Why some tech businesses need to create a new industry category.

What does creating a new tech industry category mean?

Creating (and claiming) a new industry category in tech is bold. But there’s an equal balance of risk and reward: although you are committing to educating the broader market, you also have the opportunity to build a message that answers your customer’s needs better than what is currently out there.

When creating a new industry category, the type of company you are may remain the same, you may still be a SaaS or PaaS business, for example. But the customer industry category—such as those defined by analysts like Gartner—refers to the type of work, space of mind your business occupies for customers, or the challenges you can solve for them. Recognised industry categories like Data Integration Tools, Public Cloud IT Transformation Services, and Analytics and Business Intelligence (categories from Gartner Magic Quadrants) neatly describe what kind of solutions and services tech companies can provide.

But what if you don’t fit into one of the existing categories? What if you span more than one?

Why would a business go down the ‘category claim’ road?

A company usually doesn’t set out to create or claim a new industry category. The problem they are often trying to solve is two-fold: their current positioning does not fully explain what they do, and whatever labels are out there are limiting.

Leading an existing industry category simplifies things because people can instantly recognise what you do, like being one of the ‘top accommodation booking platforms’ or a leader in ‘Digital Experience Platforms.’ But not everyone has that luxury.

Through our consulting process, when we are developing market positioning and value propositions, the main question we’re trying to answer is, ‘what is the key problem you’re trying to solve?’

Take analytics platform Domo, for example. They had been named a challenger in the Analytics and Business Intelligence Platforms Gartner Magic Quadrant, however being placed in this category meant it was often compared with other much simpler data visualisation tools—and overly commoditised. In reality, Domo’s capabilities went far beyond this, extending into building new applications and cloud data solutions that few others were doing. It meant always starting off on the wrong foot and always having to start with ‘why we’re different from other BI or analytics options’. It meant that the conversations were wrong even before they entered the room.

To solve this, Paal15 helped them position a new category: the Business Cloud, combining data integration, BI, and data apps. Domo is taking steps to claim leadership in this category, educate the market and start customer conversations in the right place.

Matillion is another example. During our consulting process, we realised that the industry category they were in couldn’t fully explain how they helped customers. Matillion evolved from being just an ‘ETL tool’ (compared against hundreds of others) to the ‘Data Productivity Cloud’, a vital accelerator needed for the speed and scale of cloud data.

The perils and pitfalls we have seen of category claims

• Not taking the time to figure out the key business problem and jumping straight into creative messaging without a solid strategic foundation.
• Approaching repositioning from an inside-out perspective, focusing too much on the product and not enough on the needs of the customer.
• Starting at too granular a level and clouding the long-term strategic vision.
• Ambiguity on whom this is all for, not knowing whom the business wants to target (Business or Tech audience? Seniority level? Verticals?)
• The wrong people are driving the exercise, getting too caught up in the technical details.

Key elements essential for category creation success

• Start with the big questions: ‘why are we here?’, ‘what business are we in?’, ‘what is the big hairy problem that keeps executives awake at night? And how do we solve it?’
• Ensure you’re applying a customer-centric vs. product-centric approach to build value propositions that solve customer problems.
• Apply a pragmatic approach to claim your category including things like messaging frameworks and executive coaching to get everyone on board.
• Ensure C-level engagement to define the right path. CEOs, Chief Strategy Officers, VPs and Chief Product Officers are crucial to understanding customer and market needs.

If you're struggling to articulate what your business does and the categories out there today over-simplify or limit your message, you should consider creating and claiming a new industry category. You can only grow and exceed expectations if customers see the full value you bring to the table.

Speak to Paal15 about creating and claiming a new industry category.