Minimum Viable Category Design Part 2
A practical guide to help founders think product-first, not product-only
… Minimum Viable Category Design.
From Part 1
- I wanted to facilitate the adoption of the category design methodology among our Connect portfolio companies.
- The concept of category design fits companies of all sizes and in all stages of their journey, from early days to pre-IPO. However, based on my initial experience, I concluded that its adoption in early-stage startups requires an ad-hoc approach.
- I produced the minimum viable category design (MVCD) model. It combines the Play Bigger playbook for the initial strategic planning phase with a light iterative test.
- I created a step by step steps workshop for MVCD which is currently at v1.0 and I have been testing it out with three portfolio companies. Their processes are still works-in-progress but have originated high potential new categories.
- Equally important, the workshop has always succeeded in providing clarity about the long term mission of the company, and in stimulating insightful conversations about the potential of the category, the future product expansion and, overall, the best way to maximise the value of the company.
- I am sharing this guide with the goal of providing product founders with a practical way to design their categories at the same time they are designing their product.
Let’s do it!
Before the Workshop
CATEGORY DESIGN DISCIPLINE.
First read Play Bigger, the ultimate bible of Category Design. Then read it again. Did I mention to read Play Bigger?
MINIMUM CATEGORY DESIGN TEAM
Next, consider who is going to be on your category design team. It has to be formed by the Founder(s) + the internal Marketing person (if you have it) + one outsider. The Outsider is someone else who can come with a fresh view, be open-minded, creative and strategic. Think of a new board member, the recent hire in Marketing, an external agency which is category design-minded.
Connect Ventures bonus: if you have Connect as your lead investor, I come with the package and will happily run a workshop for you.
You have created a briefing document with background and context that covers the following items: customers, buyers, personas, business model, alternatives, competition, distribution, branding. You have sent this out to the MVCD team 48 hours before the on-site workshop.
Now that the team is formed, the first part of the workshop is aimed at finding compelling short answers to the following 12 questions which help guide the debate and identify the new category and its potential. Carve out half a day.
STEP 1 — CATEGORY DISCOVERY
The most important concept of category design boils down to this: products don’t live in a vacuum but in the mind of the customers. Before customers care about what your product does, they have to understand and classify what problem it solves.
The problem is the proxy for the category.
So let’s start with the problem. And to get to the problem, you start from the insight. There are two types of insights:
- A market insight: something missing in the World that a new product can solve using existing technology.
- A technology insight: an engineering-led innovation that leverages a new technology (e.g. Machine Learning).
1. What was the original secret that led you to create the company?
2. What is the existing problem with a bad solution that people don’t think is yet possible to solve OR the unknown problem that people don’t yet know they have?
3. Articulate who has this problem and why it is a problem.
4. What are the key components of the problem and the possible ramifications of not solving it?
5. What is your solution and why is it unique and different?
So we have followed the Play Bigger mantra “whoever best frames the problem has the best chance of winning the category”. We are getting close. Now we need to connect the problem to the solution. What is the NEW PROBLEM you are solving DIFFERENTLY? This is where the amazing FroTo framework comes in.
6. From: New Problem > To: Different Solution
STEP 2. CATEGORY POTENTIAL
The next step is to assess whether our problem <> solution combination (the category) has high potential.
7. How expensive, frequent and hard to solve is the problem?
8. Is there a Category King already owning this problem?
9. What are the business benefits for the customers and society of solving the problem in this way?
10. Categories create a hierarchy of value. Is your solution to the problem: a. Must have, or b. Nice to have?
11. What are the alternatives that solve the same problem today? Are they large businesses?
12. Does your solution unlock new capabilities that enhance and dramatically expand the size of the market category? If yes, how?
STEP 3 — CATEGORY EXPRESSION
You have identified a new category with strong potential. Now in the second part of the workshop, it is time to give it a name, build a strong company narrative around it and map out the ecosystem around it.
In our experience, when founders want to express what their products do, that is the moment they realise they have a category issue. The most common pitfalls we see are these, in reverse order of severity:
· The Frankenstein: we are a piece of X, and a piece of Y and a piece of Z (e.g. a bank, a SaaS, a payment solution)
· The lazy Homer: let others define what existing category you belong to. Those being the journalists, Angel List, the VCs.
· The Ghost: “something new but I can’t define it 🤷♀️”.
or the most hurtful of them all:
· The shoot yourself in the foot: position your amazing new product in the incumbent category.
Does that sound familiar? In all these cases, you are not actively driving the design of your category.
A. CATEGORY NAMING
You now need to name the category. Defining the name of the category is a big step to helping the world understand the container for the problem. Here some practical tips.
- Language matters!
- Use a combination of 2 or 3 words. Focus on the impact those words will have on the customers we want to influence.
- Keep it simple, powerful, different.
- It is not about describing the product, but the market category.
- Ideally it will become an item in a customer’s budget (i.e. Consumer: Smartphone. Business: Social Media Marketing).
If you are not yet satisfied, you can try my hack, which I call Category — O — Rama.
Here’s how it works. The category name is often an output of two variables: the defining difference of the solution + the existing market.
x = “defining difference”
y = “existing market”
C = x + y
Defining difference ->Existing market
- Ready to assemble -> Furniture
- Online -> Book Store
- On-demand -> Transportation
- Community-driven -> Hospitality
- Social ->Networking
- Total ->Football
- Joy sparking -> Tidyng up
I’ll let you identify the above names that have created these categories and dominated them as category kings. What’s interesting here is that all these companies changed our point of view on a market category that already existed.
I have applied this hack with the three portfolio companies and so far it has worked out very well.
So, now it is your turn. Have fun!
B) POV DEVELOPMENT
The next challenge is to craft your category vision with a powerful point of view (POV). Your POV frames the category problem, presents your vision for the future, and declares your unique answer to the problem. It is the base of a Thought Leadership program you can develop to “own” the problem and the category.
Use the following set of questions as the backbone of your POV. No Geek-Speak. Tell a story. A POV is a narrative, not a pitch deck or brochure or white paper. Make it clear what you stand for, what you stand against, and why people should care. Shoot for around 1000 words.
13. What is your unique vision and what journey do customers need to do to reject the old way and embrace your new way of doing things?
14. Can you explain in a simple way the problem you are trying to solve for your potential customers?
15. What is the solution that solves the category problem differently?
16. If the company succeeds, what will the world look like?
17. What Do You Stand For?
C) CATEGORY ECOSYSTEM
Products don’t live in a vacuum but in the minds of the customers as containers (Problem<>Category). Likewise, companies don’t live in a vacuum but in a broader category ecosystem. You need to outline the following answers:
18. What other businesses are involved in solving your problem for the customers?
19. How do they add (or diminish) value?
20. In the ecosystem value chain, what are the control points on data, money and distribution?
Then visualize on a map these relationships within the ecosystem. It doesn’t need to be a professionally designed map.
This takes us at the end of the two sessions of the workshop. In Part III, I will describe how to validate the new category in a quick and minimum viable way, in order to receive feedback and then iterate.