Category Design
A business strategy in which a company creates a new market category rather than competing in an existing one. Developed and popularised by Christopher Lochhead, Kevin Maney, and Eddie Yoon in Play Bigger (2016). The central claim: in technology markets, one company earns approximately 76% of total market capitalisation in each category; designing a new category and becoming its leader is more valuable than achieving best-in-class position in an existing one.
The core argument
Most entrepreneurs make an unconscious decision to compete in an existing category — to build a “better” product and hope the world notices. This is what Lochhead calls the Better Trap. The empirical case against it: a peer-reviewed HBR study of all US venture-backed tech companies 2000–2015 found that one company earns ~76% of total category market cap. Fighting for “better” means fighting for the 24%.
Category design inverts the logic: rather than fitting your product into an existing market, you design the market for your product. Problems create categories; the company that defines the problem and gets the world to agree with its definition earns the category economics.
Failure cases for the Better Trap: Threads (Meta, 2023 — greatest distribution advantage in app history, failed); Amazon Fire Phone; Red Bull Cola; Microsoft Stores.
How to design a category
1. Frame, name, claim
Frame: Restate the problem in a way that makes the existing solution inadequate. Gojo: “How do I wash my hands in the absence of water?” (reframing from “how do I wash my hands with soap”). The frame must be meaningful to the customer, not just the founder.
Name: Create new language — what Lochhead calls languaging — to describe the problem and solution. New languaging creates new thinking → new value perception. Examples:
- Elisha Otis: “vertical railway” (elevator as category)
- Starbucks: “venti/grande/latte” (coffee reframed as an experience worth $3)
- OpenAI: “LLM,” “training data,” “prompt” (owns the language of generative AI)
Claim: Execute category marketing consistently enough that your company becomes synonymous with the category. The company that creates the category language wins.
2. Backcasting (not forecasting)
Forecasting: stand in the present and project forward — constrained by the present as an extension of the past. Backcasting (Mike Maples): stand in the desired future and look back, asking “what did we do to make this happen?” Backcasting unshackles strategy from present constraints. Complementary technique: reject the premise — abandon all assumptions about the current solution and start fresh.
3. Point of view (POV)
A resonant, transmissible articulation of the new problem and solution. A category POV must be about the customer’s problem, not the product’s features. Marketing’s job is to put the right words in the right mouths — a good POV drives word of mouth. The from-to (FROTO) structure: from the status quo → to the new way.
4. Damming the demand
Category designers compete category-to-category, not brand-to-brand. The competitor is the status quo, not a specific company. A category dam intercepts demand flowing toward an existing solution and redirects it: indoor cycling (spinning) dammed road cycling; Peloton dammed spinning. Neither attacked the incumbent directly.
Marketing execution
Lightning strike vs peanut butter: Concentrate marketing effort into 1–3 annual moments of total saturation of super consumers, rather than spreading budget across 52 weeks. Reach/frequency (peanut butter) is a 50-year-old media model increasingly ineffective in an attention-scarce environment. “I’d rather matter for one week a year than be irrelevant for the rest of the year.”
Super consumers: The 8–10% of buyers who drive the majority of profits and set the professional/cultural zeitgeist. Primary target for category marketing — they amplify via WOM. Category design is the only business strategy whose primary execution focus begins with word of mouth.
Category design vs positioning
Product Positioning (April Dunford’s framework) helps companies find the best competitive frame for an existing product. Category design is an upstream step: if you design the category successfully, competitive positioning becomes largely unnecessary — you are the only thing in your category. Lochhead is deliberately provocative: “positioning in the competitive comparison sense is category design for the cowards.”
Both are valid at different stages. Positioning assumes you have a product and need the right frame; category design assumes you have a problem and need to design the frame.
The magic triangle
Product, company, and category must all be designed intentionally and simultaneously. Category design is not pejorative to product; products fail because they don’t get category-designed. A breakthrough product without a category design is an invention without adoption (e.g., Segway).
Sources
- Christopher Lochhead on Category Design, the Better Trap, and Languaging — primary source; full treatment including Better Trap case studies, languaging examples, backcasting, lightning strike marketing
- Product Positioning — complementary framework; covers the competitive positioning layer that sits below category design
- 7 Powers — consistent framework; category design creates counter-positioning power; the 76% rule is empirically consistent with winner-take-most dynamics
Where mainstream views differ
The 76% rule is specific to US venture-backed tech 2000–2015. Critics note: (1) survivorship bias — failed category creation attempts are less memorable than failed “better product” attempts; (2) many successful companies did compete on incremental superiority within existing categories (Chrome, Spotify, Slack); (3) the cost of category creation (educating the market) can be prohibitive for resource-constrained startups. Lochhead’s response: category design can be done cheaply via POV + super consumer targeting + word of mouth; the comparison is not to cost-free competition but to the cost of competing against a well-funded category queen.