's going to be really successful, that's why you're going to give usmillions of dollars. And what category design does in a way is itkeeps those people from backsliding into incrementalism. Right. It's like you go intothe you start the company and you go to get investors and you're like,we're going big. Then you get into actual the work of making the thing, the product and the marketing in the sales, and you're like, well, actually, it's just a better way to do something that already exists andthat doesn't lead to companies that have a high valuation or end up with reallygood, like good good outcomes for investors. So in a way category design isjust it's almost like something that just keeps keeps founders and executive teams honestthat they really wanted to go big in the first place. So that I'mclear on category design. Is it for example, a company looks at thecrm space and there's all these sort of generic crm application is out there thatserve all kinds of different companies and they decide that they want to create acrm specifically for B Tob SASS marketers, not for anybody else, but justfor bbsass marketers, and there's no other company that has that laser like focus. So they've decided to create this category within an existing category. Is thatcategory design or is that incremental product design? I don't know. If I don'tknow if the BAB SASS CRM is specific enough to be a category,that's probably because, like crm's now are used for marketing, sales, customersuccess, all kinds of things, right the question you're asking. The answeris yes, if you you know it. This all takes place in the mindof the customer. If you can...

...get your customer having the idea that, oh, this isn't just an incremental and improvement on something that already exists, but they're like, oh, this is a whole new way of doingthings, this is actually going to transform the work that I do. That'swhen they're thinking this is a new category. So if you can get that totip and their mind and it's you know, could be really specific.I mean what you know, one thing we've we've talked about is like hey, is is southwest airlines a new category? You might say, well, no, it's not. It's just like a budget, budget airline. Butmaybe in the minds of their customers they think of it as something totally different, because there's so many ways that southwest airlines is really unique. And soit gets a little bit philosophical here about like well, what it? Youknow, what is a category in the mind of the customer. But butthat's really the question is, can you get the customer thinking, okay,this is a whole new way of doing things. That is not in somethingin it in a category that already exists? It leads to to question one iswho should consider category design, and number two is how do you getstarted? What are the first steps you should take? Yeah, so everyfunded startup should be doing category design. And category design could be as simpleas I have an idea and then I look at it through the Lens ofcategory. I I have an idea for a startup. Is that a newcategory? I have an idea for a product. Is that going to bea new category? You know, that could be the that's the simplest versionof category design is that you're always looking at everything that you're doing through thelens of Hey, could this be a new category? And if the answeris no, what would I have to change about that idea in order toget it into that into into the space of being a new category? Soyou could do any kind of cat you...

...could do category design in a verylightweight way like that. People hire us to do a much larger engagement andthey're often already at the point where they sort of found product market fit,but they really want to make sure that they stand out, and that's amuch bigger thing where we're doing a, you know, three month strategy engagementand doing a deep dive on their business and helping them figure out what's reallyunique about what they do and how that thing that's unique can can be honedand worked on and made clear that this is a categorical difference, not anincremental difference out in the market place. That's interesting because I do a lotof positioning work with bdbs ASS companies trying to identify how they're unique or differentso that they can stand apart from the dozens of, not hundreds, ofcompetitors out there who talk and walk the exact same way. But what's theconnection between tragic positioning and category design? Are they? They flow one intothe other? Yeah, the really close. In a way, you could saycategory creation is is a kind of positioning, right when you when youcome out and say we've invented something entirely new and we've given it a name. That is your positioning. The difference, though, is that positioning there's twobig things. One is positioning tends to also often include what's your positionwith an existing category, and Category Design Says No, you can't do that. You have to come up with a new category like that. That roadis closed to you. That's one thing. The other thing is that positioning isseen as a brand or marketing strategy. So it can be hard to gotalk to the chief product officer and say hey, this is our positioning. Now you need to go change your...

...product road map based on this positioning, whereas you sit in a room with the CEO, Cmo, chief productofficer and the rest of the executives and you go for creating this category.When it works, it's because everybody's bought into this single idea and then thechief product officer is going to change their product road map according to what thatcategory is that you're creating, so that when marketing and sales are going outto tell the story, but not just telling some BS. It's not justlike a story they're telling. They you know, product is coming right behindwith like really great proof points. So I've created the better mousetrap, I'vefound some customers, I've I've proven that there's demand for this product and peopleare willing to pay for it. And now we start to think, wouldn'tit be great if I could create a category that I could own, Icould move into and really be the pioneer in the evangelist? What are thesteps that I need to take? Where do I start in terms of launchingthis process? Yeah, you know, some of it depends on where youare in the process. But let's say you already do have customers and youhave a sense of the domain that you're working in your maybe you're in anexisting category, maybe you're in an emerging category. You have a sense ofwhere you play and you have some customers. What I would do, and let'ssay you didn't you didn't hire us at all. You just we're goingto sit down and try to do it yourself. You're going to start withtrying to understand and really well what problems you uniquely solve. Write it down, get every single thing down in a list. What problems do we uniquelysolve? And there will be different things on there. There'll be some problemsthat we're we unique, we uniquely solved, but they're not that valuable to thecustomer. They'll be some things are really valuable to the customer but thatother people can do. You're looking for those things that do both of those. We're unique in it and these are really valuable to the customer. Thenyou're thinking, can I look at this...

...entire list and come up with asingle overarching idea for what we call the gap? And the gap is justa concept of what is what is that high level problem that we're really solvingfor the customer? And you name that gap and you've got a kind ofbe both true to today and forward looking. When you name that gap and youcome up with what is that? WHAT IS THAT GAP? That wereally saw for the customer has to be like yeah, this is true today, but we could make it much more true in the future. So you'vegot that gap. So, for example, we wrote the strategy for qual trickswith a category strategy for qual tricks. Their gap was the experience gap.The experience gap is a difference between the experience that you think your customersare having and the experience they're actually having. And so, you know, agap is different from just problems that you solve because it's much bigger.It's a much bigger, more strategic business problem than just hey, we dosurveys, we do real time surveys. You know, it's a it's abig problem that you're that if you can, if you can get it right,your customers will hear that and go oh, yeah, yeah, thatthat that would be really valuable if somebody could solve that for me. Sothat's the gap. Next thing is you're going to look at your vision forthe next three to five years. So you could write down in three tofive years what will think. How will things be different for our customer ifwe are ultimately successful? So in Uber's case, which is another client ofours, they might say we're going to take fifty percent of the cars offthe road in in cities because Haus people won't need to buy cars so much. They want need to own car so much. So there's going to beless cars. Like that's a really cool vision statement. Now that's not justa single vision statement. You're going to need a number of these where,like hey, in the world that we're...

...building, this will happen and thiswill occur and this will happen. So that's your vision. And then there'sone more step in the process, which is your category idea. So ifyou look at the gap and you look at your vision statements, like whatwill we make happen if we're ultimately successful, the question is, what category arewe inventing to get our customers from that gap state to that Vision State? And you'll come up with the category idea through writing down some names ofcategories. So, for call tricks, it was experience management or experience managementplatform. Right. You'll write different ideas down for the name of the categoryand then maybe a sentence or two that says what each of those names meansto you and you kind of just have to play with all these ideas.Well, what if the gap was this, what if? Well, maybe thatwould change our vision to this. Well, maybe that would change ourcategory idea to this. And you're sort of triangulating these three things until youget something that really feels right. And you got to look at it aslike, can this be pretty much right today? Ay, but could wemake it really, really right tomorrow? So there's a lot of kind ofINS and outs to this where your you've got your three ideas that you're triangulating. Then you're looking at can can we make a real case that this istrue today? Then can, but are we also building a big space forus to grow into this tomorrow? And that's kind of a crux. That'sthat's kind of the essence of the process of the category strategy. And abouttwo minutes or less. Yeah, it sounds like a combination of subjective andobjective or art and science. Yeah, absolutely. And the question I wouldhave is once you've gone through the process, once you've got your product, you'vegot customers, you decide that category...

...design is something that you want toembrace and you go through this process, you come out the other end withexperience management or whatever category game that you've developed. What comes next? Whatdo you do with it, like, what are the next steps in termsof using it for marketing, sales, customer service, all the things thatare part of your operational Tiller's ideally, you know, and I know youa lot of your audience, are you in the marketing world? One ofthe cool things about category strategies if you're a CMO and you bring or you'reworking in marketing and you bring category strategy into your company, now the strategythat you're doing. It's no longer brands strategy and something that maybe the youknow, the people that run product are going to ignore. Now you're bringingin a strategy that it's like, okay, CMO, CEO, chief product officer, are all working together to form this thing that everybody can agree to, and so that's very, very powerful and it's fun for marketing to bepart of that. The next thing is, okay, if we're all in agreementon this is the category and this is our story and this is therationale for why we think this is a we've got the business case to goforward on this, then you need to do a category launch and the anda launch happens in two places, inside the company and outside the company andthe first most important places it happens inside the company. So that usually isa presentation by the CEO to everyone in the company saying something like today we'rechanging the trajectory of our company. We're no longer going to be lumped intothis category doing something incremental. We're now, you know, category creators, andhere's the category that we're creating. During strategy we write something called acategory Pov that basically the CEO will take...

...the whole company through this category Pov, through the gap, through the Vision, through the category idea. And whatthe what how much promise there is for this category in the future,once you kind of have everybody on board and you're letting different departments know whatthey can do to help manifest the category right. So like people doing recruitingare now going to be using the category idea as part of their talking points. Sales is totally going to change their pitch so that the category ideas,especially, is at the beginning of their pitch. Product is going to changeyour product road map. Everybody in the count every department, has a certainset of things that they'll do to go manifest the category. And then,on the outside of the company going public. There's something that you know. Wecall it a category launch. That will happen usually three to five monthsdown the road after we create the strategy, and that's often for betb companies.It'll be a often a conference. The CEO may do a vision categoryvision presentation at a conference and there might be a number of other things thatare done all at the same time so that you can really get your message, your new category message, out to your audience with a lot of density. You get the whole company pulling together on the internal launch, you getthe whole company pulling together on the external launch and good things will follow.So, if you've established a new and exciting category, how much of acompetitive advantage have you created? Is it the ultimate tool in terms of outflankingcompanies that made you something similar, but you've decided to stand apart and notonly compete in the same marketplace but be very distinct and in terms of whereyou can feel? It sounds like a great if you can pull it off. It sounds like a great way to...

...basically own own a market. Yeah, I mean it can be a very, very successful thing to do. Thatsaid, we're dealing with people's minds and could be. You know,we're dealing with the mind of the customer and that is always mysterious and thereis always the unknown to deal with when you're dealing with well, will peoplethink this is really valuable or not? But within that space of Hey,this is unknown, we don't know for sure how this is going to go, category design is sort of one of your first best things that you coulddo to to like create and win a new category. So, for example, there's a number of reasons why. So, first of all, ifyou're a startup, people, customers, tend to give more credibility if yousay we've created something entirely new. If you if you go to a startupswebpage and they say, hey, we're doing this thing, but we madeit faster or easier or better, like it's the thing you already know,but we made it faster easier, people don't really give a lot of credibilityto that and they sort of zone out on messages like that, whereas ifyou say we've created something entirely different, and if you know you have apodcast, if I said, well, we're going to change the podcasting gamewith this new category of podcast product, that we've invented. You at leastwould give me three minutes to find out whether that's bs or whether there's somethingreally true about that, because it might change your entire industry. And sothere's a weird way that by going big with our message and category we're we'rewe're making it so that people are much more likely to listen to that message. So that's on the kind of almost the hook side of messaging, right. You got to Hook your customers in order to get them interested and geta little bit of time with them.

And then if we look at thingson the valuation side, all up and down the spectrum of you know,of the valuation of a company, from investors to customers, to everything torecruiting, people value category creators and category leaders much more highly than they doto meet to companies. So for qual tricks, for example, they werelumped in with vase when we first started writing category strategy for them and theyweren't value. They were valued a little bit under a billion dollars. Now, five years later, they're the leader of experience management and their valued atlike twenty five billion dollars. So there's a whole valuation piece to this thatthat works really well. Also, I did want to fall up with youand in terms of looking at qual trick, I'm interested in really walking me throughthat category design process with a company that obviously is doing very well andthen billion dollar valuation is nothing to Sneeze at. Why did they come toyou? What were some of the challenges that then they were facing and whydid they think that category design was was a way that they could jump startthe growth of their company and jump obviously jumps out their valuation? Walk meto that whole that whole journey with them. Well, you know, we werebrought into that project by our my friend Al Ramadon, who has anagency called played bigger. So they brought us into that process and we workedwith L and David played bigger to write the category strategy and from the briefingdocuments that they gave us it was clear that Ryan, the CEO at qualtricks, and the executive team had a very ambitious idea of what the productwould be in the future and they had already done a ton of work onthat. And so they already had this...

...idea that their product was much morethan surveys, and so the thing that they didn't have was okay, what'sthe name of that category? What's the what's the story of that category?WHAT'S THE GAP? WHAT'S THE VISION? All of that. So the thethe process was fairly straightforward of taking founders who had a really ambitious, clearidea for what they were creating and then figuring out, like how do wetell the story of that? And that all fell into line pretty quickly.You know, we did, I think, on the first draft of the categoryPov we did it was like hey, this is really working. We justneed to make a few changes and we're good to go. There's afew other things that we did. We created a set of visuals that showedthe category idea working in advertising and kind of customer facing creative. That workedout really, really well. A kind of vetted that yes, this couldbe the new category and then, from their call tricks, created a launchevent and Ryan came out and sort of had his steve jobs moment where hetook the cat category Pov and presented it to press and Fortune one hundred companiesand you know, it was kind of like wow, this is a hugethat you know, is really well received and very successful, because people werelike Oh wow, this is exactly what we need. We don't really needmore surveys, we need experience management. I guess in that case you knewright away, or fairly quickly, how well that category design project would resonate. But in other situations where you're not getting that immediate feedback, how longdoes it take you to know whether what you've done is is actually worked,whether that whole category design processes has done...

...what you wanted it to do?Because, because it happens, is usually happen right away, or does itsometime need time to to nurture and sort of permeate through the community? Yeah, yeah, there's a number of variables there, you know, and there'sa couple things I want to call out. One is you can design the categorythe Steve Jobs Way, which is like hey, we're not going todo research, we're not going to go ask our customers, we know what'sbest. We're going to create something entirely new that we know is awesome,we're going to release it to the world and hopefully people think the same thingthat we think about this. And and that's absolutely a way that some ofour clients work and that will work with our clients where if you can getit into a category Pov, if you can write the Steve Jobs like presentationof this new category and you feel it in your gut and you like Ilove this, and you give it to your, you know, number oneinvestor and they're like I love this too, you have a pretty good chance that'sgoing to go over really well. However, we have some clients whoare like we really need to vet this and make sure this is going towork before we ever go out in public, and so we have something called CategoryAdvisory Community, which is a way that we do research with customers onan ongoing basis while we're doing category design. So while we're doing the strategy,we could check back in with customers, take their pulse. Is this workingfor you? Are you as excited about it as we are, andthen build back any any kind of insights that we've gotten, build that backinto the category that we're creating. That's one thing, and then the otherthing I want to say is you were at basically asking like okay, doesit take a while, does it happen? You know, like, what isthat all about? Obviously, because we're dealing with the mind of thecustomer, there's a aspect of this is completely mysterious and we don't know howit's going to go. That said, within that context, each client thatwe have that is trying to launch their...

...category publicly has a different capacity forhow well they're going to do that. How well do we all work togetheras a company to launch this thing? How coordinated our efforts? HOW INSYNC is marketing and product how how much does sales really have its it's decksand it's pitch together for the category launch? All that has to do with crazysocial dynamics. That has to do with how companies really work together andpeople work together, and we have a few ideas for how to keep companieson the right track, but there's a certain amount of people. Every everygroup, every organization is different and that's a big variable in all of this. So what happens if it doesn't work? What happens if, after all thiswork, all this created, this creative process, the back and forth, the alignment internally that go to launch a new category and it falls flattenits face? Have you ever run into that situation and what do you do? You know? I actually we haven't. We do have clients who they theylaunched their category recently enough so that we're still waiting to see what happens. But really the version of failure that we've seen is there's a couple timeswhere we've had clients who they thought they were hiring us to do marketing strategy, to just do the story that they would be telling, and they neverfull fully got their product and the rest of the cut, the rest ofthe company, on board with it, and in that case it just becomessome stuff we said on our website. It just doesn't really take off becausecustomers can see that it's flimsy, it's just this kind of just something you'resaying. It's not doesn't have substance to it. So unless you get allhands on board, everybody's reading off the...

...same page, it's not going towork. Thanks for all the great insight about category design, Josh. Wherecan people learn more about you and Goldfront? Come on over to gold frontcom.Also, we just launched our own podcast and newsletter. It's called categoryfirst. Well, thanks for listening to another episode of marketing spark. Ifyou enjoyed the conversation, please leave a review, subscribe by Itunes, spotifyor your favorite podcast APP, and share via social media. To learn moreabout how I how PDBSASS companies as a fractional CMO, strategic advisor and coach, send an email to mark at marketing spark dotcom or connect with me onLinkedin. I'll talk to you soon.

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