Our Online Dialogue colleague and strategist Michiel Jansen has for Marketingfacts Part two of Online Dialogue's ‘good intentions 2013′ triptych written about category busters.

Category busters are products that are not so easily pigeonholed. They create their own market and offer consumers something they did not already know. The owner of the category busters also has something nice to gain from it, namely a blue ocean: a market in which there are no competitors at first. Well-known examples are Carglass, Senseo and the iPhone. In this blog I tell you what makes a category buster so attractive, why it is so difficult to launch one successfully and I give 5 tips to launch your own category buster.

What is a category buster?

A category buster is simply a product that breaks through existing conventions. For which there is no competitor yet, but for which there is a latent consumer need. Senseo, Nespresso and most of Apple's new product lines since 1999 (iPhone, iPod, iPad, iMac, iTunes, App store, MacBook Air) are well-known examples. Category busters link markets and in some cases even create an entire industry in their slipstream, for example, the coffee pod (Senseo) or the app store, accessories and paid(!) music downloads (iPod/Pad/Phone). Losers, by the way, there are usually also following the meteoric rise of category busters: Nokia, Sony (walkman), the desktop, the record companies. Category busters, by the way, need not necessarily be devices. Retail chains like Starbucks, Bodyshop and Quickfit, and services like Easyjet or Carglass are also category busters.

Budget airlines

Initially dismissed by critics as ‘cattle transport,’ Easyjet was so much cheaper and faster that the existing airlines could not compete. The ‘free’ food and drink and loyalty programs outweighed the price difference. Moreover, being able to check in online saved so much time that the budget airline was discovered in no time by businessmen who cut their travel time by two hours. Some 15 years later, budget airlines are here to stay and Easyjet's booking methods and check-in (self-service via the Internet) are the industry standard.

Internet

The Internet is evolving so fast that it produces a relentless series of category busters: Google (search engine that does work and without excessive banners), Hotmail (free e-mail accessible from any computer), Twitter (short message to all), WhatsApp, Messenger, ICQ, SMS over the Internet Dropbox, Shazam, SalesForce etc., etc., etc.

By the way, the term ‘category buster’ has been eclipsed in recent years by the book Blue Ocean Strategy (see reading list at bottom). The blue ocean-metaphor illustrates well what is meant by a category buster: on the wide ‘blue ocean,’ no one is in your way. You can steam along without any competitors in your way. Compare this to the fairway or the boat file in front of a port or lock. Outside the ‘blue ocean,’ there is a lot of competition, and you even have a chance that people who want a particular product because of your advertising will end up choosing a competitor's product in the store or online.

What is the beauty of category busters?

Apple, Easyjet or Carglass have enjoyed their self-created market for years. Category busters provide the parent organizations behind them with a lot of advantage because there is no competition yet. Our idea of a smartphone, booking your flight online and checking in yourself, or a windshield repair, has been shaped by these companies. Competitors are often two to five years behind. Because many less innovative companies are ‘compartmentalized,’ it takes them time to respond to the success of the category buster. If it manages to grow quickly, they make a lot of money and take an unbeatable lead. For years, the media asked the question “Which search engine will be the new Google?” The answer to the question is clear by now. The competitor to Google is not a search engine but a finding engine: Facebook (don't search but find what your friends are doing or like), Twitter (the global village pump), Pinterest (digital scrapbook) or Flipboard (all of these together).

Why haven't we developed a category buster yet?

At Steve Jobs (see reading list) rightly asks why Sony did not invent the iPod. Surely that would be the most logical company to turn 1 + 1 into two? After all, they had their own record company and, as the ‘mother of the Walkman,’ were market leaders on personal audio-area. But then these departments have to think beyond their ‘own’ category and do some innovative work together.

According to the authors, Sony's hardware department and the record company worked against each other rather than innovating together. Apple CEO Steve Jobs, on the other hand, did not pick departmental thinking. He thought of the intended end result and not in business units or departments. Moreover, he set the stage: by only coming up with a single product variant, you make sure no one will see the new product as a trial balloon internally. A lot depends on it, that's a big risk, but if it works, you'll be successful. Leadership is a requirement for innovation.

Most marketers are kings of ‘the minute change’ and then do put ‘new’ or ‘improved’ very big on the bottle. Let's call it micro-innovations. In their particular market maybe just enough to maintain sales but.... maybe in 3 years ‘their market’ will have merged with a few ‘neighboring markets’. Consumers are much more fluid than most companies. Consumers really don't care whether an iPhone is a phone, a computer or an mp3 player. They don't think in categories, they just want one. The same was true of the iPod a few years earlier.

Conclusion and own experience

Innovation doesn't just bubble to the surface in most companies, even if you spend a certain percentage of your sales on research and development. You will have to break through the power of the existing categories, and you can only do that by showing leadership at the top of the company and making cross-departmental decisions. Due to the compartmentalization of companies, many employees have no interest in innovation beyond micro-innovation of their own product. Only companies that drive innovation very strongly will break through these tubes. It is part of 3M's strategy that 40% of their sales in 2015 from new products comes, with the help of the NPVI, the new product vitality index (products introduced in the last 5 years divided by total sales). Intellectual property should not be assigned to a particular business unit, but should belong to everyone.

By the way, this also corresponds to my own experience. You don't often get the chance - especially in the Netherlands - to develop a category buster. I myself have been involved in three in a span of 10 years. In 2008, I worked as an external Sanoma's Big Idea Contest won with an idea that combined their 70 titles into one subscription where you don't cancel, but can switch titles. If you want, it's also done with a few clicks. It is also possible to have multiple magazines delivered at the same time. Part of the concept is that if someone suddenly starts reading home, car or computer magazines, there is probably a buying interest. From the consumer's point of view, switching is much nicer than unsubscribing. For Sanoma, switching is better than the continuous flow of revolving-door subscribers who take advantage of offers and then let them expire and wait for a new 30% discount offer. When you have 70 titles, fostering a discount culture in the marketplace makes you your own biggest competitor. Yet each title goes for meeting its own targets and the cannibalization they thereby cause on the total matters little to them. The existence of cross-title departments at Sanoma is the only reason why the concept is now carefully developed and if www.allesmag.nl launched.

Do you know of any Dutch examples of category busters?

I'm looking for examples of category busters and what you think is the best way to give radical product innovation traction. Additionally, I'm wondering which markets you think are most in need of a category buster. If you leave a comment I'll certainly look into it. If there is enough interest, I think it would be fun to get together sometime for an inspiration and knowledge sharing session.

Do it yourself? Below are the Category Busters Starter Kit with 5 tips and a reading list.

Starter kit: create your own category busters!

The Netherlands could use some more innovative products, so here are 5 tips to develop your own category busters.

Good intention 1: Look beyond your own surroundings

Don't just follow topics focused on your own industry, go talk to customers or visit another company. See how people plan their day or what product experiences they are happy or frustrated about. And .... get surveys and best practices ignored. All your competitors have those too and provide the insights of three years ago. Rather, ask the people who have direct customer contact: service, call center and sales, what they think customers would want.

Good intention 2: Learn to look at ideas critically and from different angles

For example, use the Business Model Canvas (indeed, see reading list) to make sure you have thought through all aspects of the market, the trends and the business case. Too much depends on it to simply assume that your innovation is the next big thing.

Good intention 3: Just do it!

Without an internal sponsor with budget, you quickly become the ‘Willie Carrot’ of the company. Nice woolly ideas but a bit impractical. Get a compact project where you can demonstrate success without much cost and infrastructure. Does it really not work out within your company? Maybe then that company is no longer the place for you....

Good intention 4: Crack some hard nuts

Get management to put innovation on the agenda. In companies that have to show nice stock market figures every three months, it is more difficult than in privately owned companies, but he who does not dare... Enter into the discussion whether the leading product should get the most R&D budget? And the most marketing money. Look up what portfolio strategy is and just ask one day what is the successor to the existing success number and ... in what market.

Good intention 5: Get inspired with this reading list and have fun

It's good for your business to have in addition to your cash cows put something new down. You get more of a trial and error-culture of than a 'shove off and wait and see' culture, and that's worth a lot! Need more inspiration? Read a category buster book that will inspire you.

1. If you only read 1 book from this list, or even just 1 chapter or 10 pages, make sure it's from Karaoke Capitalism is. The book that inspires and explains that best practices always be three years old and already familiar to everyone. Despite the fact that the book is already about 10 years old, it is still current and mindblowing.
2. Alexander Ostwalder has the Business Model Canvas-method described. With this you will learn out of the box thinking by looking at ideas from multiple angles. It also helps to critically consider all aspects of ideas, allowing you to combine innovation with critical thinking.
3. Blue Ocean Strategy is entirely about creating markets that do not yet exist and describes various models for arriving at category busters beyond your market or just outside your market.

Also related to category busters:

4. Inside the Tornado and Crossing the Chasm: herein, Geoffery Moore sets out how to make the leap from a product recognized as good by early adopters to a mainstream category buster. If you Inside the Tornado reads, the Apple versus Samsung smartphone race (including patent wars) appears to be predictable.
5. Steve Jobs. With 8 category busters to your name, you do deserve a spot on this reading list. The book reads well and gives a good insight into how Steve Jobs, despite his ‘blind spots and brusque management style’ was sober enough not to tolerate territorial drift of departments, to test, test, test products and have the guts to choose and take a big gamble every time. Also, his contracts of 1 or 2 A4 sheets could be followed more.
6. The Service Profit Chain is a book from the late 1990s, but is one of the better books, as far as I'm concerned, for showing how innovation and delivering real service and added value is related to avoiding ’mind-numbing‘ work, by giving your employees accountability and trust rather than controlling them with stifling processes.

Originally posted on January 17, 2013 at Marketingfacts