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're listening to marketing spark. Most entrepreneurs and companies move into existing markets. There are competitors doing the same things, but the entrepreneur believes they've built a better mousetrap. There's already proven demand for a product or service, so it's simply a matter of letting consumers know that there's a new option available. But what happens when you have a product in a market that doesn't exist, or perhaps you'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 heads up gold front, a Category Design Studio that specializes in helping a be to be 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 with a high level question? What is category design and who uses it? Why do why is it important these days? So category design is a discipline often used by startups, but could be used by other, many other kinds of companies to define and lead new market categories. And that idea of new market categories means that you're looking for an entirely new space to compete in and you're not competing in an existing category. And so there's a whole set of ideas and tools and a whole discipline built around that idea of how do we design a new market category for our for our company? One of the things that people may think about when it comes to category design is that as just the latest buzz word, it's something new that...

...consultants have rallied behind so that they can sell different kinds of services. Is Category Design a real thing? Obviously it 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 of people 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 of some 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 strategy was invented there was a number of people who said, if we can define the central DNA of a company and it's products, then our brand strategy could become the North Star for everything that that company does. Right. Problem is that if you go into the startup world, chief product officers, people who run sales, people who run HR, people and the people department, they don't take brand strategy that seriously. The chief product officer is often not going to look at a brand strategy as like yes, I want this to be the North Star for our product roadmap. And so in a way category strategy has come out of that problem that there is no unifying whole company strategy when it 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 do it in a way that where it's just kind of it's not real and it's just kind of like something that marketing, marketing people say, but there's no meat to it. But when it's done right, you're doing it with the CEO, whoever runs product, the person who runs marketing, person who runs sales, all of those executives are agreeing to the central strategy and then they're going to change what they do according to what that North Star is, and when you do that it's really substantial. One of the things I think about when 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 marketing and own that category, at least emerge as the leading business because you've moved first, that is an awesome way to grow and build a business. But the one thing that I would say, I guess, if I was the devil'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 so agile these days that you can move, you can start, you can start a business really easily. What is that alignment between concept and reality and what 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 sense that it's like, Hey, are we really a category creator? Like not everybody can be a category creator, right, but I look at it a different way. I know we work with startups and to late stage startups and companies that are in tech, companies that just ipoed and people that are in that world. And in my mind, those companies are all saying we have a really big idea that's going to turn into a very large market or very large valuation for our company. They're going...

...to investors saying we've got a big idea, it's going to be really successful, that's why you're going to give us millions of dollars. And what category design does in a way is it keeps those people from backsliding into incrementalism. Right. It's like you go into the 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 and that doesn't lead to companies that have a high valuation or end up with really good, like good good outcomes for investors. So in a way category design is just it's almost like something that just keeps keeps founders and executive teams honest that they really wanted to go big in the first place. So that I'm clear on category design. Is it for example, a company looks at the crm space and there's all these sort of generic crm application is out there that serve all kinds of different companies and they decide that they want to create a crm specifically for B Tob SASS marketers, not for anybody else, but just for 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 that category design or is that incremental product design? I don't know. If I don't know 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, customer success, all kinds of things, right the question you're asking. The answer is yes, if you you know it. This all takes place in the mind of 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 doing things, this is actually going to transform the work that I do. That's when they're thinking this is a new category. So if you can get that to tip 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. But maybe 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 so it gets a little bit philosophical here about like well, what it? You know, what is a category in the mind of the customer. But but that'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 something in it in a category that already exists? It leads to to question one is who should consider category design, and number two is how do you get started? What are the first steps you should take? Yeah, so every funded startup should be doing category design. And category design could be as simple as I have an idea and then I look at it through the Lens of category. I I have an idea for a startup. Is that a new category? I have an idea for a product. Is that going to be a new category? You know, that could be the that's the simplest version of category design is that you're always looking at everything that you're doing through the lens of Hey, could this be a new category? And if the answer is no, what would I have to change about that idea in order to get it into that into into the space of being a new category? So you could do any kind of cat you...

...could do category design in a very lightweight way like that. People hire us to do a much larger engagement and they'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 a much bigger thing where we're doing a, you know, three month strategy engagement and doing a deep dive on their business and helping them figure out what's really unique about what they do and how that thing that's unique can can be honed and worked on and made clear that this is a categorical difference, not an incremental difference out in the market place. That's interesting because I do a lot of positioning work with bdbs ASS companies trying to identify how they're unique or different so that they can stand apart from the dozens of, not hundreds, of competitors out there who talk and walk the exact same way. But what's the connection between tragic positioning and category design? Are they? They flow one into the other? Yeah, the really close. In a way, you could say category creation is is a kind of positioning, right when you when you come 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 two big things. One is positioning tends to also often include what's your position with 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 road is closed to you. That's one thing. The other thing is that positioning is seen as a brand or marketing strategy. So it can be hard to go talk 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 product officer 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 the chief product officer is going to change their product road map according to what that category is that you're creating, so that when marketing and sales are going out to tell the story, but not just telling some BS. It's not just like a story they're telling. They you know, product is coming right behind with like really great proof points. So I've created the better mousetrap, I've found some customers, I've I've proven that there's demand for this product and people are willing to pay for it. And now we start to think, wouldn't it be great if I could create a category that I could own, I could move into and really be the pioneer in the evangelist? What are the steps that I need to take? Where do I start in terms of launching this process? Yeah, you know, some of it depends on where you are in the process. But let's say you already do have customers and you have a sense of the domain that you're working in your maybe you're in an existing category, maybe you're in an emerging category. You have a sense of where you play and you have some customers. What I would do, and let's say you didn't you didn't hire us at all. You just we're going to sit down and try to do it yourself. You're going to start with trying 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 uniquely solve? And there will be different things on there. There'll be some problems that we're we unique, we uniquely solved, but they're not that valuable to the customer. They'll be some things are really valuable to the customer but that other 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. Then you're thinking, can I look at this...

...entire list and come up with a single overarching idea for what we call the gap? And the gap is just a concept of what is what is that high level problem that we're really solving for the customer? And you name that gap and you've got a kind of be both true to today and forward looking. When you name that gap and you come up with what is that? WHAT IS THAT GAP? That we really 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've got that gap. So, for example, we wrote the strategy for qual tricks with 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 customers are having and the experience they're actually having. And so, you know, a gap 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 do surveys, we do real time surveys. You know, it's a it's a big problem that you're that if you can, if you can get it right, your customers will hear that and go oh, yeah, yeah, that that that would be really valuable if somebody could solve that for me. So that's the gap. Next thing is you're going to look at your vision for the next three to five years. So you could write down in three to five years what will think. How will things be different for our customer if we are ultimately successful? So in Uber's case, which is another client of ours, they might say we're going to take fifty percent of the cars off the 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 be less cars. Like that's a really cool vision statement. Now that's not just a 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 this will occur and this will happen. So that's your vision. And then there's one more step in the process, which is your category idea. So if you look at the gap and you look at your vision statements, like what will we make happen if we're ultimately successful, the question is, what category are we 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 of categories. So, for call tricks, it was experience management or experience management platform. Right. You'll write different ideas down for the name of the category and then maybe a sentence or two that says what each of those names means to you and you kind of just have to play with all these ideas. Well, what if the gap was this, what if? Well, maybe that would change our vision to this. Well, maybe that would change our category idea to this. And you're sort of triangulating these three things until you get something that really feels right. And you got to look at it as like, can this be pretty much right today? Ay, but could we make it really, really right tomorrow? So there's a lot of kind of INS 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 is true today? Then can, but are we also building a big space for us to grow into this tomorrow? And that's kind of a crux. That's that's kind of the essence of the process of the category strategy. And about two minutes or less. Yeah, it sounds like a combination of subjective and objective or art and science. Yeah, absolutely. And the question I would have is once you've gone through the process, once you've got your product, you've got customers, you decide that category...

...design is something that you want to embrace and you go through this process, you come out the other end with experience management or whatever category game that you've developed. What comes next? What do you do with it, like, what are the next steps in terms of using it for marketing, sales, customer service, all the things that are part of your operational Tiller's ideally, you know, and I know you a lot of your audience, are you in the marketing world? One of the cool things about category strategies if you're a CMO and you bring or you're working in marketing and you bring category strategy into your company, now the strategy that you're doing. It's no longer brands strategy and something that maybe the you know, the people that run product are going to ignore. Now you're bringing in 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 be part of that. The next thing is, okay, if we're all in agreement on this is the category and this is our story and this is the rationale for why we think this is a we've got the business case to go forward on this, then you need to do a category launch and the and a launch happens in two places, inside the company and outside the company and the first most important places it happens inside the company. So that usually is a presentation by the CEO to everyone in the company saying something like today we're changing the trajectory of our company. We're no longer going to be lumped into this category doing something incremental. We're now, you know, category creators, and here's the category that we're creating. During strategy we write something called a category 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 what the 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 what they can do to help manifest the category right. So like people doing recruiting are 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 change your product road map. Everybody in the count every department, has a certain set 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. We call it a category launch. That will happen usually three to five months down 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 category vision presentation at a conference and there might be a number of other things that are 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 get the 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 a competitive advantage have you created? Is it the ultimate tool in terms of outflanking companies that made you something similar, but you've decided to stand apart and not only compete in the same marketplace but be very distinct and in terms of where you 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. That said, 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 there is always the unknown to deal with when you're dealing with well, will people think 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 could do to to like create and win a new category. So, for example, there's a number of reasons why. So, first of all, if you're a startup, people, customers, tend to give more credibility if you say we've created something entirely new. If you if you go to a startups webpage and they say, hey, we're doing this thing, but we made it 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 credibility to that and they sort of zone out on messages like that, whereas if you say we've created something entirely different, and if you know you have a podcast, if I said, well, we're going to change the podcasting game with this new category of podcast product, that we've invented. You at least would give me three minutes to find out whether that's bs or whether there's something really true about that, because it might change your entire industry. And so there's a weird way that by going big with our message and category we're we're we'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 get a little bit of time with them.

And then if we look at things on the valuation side, all up and down the spectrum of you know, of the valuation of a company, from investors to customers, to everything to recruiting, people value category creators and category leaders much more highly than they do to meet to companies. So for qual tricks, for example, they were lumped in with vase when we first started writing category strategy for them and they weren'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 at like twenty five billion dollars. So there's a whole valuation piece to this that that works really well. Also, I did want to fall up with you and in terms of looking at qual trick, I'm interested in really walking me through that category design process with a company that obviously is doing very well and then billion dollar valuation is nothing to Sneeze at. Why did they come to you? What were some of the challenges that then they were facing and why did they think that category design was was a way that they could jump start the growth of their company and jump obviously jumps out their valuation? Walk me to that whole that whole journey with them. Well, you know, we were brought into that project by our my friend Al Ramadon, who has an agency called played bigger. So they brought us into that process and we worked with L and David played bigger to write the category strategy and from the briefing documents that they gave us it was clear that Ryan, the CEO at qual tricks, and the executive team had a very ambitious idea of what the product would be in the future and they had already done a ton of work on that. And so they already had this...

...idea that their product was much more than surveys, and so the thing that they didn't have was okay, what's the 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 the the process was fairly straightforward of taking founders who had a really ambitious, clear idea for what they were creating and then figuring out, like how do we tell the story of that? And that all fell into line pretty quickly. You know, we did, I think, on the first draft of the category Pov we did it was like hey, this is really working. We just need to make a few changes and we're good to go. There's a few other things that we did. We created a set of visuals that showed the category idea working in advertising and kind of customer facing creative. That worked out really, really well. A kind of vetted that yes, this could be the new category and then, from their call tricks, created a launch event and Ryan came out and sort of had his steve jobs moment where he took the cat category Pov and presented it to press and Fortune one hundred companies and you know, it was kind of like wow, this is a huge that you know, is really well received and very successful, because people were like Oh wow, this is exactly what we need. We don't really need more surveys, we need experience management. I guess in that case you knew right 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 long does 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 it sometime 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's a couple things I want to call out. One is you can design the category the Steve Jobs Way, which is like hey, we're not going to do research, we're not going to go ask our customers, we know what's best. 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 thing that we think about this. And and that's absolutely a way that some of our clients work and that will work with our clients where if you can get it into a category Pov, if you can write the Steve Jobs like presentation of this new category and you feel it in your gut and you like I love this, and you give it to your, you know, number one investor and they're like I love this too, you have a pretty good chance that's going to go over really well. However, we have some clients who are like we really need to vet this and make sure this is going to work before we ever go out in public, and so we have something called Category Advisory Community, which is a way that we do research with customers on an 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 working for you? Are you as excited about it as we are, and then build back any any kind of insights that we've gotten, build that back into the category that we're creating. That's one thing, and then the other thing I want to say is you were at basically asking like okay, does it take a while, does it happen? You know, like, what is that all about? Obviously, because we're dealing with the mind of the customer, there's a aspect of this is completely mysterious and we don't know how it's going to go. That said, within that context, each client that we have that is trying to launch their...

...category publicly has a different capacity for how well they're going to do that. How well do we all work together as a company to launch this thing? How coordinated our efforts? HOW IN SYNC is marketing and product how how much does sales really have its it's decks and it's pitch together for the category launch? All that has to do with crazy social dynamics. That has to do with how companies really work together and people work together, and we have a few ideas for how to keep companies on the right track, but there's a certain amount of people. Every every group, 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 this work, all this created, this creative process, the back and forth, the alignment internally that go to launch a new category and it falls flatten its 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 they launched 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 times where 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 never full fully got their product and the rest of the cut, the rest of the company, on board with it, and in that case it just becomes some stuff we said on our website. It just doesn't really take off because customers can see that it's flimsy, it's just this kind of just something you're saying. It's not doesn't have substance to it. So unless you get all hands on board, everybody's reading off the...

...same page, it's not going to work. Thanks for all the great insight about category design, Josh. Where can 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 category first. Well, thanks for listening to another episode of marketing spark. If you enjoyed the conversation, please leave a review, subscribe by Itunes, spotify or your favorite podcast APP, and share via social media. To learn more about 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 on Linkedin. I'll talk to you soon.

In-Stream Audio Search

NEW

Search across all episodes within this podcast

Episodes (93)