book.chapter Category: strategy redefined

In the dynamic landscape of business, there exists a breed of trailblazers known as category kings. These pioneers do not merely strive to enhance the quality of their offerings; instead, they chart a course into uncharted territories, introducing groundbreaking categories of products or services. Their innovations render previous solutions obsolete, cumbersome, or inefficient. These legendary enterprises don't just create new categories; they establish a magnetic pull that reshapes the market. During the 1920s, Clarence Birdseye embarked on a career as a naturalist with the U.S. government, which led him to the frigid expanses of Labrador, Canada. There, he observed the Inuit people preserving fish by instantly freezing them on the ice, thus maintaining their taste and texture. Fascinated, Birdseye returned to the United States, refined the technique for vegetables, and founded General Seafoods to bring this novel category of products to market. With no existing demand, Birdseye had to construct the entire infrastructure, from freezer railcars to grocery store freezer cases, even prompting DuPont to create cellophane for packaging. Eventually, the Birds Eye brand became synonymous with frozen foods, a staple in supermarkets worldwide. A similar revolution unfolded on a snowy Parisian evening in 2008 when Travis Kalanick and Garrett Camp, unable to hail a cab, envisioned a solution: a smartphone application to summon a ride with the tap of a button. Back in San Francisco, they developed Uber-Cab, which launched in the summer of 2010. The app connected passengers with drivers using their personal vehicles, with transactions secured through stored credit card information. Uber's growth was propelled by its ability to highlight the inadequacies of traditional taxis and offer a superior alternative. The company's confrontations with the taxi industry only heightened its visibility, as evidenced by the surge in sign-ups during a London taxi strike. By December 2014, Uber's valuation soared to $40 billion, a testament to its success in creating a new business category. Uber and Birds Eye exemplify the transformative impact of becoming a category king by forging a new market space. The most captivating companies of today do not simply invent products; they redefine the market by offering something distinct, making prior solutions appear antiquated and inefficient. These companies, like Amazon.com, Salesforce.com, IKEA, Skype, Alibaba, Facebook, and Google, have outpaced their competitors, many of whom predated these kings in the marketplace. In today's networked and social media-driven economy, once a company ascends to category king status, it benefits from a cascade of advantages that widen the gap between it and its competitors. To ascend to the throne of category king, one must master the art of category design. This involves simultaneously crafting an exceptional product that delivers a superior customer experience, constructing a robust company, and nurturing a compelling category. It's akin to building a three-legged stool, where each leg is crucial for stability. Category design is the strategic process of creating and nurturing a new market category, conditioning the market to crave your solution, and ultimately crowning your company as the sovereign. Google serves as a prime example, with its founders Larry Page and Sergey Brin revolutionizing search engine technology by prioritizing links over keywords. This innovation, coupled with the monetization through AdWords, not only transformed information consumption but also reinvented the advertising industry. Google's expansion into various services and the development of Android further solidified its position as a category king. The synergy of product design, company design, and category design can generate a self-reinforcing cycle of momentum. As a new category gains recognition, so too does the company that created it. Category design isn't exclusive to tech giants; it's a strategy employed by diverse entities. Amazon revolutionized reading with the Kindle and pioneered cloud computing with AWS. Corning has consistently introduced new glass categories for over a century and a half. IBM's System/360 in 1964 marked the creation of a new category in computing. Muhammad Ali, J.K. Rowling with her Harry Potter series, Diane Green with VMWare, and Manoj Bhargava with 5-Hour Energy are all examples of individuals or entities that have created and dominated new categories. The potency of category design lies in its ability to unite the right product and company to address a market need, compelling the market to embrace your solution. As the company champions the problem and its solution, the category crowns the company as its king. The ultimate power is achieved when customers recognize the importance of the category and view your product and company as the preeminent providers. It's not branding that anoints a category king; it's the strategic process of category design.