Throughout my career, I’ve been drawn to companies that pioneer new industrial categories. When I joined Tesla in 2011, the Roadster was the forebearer of today’s massive electric-vehicle industry. And in their own respects, the previous companies I worked at were remaking the markets for solar power and semiconductor manufacturing.
Over the last decade, “category design” has become a hot topic in the business world, especially in fields where technological advances have opened up new ways of approaching longstanding problems.
But it can also feel like a buzzword. As an investor, I’ve seen many startups that describe themselves as “category defining,” but only a few that actually are. Where companies are successful in creating new, meaningful categories, there is one strategic commonality: a focus on market education and community.
Experts in growth strategy have credited market education as key in category creation. In other words, it’s not just educating people about new solutions, but enabling them to see their not-so-obvious pain points as well. Thought leaders in this area have even published a playbook on category creation that has proven to be a very effective blueprint.
The drive to be a category creator is clear, and the benefits enormous if you succeed in dominating it. According to the playbook’s authors, “category kings” capture over three-fourths of the market cap of their category. Bringing incremental innovations to market are likely to result in smaller wins.
That said, the process of designing and creating a new product or service category takes time. One of the companies we partner with, Instrumental, is doing an exceptional job of this in the manufacturing space. So we asked Instrumental’s co-founder and CEO, Anna-Katrina Shedletsky, how she is approaching category creation and community initiatives — and where she has found success.
What is the category Instrumental is creating?
Instrumental is a manufacturing-optimization platform, which is a category of software solutions that collect data, intelligently transform the information, present it in context (often in real-time), and drive action for continuous improvement in manufacturing.
By design, we chose a name that includes an existing concept, “manufacturing optimization.” It’s the gold standard for improving a product or process in manufacturing — you can read about it in textbooks. This concept is quite encompassing: It spans from one-time optimization exercises that a Big Three consulting firm will do for you, to incremental continuous improvements made bit-by-bit on factory floors.
Instrumental is among a group of companies across multiple different kinds of manufacturing that are solving traditional optimization problems with the scale and impact of the one-time deep audit, but with less effort than the bit-by-bit approach. The different companies in the space are looking at the problem from different angles, but with the same goal in mind: continuously finding patterns and opportunities that aren’t immediately obvious, but have huge impact.
What was your motivation for creating a category?
We believe that manufacturing can happen significantly faster and more efficiently if leaders have a clear way to both understand and discuss the challenges they’re facing — and see how others are tackling those same challenges. There wasn’t really a name for that pain, so there wasn’t a space for those conversations.
Usually companies get “put” in a category by the analysts that cover the space. For several years, Instrumental defied initial categorization — analysts told us we were a “new business.” But, a new category isn’t a category until there’s a significant amount of business already in the category — a classic chicken-and-egg situation. We saw a bunch of similar, even competitive, companies who likely also defied categorization. They were all tackling the manufacturing optimization problem in different ways with different datasets (machine data, product data, video of workers) but the same mission: collect data, intelligently transform it, present it in context, and drive action for continuous improvement.
So we gave it a name, we started talking about it and developing the vocabulary around it. We’ve started pulling other companies in. Back in 2019, Googling “manufacturing optimization” wouldn’t yield many results, just references to textbooks from the 1980s. Now, it’s a core keyword with ads running on it.
How do you go about designing a category?
The authors of the playbook mentioned earlier talk about organizing a category launch, or “lightning strike.” Since our motivation for creating a category was to create a vocabulary that a large segment of our industry could use to talk to each other about their challenges, we knew our “lightning strike” needed to include those people, so we designed an event. I was inspired by Salesforce’s aspirational name for Dreamforce, so we called it Build Better — and we got over a hundred people to show up to a day of content talking about manufacturing optimization and sharing their challenges.
This year, the Build Better Manufacturing Optimization Summit is happening on February 16, and it will be virtual. We’ve got several hundreds of engineering and manufacturing leaders across electronics who are excited to learn best practices directly from their peers, to reflect on the misalignments within their organizations that drive dysfunction, and to consider how technologies can be leveraged to level up how they build.
Tell us more about Build Better and the Manufacturing Optimization Summit.
Through our customers, we discovered that most of them learn best practices in one-on-one conversations with peers or former peers. There’s no one existing place where engineering and manufacturing leaders go to learn. That was a space we could fill in an authentic way that’s aligned with our mission as a company, and the ethos of the category we’re building.
This year, we’re focused on three key themes:
- The deep-seated misalignments between all of the different parties that enable a product to come to market — and how that holds everyone back
- The acceleration of digitization and technology as companies adapt to developing and producing products entirely remotely
- The coming wave of consumer sentiment for sustainability in manufacturing, and how that impacts everything from material selection, design, and manufacturing processes
And registrations are open until February 15!
What advice would you give to other leaders who are considering creating their own category?
Not every company is well-suited for category creation. Some great businesses are built in existing spaces. But some companies simply don’t fit anywhere, and if you think you might be building one of those, start thinking about it early — even if you don’t act on it right away. The most valuable part of the category-creation process was getting really clear about what problem we solve. I knew in my heart what problem we were solving, but had always struggled to articulate it in a clean and simple sentence. Focus on that first.