Introduction to Category Creation
Melina Palmer: Welcome to episode 584 of the Brainy Business. Understanding the Psychology of why People Buy. In today’s episode, I’m excited to introduce you to Kevin Maney, co-author of The Category Creation Formula. Ready? Let’s get started.
Announcer: You are listening to the Brainy Business podcast, where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now, here’s your host, Melina Palmer.
Melina Palmer: Hello. Hello, everyone. My name is Melina Palmer and I want to welcome you to the Brainy Business Podcast. Imagine, a new competitor enters your space tomorrow in a big way. Do you feel that little jolt of panic, like there’s suddenly less room for you and you have to fight harder to hold your ground? That instinct is incredibly common, but that doesn’t mean it’s right. Sometimes a competitor showing up is exactly what makes people believe your category is real in the first place, which is, of course, what we’re talking about in today’s episode.
My guest today is Kevin Maney. Kevin spent 22 years as a columnist, editor, and reporter at USA Today, much of it covering technology, and has gone on to write several books, including the definitive history of IBM, The Maverick and His Machine, and the New York Times bestseller The 2-Second Advantage. A decade ago, he co-authored Play Bigger, which introduced the concept of category design and has sold more than 250,000 copies worldwide. Since then, as a founder of Category Design Advisors, Kevin has helped leadership teams at more than 100 companies think through their strategy, and that experience is now distilled into his newest book, The Category Creation Formula.
As you listen today, really think about your company and the category you’re in through the lens that Kevin provides and whether you actually have the right amount of competition or if it might be time to create a new category really quickly. Before we get into the conversation, I want to be sure you know that there are links in the show notes for my top related past episodes and books, ways to get in touch, and more. It’s all within the app you’re listening to and at thebrainybusiness.com/584. For now, let’s jump right in. Kevin Maney, welcome to the Brainy Business Podcast.
Kevin Maney: Yeah, great to be here, Melina. Thanks for asking me to be on.
Melina Palmer: Of course. I’m super excited to chat with you today. Loved reading about your work and learning more. For everyone who doesn’t yet know you, can you share a bit about yourself and the work that you do?
Kevin Maney’s Background and Career Journey
Kevin Maney: Yeah, I guess the short version is that I’ve been a journalist and author writing about the tech industry, big ideas, big strategy things for almost four decades maybe. Yeah, those are the things we start to say that we go wait, that can’t be right. But a lot of books, but one of the books that came out 10 years ago called Play Bigger, definitely the most successful book I’ve been a part of, proposed this concept which we’re going to talk about today called Category Design. And that led to over the past 10 years running a strategic advisory practice called Category Design Advisors. We’ve worked with 50-plus companies over those years, spoken to hundreds of others, and just have this brand new book out called The Category Creation Formula, which is based on that 10 years of basically field testing, field research, studying more about how market categories work and kind of capturing that all in the new book. So that’s where we are today.
Melina Palmer: Yeah, well digging in a little bit on the background there. I mean how, how did you get… were you in journalism first and you happened to get assigned to a tech beat and you go oh I’m so glad that that happened? Or were you really interested in technology and that sort of stuff and happened to get into journalism? Like what’s that background?
Kevin Maney: Like all the best things in life, that happened by accident.
Melina Palmer: I figured there was some serendipity in there.
Kevin Maney: I was a writer from the time I can remember and that’s what I wanted to do in my life. And went to school for journalism and English and knew nothing about technology whatsoever. But I did grow up in Binghamton, New York, which is next door to Endicott, New York, which is where IBM basically grew up and all through my younger years had an enormous presence. And I got out of college, there was a thriving local newspaper at the time called the Binghamton Evening Press and I had interned there. I applied for a job after college and they got back in touch with me and they said, “Well, we have two job openings and one is to be the night cops reporter”—so I’d stay up all night running around after crime scenes—”or you could be a business reporter.” And I thought business reporter sounded more sane. And if you’re going to be a business reporter in Binghamton, New York, the main thing you’re going to cover is IBM.
And so I started doing that, first of all realized that I really liked it. I liked trying to understand what was going on in technology and then trying to explain it in a very coffee table kind of way. And then the other serendipitous thing that happened was this was the mid-1980s, just when the personal computer started to get into people’s lives. And for the first time, people cared about technology. And so, there suddenly was a booming demand for technology journalists and I got to ride that wave. So it all worked out. And then the book thing was another total accident. I was at USA Today, I was their technology journalist columnist. And in the early 90s, I started writing about this thing called the information superhighway.
Melina Palmer: That thing.
Kevin Maney: And I started writing a series of stories about, which was a new concept at the time, how all media was going to become digital and what that would mean. And I ended up out of the blue getting a call from a book editor at John Wiley & Sons saying, “Did you ever think there’s a book in that stuff you’re writing?” And so that turned into my first book called Mega Media Shakeout, which happened to come out right in the middle of the dot-com craze. And, you know, got me into the book business, so I love taking advantage of lucky accidents—that is what it’s all about.
Melina Palmer: That’s life in a nutshell, right? There’s a really great book called Can You Learn to Be Lucky? and in that book, she talks about how so much in serendipity is very much creating and seeing those opportunities when you look for them. And so there are so many people that, you know, if someone asks “Would you do a book?” they would go, “Oh, no, I bet not, someone else is going to write that book,” right? And you think about how different life could have been if you had taken a different road or a different path. But yeah, timing and a lot of it is very fortuitous that you got into that work at the time you did. Cool.
Kevin Maney: And having the attitude of “I could figure that out.”
Melina Palmer: There’s a whole lot of not quite “fake it till you make it,” but like, “I believe in myself enough to know I can make that happen.”
Kevin Maney: Right. I have no idea how to write a book, but I’ll figure it out.
Melina Palmer: Right. Knowing you’ve written so many different types of content, do you have tips for people? I think one thing that people struggle with is coming up with ideas, like the angle or the way to think about something. But also, as you think about interviewing people, do you just pick up the phone and call somebody when you want to talk to them? What a foreign concept, I guess, for us especially. How do you pitch people to be willing to talk to you? What sort of tips do you have for people that are doing research and things?
Kevin Maney: Yeah, well, I mean, of course, it’s different early in your career versus later. At this point in time, I have such a huge network that I just reach out to my network and can find people that way. But early in the career, of course, the other thing is you lean on other people, right? You find somebody else who’s got a really great network. You say, “Who else do you know that I could talk to, and would you introduce me?” And that’s what I did a lot early on. Sometimes it was fellow journalists, but then if you’re talking to somebody in the business, you say, “Who else could I talk to? Would you introduce me?” I mean, those are the two big questions, right?
Melina Palmer: Yes. And the “Would you introduce me?” question is the one that would be harder for most people to ask, yet it’s the really key point in making that happen too. Because those warm introductions really make all the difference in not having to cold pitch. That’s rough, nobody likes to do that.
Kevin Maney: No, no, no. But yeah, the thing about coming up with ideas… there’s two things. One is that if you’re constantly in the middle of things, you’ll have all this stuff sort of swirling around in your brain. But I’ve been friends for a very long time with another writer that I’m sure a lot of your listeners will know, Jim Collins, who wrote Good to Great, Built to Last, all these books. And I remember him telling me something when we were both pretty young. We were talking about this, and he said, “I wait for ideas to find me.” Then I thought about it and I thought, you know, most of the really good things I’ve done in my career, especially the books, have been this combination of knowing a lot about what’s going on out there and having a lot of stuff in my head, but then when a good idea finds me, I know it’s a good idea, right? I immediately can put some structure around it and say, “Oh, I get that. That actually makes sense in the world that I know, and I can see a pathway to making something more out of that.” So I do think that having the patience, in a sense, to let the idea find you is a good way to operate.
Melina Palmer: I love that. And there’s enough of investing that time in researching, being curious, asking good questions, and just talking to people that you start to make connections. I know for me, part of this with the podcast is I’ve gotten to interview so many people with varied backgrounds where I can see a tie between this person’s field of research and that person’s field of research. And I brought them together and they go, “Weird, I never even really thought about that from this angle,” but it’s so obvious to me. And I love those sorts of connection points in the gray area, which I think really ties in so much with creating categories, right? You have to see the thing that’s not there yet and what could be, and what someone might be interested in. So I’d love, as good a transition as any, for you to talk about creating categories. What is a category in business? How do we go about creating them? Why does that matter? Kick us off.
Defining a Market Category
Kevin Maney: Yeah. Well, there’s a couple of things in your question that I would like to address, but let me just start with this, especially since I know how important behavioral economics is to you. And so there’s this one interesting thing, right? Let’s just start with what do we even mean by a market category? One of my co-authors, Christopher Lochhead, had this great saying that most companies treat markets like it’s the weather—like “I can’t do anything about it, it’s just there.” But in reality, a market category is a space in people’s minds. That’s all it is, right? And all those existing market categories—smartphone, laptop, eggs, whatever—these are all categories that exist. We have a space in our mind for them. If somebody says it, we immediately know what it means. Our mind goes to a leader in that space or a particular brand we like. That space exists. Creating a new market category is literally about creating a new space in somebody’s brain.
Melina Palmer: Yeah.
Kevin Maney: And if that’s true, then first of all, it can be created. It’s not the weather. It doesn’t just exist. It can be created, it can be influenced, and it can be built upon and expanded. One of the examples I often use if I’m giving a talk is what happened with electric cars. So 20 years ago, if we were here having a conversation about what car to buy, the only cars we would come up with were gas-powered cars. There had been crappy electric cars that nobody wanted, but there was no space in anybody’s mind that this was an alternative.
And then Tesla comes along and brilliantly starts out by building the Roadster to prove that an electric car could be cooler and faster than any gas-powered car out there, immediately getting a lot of attention and opening up the space in people’s minds that says, “Oh, this is interesting.” Then they continued by not only building more practical cars, but also, if you remember, there’s this point in time when Tesla opened up its patents with the reasoning that it wanted other companies and other big carmakers to make electric cars because that would expand that space in people’s minds.
Melina Palmer: Yeah.
Kevin Maney: And so now you get to this point 20 years later where if we’re going to have a conversation about a car to buy, there are two alternatives. There are two spaces, and they’re not the same ones, right? There’s the space of electric cars and there’s the space of gas-powered cars. And this electric car space is new, but it’s there, and it’s got a bunch of brands in it, and it’s got a bunch of features and expectations of what it’s going to be like. So it was created out of nothing. And any company can do that. It’s just a matter of finding the right thing and the right space to create, and then going about it very purposely.
Melina Palmer: I really love that. I hadn’t made this connection necessarily before, and I appreciate where you’re talking about making the space in the mind. Because you primed it by saying something about how much I love behavioral economics, the concept of mental accounting by Richard Thaler came to mind. This is where we look at how money on a credit card feels different than cash in my hand, which is different than writing a check. If things are in different accounts, we think about that money in a different way. We sort stuff in our brains into those adjacent categories, and it feels like it has to be this or that. But then someone made credit, right? And then you’re like, “Oh, I guess that’s a thing now.”
But can we just create a category out of thin air to say like, “Well, I’m gonna make this thing that no one’s ever heard of”? I think when people think about competition, they see competitors as bad. The point you were making there about Tesla inviting competition may feel counterintuitive to people. The common thought is, “Once somebody else is in the space, I’ve lost, right? I need to be the only one. I need to be so innovative and so different.” Now, why is that thinking wrong?
The Role of Competition and Dominant Design
Kevin Maney: Oh, it’s absolutely wrong.
Melina Palmer: Absolutely wrong.
Kevin Maney: So a couple of things. One, it’s just this idea of the space in your mind, right? If there is just one company that’s saying, “We’re making this thing,” you have some doubts. Is this thing important? Okay, maybe it seems cool, but is it going to be around? You get things like the Segway, right? They build this thing, it’s a fascinating piece of engineering, but we don’t know what to do with it. And nobody else is making one, so it can’t be a real category. Having competitors come into a category reinforces that space and opens it up. Now, you want to continue to be seen as the trendsetter, the expectation setter, and the leader in that category—that’s your job as a category creator trying to win. But you absolutely want others to come in there.
The other thing we lean on is an economist named Paul Geroski, who wrote a book called The Evolution of New Markets. He studied market categories, took them apart, and tried to understand if there was a common pattern. And the simple pattern he described basically holds up and is very intuitive if you think about it. Think of an X and Y axis, right? There are two lines, two trends that are part of this thing. The first is the number of companies in a space. On day one, somebody invents something cool and new, and they’re the only one there. If the world really needs that thing and it should exist, a lot of others are going to see that and say, “We’re going to do that too.” They start piling in with a whole bunch of different versions of that.
One of the examples you can think of is smartphones in the early days. A lot of companies could see that we were definitely going to have these phones in our pockets that connect to the Internet—this was going to be a thing. But you ended up with designs like BlackBerries and Nokias, six different operating systems, and different formats. You want to see that happen because that validates the idea that this category is generally right. So all these companies pile into the space for a number of years.
But buyers, for the most part, are wary when that’s happening because it’s too confusing. “Am I going to buy this thing and it’s going to go away in two years? Is this real? What’s the best version?” So as that is happening, the number of users or the amount of money flowing into that category stays relatively flat. This is like the early adopter phase where early adopters are testing and trying things out, but most of us are waiting.
What Geroski pointed out was that there is always a moment in time when the market basically decides on what he called the “dominant design.” Because we want one version of how things work—not necessarily one brand, but one way things work. In smartphones, that dominant design happened when Apple came out in 2007 with the iPhone. And everybody said, “Okay, this is what a smartphone should be. It should have an App Store, the keyboard on the screen, and the whole ecosystem should look like this.” Dominant design today, no matter what brand you buy—Android or iPhone—pretty much all looks the same, right?
So the dominant design happens, and two things occur at that moment in time. One is that the number of companies in the space takes a dive—that’s why we don’t have BlackBerries and Nokias around anymore. And two, the market takes off because now we’re all comfortable with this thing; the category has been validated. Those lines cross, and a smaller number of companies captures an enormous amount of value. What that tells any company in a space is that the whole “first-mover advantage” is total bullshit. It doesn’t matter who’s first; what matters is who wins the dominant design. It’s great to be first because if you’re first and you stay out ahead of things, you can constantly be seen as the one setting the rules, setting the expectations, and guiding where this category is going, giving you a better chance of winning the dominant design. But as a company, your target and your bullseye has to stay on being the dominant design whenever that happens, because that is the ultimate win.
Melina Palmer: Yeah. And there’s that opportunity when you’re not first, right? You can see how people respond, let somebody else make some mistakes, and you can come in creating that dominant design. Like you said, if you have the idea, don’t necessarily wait for someone else to have it. But you can kind of see, like in the case you mentioned with Tesla, other people had electric cars that were not great, but Tesla learned from it to see what they wanted to do. Apple was not the first smartphone that existed out in the world, but they were able to lean into what was wrong with others to help position and show why theirs was the dominant design.
Kevin Maney: Right. And the conversation we’ll have with a leadership team at a company is to actually put that chart on the wall and say, “Whatever product we’re talking about, where is it in this timeline?” Because if we’re talking about something that’s before the dominant design—where it hasn’t been chosen yet and it’s still chaotic out there—then we’ll say, “Okay, let’s figure out how to go full speed ahead and win that.” But if we look at it and say, “You know what, really there’s already a dominant design and we’re on the back end of that,” then your choice is either to just accept a smaller market share in somebody else’s market—thousands of great businesses do that and that’s fine, taking 5% or 10% market share of a huge market because you’re cheaper—or the other choice is to say, “We have bigger ambitions than that. We want to create, win, and own a market category.” If being in this current category means we’re always going to be the number two, three, or five player, we have to get to something adjacent that seems new and fresh. Those are the two decisions you can make, and that chart can help you make that decision.
Melina Palmer: Yeah. Building on that, how does a company decide like, “Yes, we want to go all in and create the category” versus looking to be a little bit smaller? Is it just that they were excited about it, or like you said, it happens to fit in with some other stuff and they don’t want to put in the investment to make this new thing work? And a related question: is creating categories only for tech and things where we can make an app or do a digital thing? Is that where people get stuck, thinking if they don’t want to go into tech, they don’t have a category they can create? Or how can they see the light for other types of categories that might be in different markets?
Category Creation Beyond Technology
Kevin Maney: I guess I could start with the last one first. No, these categories get created all the time in every kind of market. Tech is an easy example because there’s constant innovation and constant change, and less so in things like groceries or hard goods. But if you think about it over time, everything that exists today at one point was something new that created a new category. There didn’t used to be electric drills until somebody made one. Our firm has been contacted over the years by various industries; we worked at one point with an ice cream company that had an idea for “nighttime ice cream” so if you snack late at night, it wasn’t going to interrupt your sleep. We also recently got contacted by a fragrance company that had a very different idea about what fragrances do. So yeah, it can be all over the map really, it does not just apply to tech. It just happens to be easier in tech because there’s so much change and expected change.
Melina Palmer: Yeah. And these days, what’s nice is that technology can be underlying in making some things possible even if it’s not a tech industry per se. I think there’s so much even in the delivery mechanism for things. You look at Rent the Runway as a clothing company; instead of having to buy things, you’re able to just rent them, use them, and send them back, which is great sustainability-wise and also less expensive. They need to be able to build the infrastructure around a company like that, which definitely leans on technology, but it’s not a tech brand per se. I love how those all kind of fold in together. So we’ve told everybody now: don’t tune out and think it doesn’t apply to you, it definitely does.
What else goes into deciding if it’s worth creating the category or not? Perhaps this leans into looking into finding those “adjacent possibles” or into how they would sit down and do this themselves as a team. You have some advice on that in the book—what might they do?
The Category Creation Formula
Kevin Maney: Well, a starting place is recognizing that creating a new category—creating something that doesn’t exist yet—is harder than creating another version of something that already exists, because you have to do the hard work of opening that space in people’s minds, explaining what this is, and making people feel like this is something important that needs to exist. Whereas if you are doing another version of something that already exists, you can just say, “It’s like this, but cheaper or better.” So there is a certain kind of person or company that wants to do this, someone who has bigger ambitions or really wants to change the way we work and live. There is a level of ambition to it that you have to have.
In doing this for 10 years and working with companies, we kept seeing patterns of how the most interesting thinkers think this through. We kept trying to simplify and simplify what that pattern was so that we could get down to something very simple we could write on a whiteboard to drive a discussion. This is what the new book is about, and it’s called The Category Creation Formula. The most powerful discussion tool that we found in 10 years is this very simple formula:
$$\text{Context} + \text{Missing} + \text{Innovation} = \text{New Market Category}$$
For Context, we’ll tell a company to put their product aside. If all you’re doing is trying to describe your product, you’re basically just having a marketing meeting. Put your product and your company aside, pretend this is day one, and look at who the target customer or audience is. Context means looking at what’s changing around them and what has changed in their lives. That could be new technologies, or it can be the fact that a war is disrupting supply chains or changing energy costs, or it can be society and people’s mores changing. Context is always changing, and the more that the context changes, the more opportunities it opens up to create new things because it’s always creating new problems or new ways to solve old problems.
If you have this deep-dive discussion around the context of your target audience, then that starts to lead to the second piece, which is the Missing—what is now missing in this new context? What is a problem that your audience has been frustrated with for years and never been able to solve? Maybe in this new context we could solve it. Or, does the context create an entirely new problem that didn’t exist before and now needs a way to be solved?
Once you can see what that missing element is in this context, it becomes a pretty easy thing to see what the Innovation needs to be to fix that missing piece. Again, a lot of that can be technology, but it could also be a food, a kind of makeup, or anything. If you put all those things together, you pretty much guarantee two outcomes: one, you’ll see something that is probably new because you’re anchoring this in how context is changing right now, and two, you’re going to see something that matters. You’re not going to go and create a product that nobody really wants, because now you’ve actually seen the thing to solve for people and put together a reasonable story of something that has to exist in the world.
If you go through that exercise, the new product or innovation and the product category emerge pretty clearly. Then you can apply it to your current product and ask, “Does this product that we’ve built satisfy what we’re talking about?” If not, maybe you go back to the drawing board and alter the product. If the product hits that perfectly, now you have a way to talk about this and a way to make it important to the world, which can go out into your messaging and positioning.
Melina Palmer: I’m curious, how often—and you might not have an exact stat for this—does a team come back and say, “And our product hits it perfectly!”? It feels like if you just land right back on the exact thing you’ve already made, maybe you didn’t think about this well enough or look closely enough. I do training with teams that I call “question storming” to make sure we’re working on the right problems. It’s a different approach, but similar in intent. If you don’t come out of that realizing that you’ve been missing something, it feels like you didn’t do it right and just led yourself right back to where you started. Would that be fair?
Kevin Maney: Well, I think there’s a bigger danger of doing it yourself and coming to that conclusion than when you have an outsider’s perspective.
Melina Palmer: Right, an outside facilitator is going to be like, “No, no, no.”
Kevin Maney: Yeah. I wouldn’t say it’s necessarily a lost cause if that’s where you land. At least the one thing you’re going to end up having is a far better way to tell the story of why this thing should exist and a far better message for the market. Because now you’re not doing what 99% of tech companies do, which is saying, “Here’s our thing, you figure out what to do with it.”
Melina Palmer: “We made this cool thing, isn’t it cool? Go find a way to use it, that’s your job now.” Right, exactly.
Kevin Maney: Exactly. This turns that upside down and says, “I understand you, I understand what you need, and I understand your problem. Here’s what a great solution would look like, and by the way, I have a product that does that.” That is a completely different kind of message. Most of the companies we work with don’t necessarily come to the conclusion that their product is entirely wrong, though some have had to redo it. Others realize, “Okay, our product is right for the moment, but now we see what we’re truly about and the journey we need to take people on.” It gives the product team a clear product roadmap because they know exactly what they are solving for. It gives clients that have been around for 20 or 30 years a real direction and a North Star to work towards, and that can be very powerful too.
Melina Palmer: Yeah, that purpose piece is so key. I always think back to the really great Marketing Myopia article from Harvard Business Review from years ago. It talks about people who made buggy whips; if they continued to say, “We make the best darn buggy whips in the world,” pretty soon cars came around and nobody wanted a buggy whip anymore. But if you realize you’re in the business of helping people get to where they want to go quickly, you can pivot based on what people need, even if right now it happens to be buggy whips.
In the book, you also mention the “horseless carriage” as an idea. I love this piece of how metaphor ties in as we find the context of something. To tie a new concept to something similar that already exists in the brain helps people understand it. If you just say out of nowhere, “It’s an automobile,” people might go, “Uh, I don’t know what that means, I don’t like it.” But if we say “horseless carriage” or “electronic mail,” it ties to something we’re already using, helping someone make the connection needed when creating that new category.
The Power of Language and Storytelling
Kevin Maney: No, absolutely right. This is actually based on real academic research that shows how this works. When we work with a company, one of the things we try to help with is language, because having shorthand versions of things, labels, and ways for people to refer to things helps reinforce that category and gives an easier way to communicate it once that language gets out there. An important part of that language is what we call the category itself. One of the most powerful ways to think about it is to take an “anchor word” of something people already know, but put a modifier either in front or in back of it that makes it seem like a new, different version of that thing. We all know what a phone is, and you put “smart” in front of it—now we’ve got something intriguing: a smartphone. Or way back when, we all knew what an oven did to cook food, but you take this new technology and put “microwave” in front of it to make “microwave oven.” People think, “Okay, I know it cooks food, but obviously it cooks food differently.” We try to look for that kind of pairing and try to make something like that stick.
Melina Palmer: Yeah, so key for people. It makes it a nice association process as you understand the context of the problem you’re looking to solve. People are trying to achieve something, so you look at what they don’t have—that missing element in their context. For example, people were sending mail for communication, but it took a long time to get things across the country. It would be great if we could send it quicker, and we can do that electronically, so we made electronic mail. Good for us, right? That’s exactly how that category got created. When you think about it that way, it helps you understand who you are talking to, what they are trying to do, how you are helping them solve that problem in a way they can’t right now, and what the benefit is to them.
Like you said, that helps immensely with the messaging. People will then likely find other ways they might use it that are adjacent to the “adjacent possible” you’ve set up, which is great. Maybe they uncover something you hadn’t thought about yet, and that becomes more of what you do. But picking something to help it become more tangible in the brain and getting enough people on board to realize there’s momentum behind it is key in those early days. It helps get those really loyal fans who love what you’re doing and will follow you as you make continued innovations over time.
Kevin Maney: And you’ve given those fans a way to talk about it. You’ve given them language and phrases so that it can propagate throughout the population. I want to bring something else up that you touched on in your questions over the last few minutes.
Melina Palmer: Please, yeah.
Kevin Maney: It’s this idea of listening to your customers. To go back to old apocryphal sayings, supposedly Henry Ford said, “If I listened to my customers, they would have said they wanted a faster horse.” Your customers know what exists, and they will tell you what is wrong with it, how it could be better, or that they want a couple of other knobs on it. That’s what they’re going to tell you. Your customers are not going to imagine something entirely new. Now, you have to know your customers really well and know enough about them to have that context conversation and understand their problems. But the companies that are going to create a new category have to have the mindset of imagining something that nobody else has yet.
Melina Palmer: Yes.
Kevin Maney: And that is the hard part. It is letting go of “I’m going to listen to my customers and build what they say they want” and instead shifting to “I’m going to listen to my customers to understand them, and then build them something they don’t yet know they want.”
Melina Palmer: Yes! The title of my first book is actually What Your Customer Wants and Can’t Tell You, so the language you’re using there is music to my ears. We’re speaking the same language on this; I knew we were kindred spirits when I read your book. I am all about storytelling, word choice, metaphor, and understanding the people we’re talking to in a way that communicates effectively to make them excited. It’s not about what you care about or even what you would need, because typically your customer is not you, and they need something different.
The person creating something can see what the customer doesn’t see yet, and it requires understanding and empathizing with people in a way that they can’t yet articulate. I always look to the example from Tide with laundry detergent. People were pouring it and it was making a mess all the time. They tried to MacGyver solutions or use duct tape, but they just accepted the mess and didn’t really think about it. When researchers did ethnographic research, they asked, “Why have you never brought this up in focus groups?” And people just said, “I don’t know, that’s just how it is.” They had been doing focus groups for years and nobody ever talked about what a nightmare mess it was to pour the stuff. So Tide created the pourable spout and it changed the whole game. Nobody even thought to ask for it because it was just an accepted norm of the world around them. We do that with so much stuff all the time. If you can step back enough to observe what people are dealing with, ask thoughtful questions, and remain curious, it unlocks so much in life and business.
Kevin Maney: Yeah. If we have a few minutes, I can give you a great example right out of one of the greatest category-creating companies of all time, Apple, as to why the story matters so much.
Melina Palmer: Yes, please.
Kevin Maney: Let’s do a comparison here of this whole formula: context, missing, innovation. We looked at patterns of how people we admired thought about these things, and I realized that every time Steve Jobs introduced an important new product, that’s exactly how he introduced it. Take the 2011 introduction of the iPad. Steve Jobs gets up on stage, and the first thing he does is describe a change in context that we probably weren’t quite aware of yet. He starts talking about how we are starting to consume every kind of media on digital devices—not just listening to music and reading stuff online, but watching movies, sports events, and reading books. He sets the tone of a changing context, and we look at it and go, “Oh, yeah, that sounds right.”
Then he sets up a problem that we didn’t yet know we had. He puts a slide up on the screen and says, “So this is happening. Right now you have the iPhone. Great product, wonderful product. But the screen is really small, and it’s going to drive you crazy trying to watch a movie on that screen. And you have this other great product, the MacBook. I’m sure you really love your MacBook, but taking that to the beach to read a novel is really not very practical.” He sets up this idea that there is a missing piece, a problem we didn’t even recognize we had, and says, “You don’t have the right kind of device for this new media landscape. That’s why we’re introducing this new category of products, and ours is called the iPad.” He puts the iPad on the screen right in the middle between the iPhone and the MacBook, and then goes on to describe why it’s the perfect device for digital media. By the end of that presentation, you’re going, “Okay, I get it. I never thought of that before, but now I can’t unsee it.”
Melina Palmer: “I can’t unsee it!” That is a good phrase.
Kevin Maney: “I can’t unsee it. And maybe I should get one of those,” right?
Melina Palmer: Yes.
Kevin Maney: Compare that all these years later to Tim Cook, who does not operate that way, going on stage to introduce the Vision Pro goggles. He goes up on stage, and the first thing he does is put up a slide of the Vision Pro goggles and says, “We’ve got this cool new product, and here are all the things it does, and here are all the features.” There was no definition of what it’s good for or why we need this; it was left up to us to figure that out, which most people never did, which is part of why the momentum struggled. Apple didn’t lead with a product that clearly answered a consumer’s “missing” need in their context; they thought it was a cool product to make, and once they made it, they didn’t clearly dictate why we needed it. Other than small groups of gamers or early adopters, it didn’t catch on in the same mass way. It really matters how you bring something to market and how you embed it in people’s brains.
Melina Palmer: And just the unveiling of that experience, thinking about the dopamine you get from anticipation and building trust where the audience is part of the revelation. Steve Jobs did it in a way where, by the time the thing got announced, you were completely bought in. Being able to announce that something is coming and getting people excited about it is so powerful.
I actually have a whole episode about the Apple Card regarding this. I used to work in the financial institution space, and the features of the Apple Card were things that almost any financial institution could do, but they just didn’t talk about it in the right way. How you talk about it matters so much more than the exact technicalities of what you’re talking about. Yeah, love it, love it, love it. For everyone who is now so excited to follow you, to get their own copy of The Category Creation Formula, and to learn more—or maybe if their business is looking to create a category and they want to hire your team—what is the best path for them to do that?
Kevin Maney: Thanks. Well, we have a firm called Category Design Advisors, and the website is simply categorydesignadvisors.com. You can find our work there. I also have my own personal site, kevinmaney.com, if you’re interested in past books I’ve done or anything else I’ve worked on. Those are the two main places.
Melina Palmer: Awesome. Well, we’ll put links in the show notes to make it easy, but it’s always great to hear it directly from you. So thank you again so much for coming on the show and chatting with me today. It was really delightful to learn from you and share these ideas.
Kevin Maney: It was a total pleasure, Melina. Thanks.
Melina’s Final Thoughts and Episode Wrap-up
Melina Palmer: Thank you again to Kevin Maney for joining me on the show today. What got your brain buzzing in today’s conversation? For me, there were so many great insights from the book and our conversation, but one of my favorite new terms I picked up from the book is something called “the adjacent possible.” There’s actually a whole chapter on it, and the basic idea is that there’s a narrow sweet spot between an idea that’s already fully built out—where you’re really fighting over scraps of a crowded category—and an idea that’s so far ahead of its time that the market and the technology just aren’t ready yet. The companies that really win are the ones that land right in that space between the two.
The Tesla example that Kevin shared in our conversation illustrates this well. Electric cars existed before Tesla, but they were clunky and people didn’t really want them because the world wasn’t ready. Tesla didn’t have to invent the electric car, but they found the moment when the technology and the public’s appetite finally lined up to really create the category in a very different way.
And this connects back to one of my favorite ideas from our conversation: a category is really just a space in people’s minds. That means you have this opportunity to create something that doesn’t fully exist yet just by understanding how your product or service serves people, what they actually value, and how to message that in a way that helps them see it. That’s a different skill than building a good product; it’s understanding the story your category and company need to tell.
And now that you’ve had a chance to reflect, where do you think your category sits in people’s minds right now? And is there a space nearby that hasn’t been claimed yet? Whether you’re ready to share that category yet, or you just want to share one of your top insights from the episode, while you’re ruminating on that, come share it with me on social media. You’re going to find me as @TheBrainyBiz pretty much everywhere and as Melina Palmer on LinkedIn.
There are links in the show notes to make it easy, as well as links for my top related past episodes and books, including The Category Creation Formula, ways to get in touch, and more. It’s all waiting for you in the app you’re listening to and at thebrainybusiness.com/584. And thank you again to Kevin Maney for joining me on the show today. It was a delight to chat with and learn from you. Join me next time for another brainy episode of the Brainy Business Podcast. It’s going to be a lot of fun, you don’t want to miss it. Until then, thanks again for listening and learning with me, and remember to be thoughtful.
Announcer: Thank you for listening to the Brainy Business podcast. Melina offers virtual strategy sessions, workshops, and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.
