How small business owners can escape price-driven competition by redefining their market and creating a new category instead of competing in crowded spaces.

Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of The How of Business podcast show – dedicated to helping you start, run, grow and exit your small business.

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Resources:

Books mentioned in this episode:
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• The Category Creation Formula: Discover, Design, and Win New Market Categories

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This episode of The How of Business podcast is sponsored by QuickBooks Payroll.

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Transcript:

The following is a full transcript of this episode. This transcript was produced by an automated system and may contain some typos.

Henry Lopez 00:15
Welcome to this episode of the how of business. This is Henry Lopez. My guest today is Kevin. Madey. Kevin, welcome to the show. Thanks, Henry. I’m glad to be here. Absolutely. We’re going to chat today about and explore the topic of Kevin’s latest book, which is about how business owners can escape what often is for us, Kevin, we’re going to explore this crowded, price driven competition by hopefully redefining the space that we’re in. And so that’s what we’re going to explore. You can find all of the resources, everything we talk about, links that we share today, including information about my one on one and group coaching programs at the Howard business.com also invite you to consider joining the Howard business community on Patreon and subscribe wherever you might be listening to this episode so you don’t miss any new episodes. Let me tell you a little bit more about Kevin Maney, and then we’ll get into the we’ll get into the conversation. Kevin Maney is a best selling author a long term or long time rather, business journalist and a co founding partner of the firm, category design advisors. And category design advisors, they help leadership teams define name and lead new market categories, rather than simply compete with an existing ones. He co authored the very popular book play bigger, and that book is what brought the whole category design concept and approach into the mainstream. And his writings have appeared in major outlets like Newsweek, fortune, the Atlantic, wired, USA Today, and then today we’re going to focus specifically, as I said, on his latest book, The title, which is the category creation formula, A Practical Guide to discovering, designing and winning new market categories. So with all that, Kevin lives in New York City. Kevin Maine, welcome to the show. Thanks. Great introduction. Appreciate it. No problem. I appreciate you being here today. So I thought we would start with just defining, what are we talking about when we say category creation and the category creation formula? Let’s start there. What are we talking about here?

Kevin Maney 02:10
Well, so market categories, you know, I mean a category is something like, you know, generic, like microwave oven or smartphone. Mean, those are categories of products. And it turns out that the in whether we’re talking about, you know, on the global scale, or whether we’re talking about, you know, in your small town, the businesses that really stand out and change the way we do things and that we, you know, we remember, we admire, generally tend to be businesses that Bring us a category that that didn’t exist before, something that needed to exist but didn’t exist. You know, you can go to an Uber with, you know, ride hailing and how that before that, we just had tax season, and we had this whole new way.

Henry Lopez 02:52
We had a category there, but they disrupted that category. So that’s part of this as well, right?

Kevin Maney 02:56
That’s, well, you know, we, honestly, Henry, we try to stay away from the word disrupt, because, actually, it created something new, right?

Henry Lopez 03:04
So you look at it as it created something new because, because, to your point, you live in Manhattan, taxis still exist. They’re still there in conjunction with now this new ride share service. Yeah, yeah.

Kevin Maney 03:14
And certainly, sometimes new categories take apart old ones and or make them change. I mean, you know, forever that’s happened, right? You know, television was a new category, right? That made radio into, you know, something different than what radio is before that. I mean, it’s, you know, this has happened over and over in history, of course, and you know, and what we came to realize when we first started this journey down the whole category design path, was that in most market categories. And again, whether we’re talking on a big scale or a small scale, whoever is the leader of that category tends to get all the attention, get most of the economics, get most of the market share. And you know, maybe there’s a number two or number three, but it’s, it’s that that one that really kind of controls and makes the most of that category, so that what we’re saying is like, Okay, if you’re running a business, why wouldn’t you do everything you can to be that one? And so we spent years reverse engineering how companies that did that, did that, and put together some playbooks for how anybody can kind of think through in that kind of in that way.

Henry Lopez 04:18
How do you how do we apply this, though, then Kevin, to the reality, at least in my experience, that there are only so many new categories to invent, so we end up, especially for small business owners, going into crowded spaces and trying to stand out there, right? So, so I get this, but, but what I struggle with is, how do I apply this? And, of course, this happens a lot when we’re talking about, like, say, a Silicon Valley startup, where we’re inventing a whole new software, a whole new solution. But if I’m going into the home services business, for example, that’s already crowded, can I apply some of this same approach and the formula in that space or not?

Kevin Maney 04:55
Yeah, absolutely. So the book is called the category creation formula. Let me tell you. What that is? What is the formula? Yeah, what is form? Because it’s actually, you know, we realized this after, you know, 10 years of working with companies and and it really becomes a very helpful thinking tool for anyone in any kind of market, right? So the formula is very simple. Let me explain the pieces. It’s it’s context, plus missing plus innovation is what gives you a new category, a new market category. So let me explain this, and especially with emphasis on if you’re a small business in you know, a particular city or town. So context means what is changing around your target audience. And that can be like how technology is changing. It can be how the economy is changing, how the population around you is. I mean, there’s so many things and and, and the more that things change, the more that it creates either new problems that didn’t exist before, right, or new and different ways to solve a problem that’s been around forever. All right,

Henry Lopez 05:55
let me interject there, if I could. So in context, for example, it could be that solutions that were available to a certain demographic, that demographic that demographic now has age, or is aging now they have different needs for a particular problem that they have, right?

Kevin Maney 06:10
That could be that could be it. It could also be that, you know, I mean, I know this veers into technology, but still, even technology applies to small business, right? You’re in a town and you realize that there’s this new thing called artificial intelligence that maybe could be applied to something just very in your very small niche, that could actually make a big difference in how something works? What we encourage business owners to do is to start actually in a place that most of them don’t start, which is have a deep conversation with your team about the context, what’s going on with the audience. We’re trying to address, how are things changing? What’s new about possible solutions to old problems? What’s what’s a new problem? Really like try to dig into that conversation is, if you really can understand and put some words around the context, then what you start to see is the next piece, which is the missing what’s missing in this new context? What’s the new problem that now exists, or the old problem that can be solved in a new way that your audience in this new context would be so happy to have solved? And if you can see that missing, it becomes pretty easy to see what the innovation you need to create to solve for that missing in this new context. And if you see all of that, you’re probably creating something new, something new and different that didn’t exist before. And what you want is people to say, you know, the ultimate is, right? Is people to say, like, Oh my God, why didn’t this I’m so glad this now exists. Why didn’t somebody think of that before? I mean, that’s like, the win, right?

Henry Lopez 07:41
And that can happen even in an otherwise crowded segment or industry or market, right, because now I’m carving out a niche within it where I can be unique. Am I following correctly?

Kevin Maney 07:55
You are you are. Let me give you an example of somebody who sought us out, even though he’s not in, you know, a technology space or or a big business space, right? So this is this fellow here in New York. I’m in New York, and he’s in Brooklyn, named Waleed cope. And Waleed had been in the laundry business for a generation, and what he saw when he started to think about changes and population and everything was, was that there are lots of laundromats and wash and fold, like kinds of things that are very impersonal, you know, they’re low cost, they’re not very nice, usually, right? And then, or there’s like some high end concierge, you know, laundry service. But what he saw was that there was a missing in between, which is a very personalized, friendly, sort of a little bit higher end than kind of laundry,

Henry Lopez 08:44
something that was clean, and I actually want to sit down and read a book while my laundry says that kind of an environment, yeah,

Kevin Maney 08:51
some mix between a cafe and a laundry, you know, at a laundry store. So he started this company called the soap box. Has done phenomenally well. It just in Brooklyn, right? And but the thing is that by doing this, he stands out as something different. He’s not competing on price, he’s not competing on a number of locations. He’s competing on being something different from everybody else in that business. And that’s what, that’s what is really, what’s what we’re really

Henry Lopez 09:17
about, yeah, and that’s a perfect example, because, having visited the city often, there’s a laundromat on every corner. There is a wash and fold place on every other corner, there’s a dry cleaner on you I mean, there’s hundreds of these types of providing the basic service of cleaning or helping or allowing me to wash my clothes. He created a new category within a crowded market. Is that fair?

Kevin Maney 09:37
Yes, and within a geography too. Because, you know, he’s, I mean, as far as I know, he wasn’t doing this with the ambition of, I’m going to franchise these across the world or something. It was, you know, my audience in Brooklyn has changed. It’s gotten wealthier, it’s gotten younger and and they’re looking for a different kind of service than exists. So right now, yeah. Henry.

Henry Lopez 10:00
Yeah. The other thing I’ve observed in that segment is, because I’ve, you know, researched this, I’m interested in that segment is it used to be the thought was, oh, laundromats are in poor neighborhoods, not there’s anything wrong with that in poor neighborhoods. Poor neighborhoods where they don’t have washers and dryers. But that has changed. People now see it as more convenient to go where there are, let’s say, high capacity washers, and I get all my wash done in two loads, right? So there’s, there’s different reasons now why people go to a laundromat, not just because they may or may not have a washer dryer at home. Yeah, that’s right, that’s right. But to that end, then that demographic expects a different experience that they weren’t getting.

Kevin Maney 12:07
Yeah, right, exactly right. Okay, I you know, I grew up with a lesson in this that my very, my very first job. So I grew up in Binghamton, New York, and I grew up playing hockey, and there was no skate shop in the city that had, you know, like knowledgeable people and, you know, in good service there, you know, there was a big sporting goods store where you might find some skates, whatever. So this, this guy named Harold beam, who had been in like an Olympic speed skater when he was young, opened this tiny, little skate shop. But it was very hands on. It was, you know, he, he obviously knew everything about skates. I was probably 15, and I went to work for him. I learned to sharpen skates and things like that. But it was, he established something that just was missing in the town. And so he became known. And everybody for, you know, 50 miles around would come to this guy. And you know, that’s, I mean, that’s, that’s what we’re talking about. And then, you know, he has, you know, the other thing that happens when that, when these, when you do something like that, is because we work with these sort of, all these cognitive biases in our brains, and when somebody establishes something like that, it really establishes in people’s minds that that is the leader, and that’s the one to go to, even when others come in to the market.

Henry Lopez 13:23
That’s that first mover advantage. Yes, yeah, well, it’s a

Kevin Maney 13:26
little more than So, because there’s a lot of first movers who don’t manage to, like, actually like to

Henry Lopez 13:32
get to that certain level of reputation and scale to establish that leadership role.

Kevin Maney 13:37
Okay, yeah, you know, we see this all the time, you know. And again, to move towards the big, broad technology things. It’s like Google managed to stick in our heads as the place to go for search. And we all do that. You have like 90% you know, market share of search, even though there are probably or there are other search engines that probably deliver better results, but it doesn’t. We don’t care, because that bias is stuck in our head, yeah,

Henry Lopez 14:00
just like with the beta, Matt, the beta versus the VHS, and which one won there? Yeah. So I get that going back to also, then the context, I think if I’m following that part of it, that first step, it really speaks to whether I’m planning to start a business or I have an existing business, making sure you spend the time listening to the consumer, the buyer, and really understanding what it is that they need, right? So which really is business 101, but I think sometimes we tend to skip that because, you know, I have a passion for food, so I’m open a restaurant, but this, this formula, really requires that we carefully listen either to our existing customer or to our prospective customer. Is that, am I getting that part of it?

Kevin Maney 14:41
You are right, but with a twist. Yeah, I’m gonna give you a twist. There’s a apocryphal quote right from Henry Ford that if I listen to my customers, they would say they wanted a faster horse. Existing customers don’t tend to know what they don’t yet know. Right? They will say, you know your restaurant, for instance, that I. I’d like a, I’d love a restaurant that you know has cheaper prices or something like that, right? So yes, it does involve being paying close attention to your cut, what your customers are saying, what’s going on around them, and understanding that. But it also you have to apply a layer of imagination on top of that, as somebody who really knows a sector and a business and a town or whatever it is that you really know, and be able to imagine something that that your your audience really can’t yet imagine, and then tell them about it and bring them to that.

Henry Lopez 15:30
Yeah, that’s a brilliant qualifier. Because, I mean, if we go back to Henry Ford, he didn’t, he thought a black was the only color people would want, right? And that was one of the ways that Chevy came in and said, No, no, we were going to offer all these colors. And so he got stuck there, right? Because he just assumed, or similar to when the iPhone, before the iPhone, you would have asked, I remember asking my wife, because there was somebody in our family had got one of the first iPhones, and she, I remember her saying, I can’t imagine what I would use that for, right? And now we can’t imagine living without it. But that’s the point you’re making, that we have to then connect the dots of we need to look into the future and say, but if they had this, and that’s what makes it hard, right, if they had this, would they use it and other things where, I think that comes to mind here is, you know, and covid helped it a lot of this. But I think five years ago, if you would have said, the way you make a reservation at a restaurant is you do it online, people would have said, No, I don’t trust that. I want to call and make a reservation. Now, nobody wants to call, right? I want to do it on my phone, right? But that’s to your point, that part of what we have to do as entrepreneurs is envision what somebody might respond to is that, was that what you’re saying in part,

Kevin Maney 16:35
yes, yes, absolutely. Which, which, by the way, you know, again, going back to that, this sort of simple formula that discussion can help you see what that is. But then there’s what we do with that. So if we have a client, and we take them through that process, that thinking, and there’s a lot of other, you know, discussion and thinking tools, but an important thing to come out with is what we end up calling a POV point of view, right? It’s a point of view on the new category, but here’s what’s important about it that, again, most businesses and business leaders don’t do most businesses want to start out by telling you, here’s what we do, or here’s the product and here, here’s what it looks like, right? That’s the beginning. Here are the features, right? Which makes us as individuals have to think like, Well, okay, how do I use that? Or what’s it good

17:19
for? You’re asking me to connect the dots.

Kevin Maney 17:22
That’s you’re asking me to connect that. So the way that we construct, and it’s really helpful to have a narrative story that is not necessarily the story you’re going to like spew every time you talk to anybody else, but, but the world is held together by stories, right? I mean the Bible or the declaration. I mean the words and stories hold the world together, and so having a narrative story that is about why your business exists, and why this new category should exist, and why you’re the one to bring it to the world gives everybody on your staff, everybody that you’re marketing, to something that a common language, a common way to talk about this. And the story should begin with the problem, not begin with your product or your service or whatever. So if the story begins with let me tell you I understand this problem you have, and let me explain it to you, so that you explain it back to you, so that you sit there basically nodding your head and going, yeah. Well, you know,

18:20
that’s me. Yeah, that’s right. I have that problem.

Kevin Maney 18:23
Yeah, if you start with that, then the audience you’re addressing is their reaction is going to be to pull them in, right? Okay, you understand my problem. Like, now tell me how to solve it. So if the POV begins with, like, really doing a deep dive about, like, really describing that problem, and then turning the corner and saying, Okay, here’s a solution that should exist in the world. This is not stay away from that at that point, from yet, from marketing yourself, but but actually explain this should exist in the world. To solve your problem, whether we do it or not, somebody’s got to do this, right? If that’s the feeling you can engender in people, like, Okay, I understand your problem. And yes, you know what? You just described something. God, I really want that to exist. And then at the end of that comes the part where you say, and look, we’re doing this. Here’s why we’re qualified to do this. We’ve had 25 years of, you know, experience in this business and and we know our, you know, whatever. And if you do it in that way, you’ve got a story to tell that’s going to pull people in, rather than a marketing pitch or a sales pitch that makes people kind of go, Whoa, you know, right? You’re trying to sell me something. I don’t understand why I need this.

Henry Lopez 19:31
Yeah, I’m with you. Let me see if I can apply it to an example to see if I’m really getting it. If I think of, for example, me as a consumer of home services, let’s take a plumber. Actually, we had our dishwasher grow out recently, and so we had to get it serviced. One of the biggest things that I so frustrated with is they’ll give you that window. We’ll be there between nine and noon, right? Hopefully, hopefully. And the reality is that that day we’ll find out when they really show up. So let’s say if I started a dishwasher repair service, of which there are a million of them, but. What the story I’m going to tell is the problem you have is setting aside time. You got to take time off of work, or whatever the case is. The story is that I’m going to help you with that problem. You have this problem of being scheduling someone to come service your dishwasher. I’m acknowledging that pain that you have, not the broken dishwasher, is obvious, but the really, the deed, the challenge is that time that you have to allocate to wait for somebody to show up, yeah? If I highlight and speak to that, that’s the story I tell, then I say what we have is an approach that allows me to come in within a one hour window. I’m not saying it. I’m just making that up. Yeah, that part of what, what you’re talking about there is that, is that an example of what that might look like?

Kevin Maney 20:42
Yeah, absolutely, absolutely. And you know, what’s been becomes interesting about that is that the price becomes less important.

Henry Lopez 20:48
That’s right. That’s right, because I’m not attracting the person who is looking for the cheapest price. I’m attracting the person who is looking for the convenience and the benefit of having somebody come in when they say they’re going to come in and fix my problem.

Kevin Maney 21:02
Yep, and, you know, and I love this example, because it’s actually redefining the problem, right? Because, you know, most people think my problem is that I’ve got a broken dishwasher Exactly, exactly. But if you redefine it and say Your problem is time, time you’re busy, you can’t take your the time to do this and redefine it that way. It becomes a whole it becomes a whole new category in people’s minds. Like, right? Yeah, it’s a really great example.

Henry Lopez 21:27
Henry, okay, I get it. I understand if that’s fantastic. This also speaks to, as I was kind of trying to summarize the concept here, the changing I’m putting this is the words that I kind of use to summarize changing, how the customer thinks about the problem and be then becoming the obvious solution. So that’s the example that we’re giving here. Yes, yes, yeah. That’s where the story, part of it comes in. And what you’re saying, of course, is that in my marketing, I lead with that, not we fix dishwashers and we have the best parts, or we use, you know, the best technology, or we have the highest trained technicians. Everybody has that too, that we’re changing the narrative or the story to this ideal problem. And what’s missing was somebody that guarantees a one hour window, right?

Kevin Maney 22:10
Yep, yep. That’s that’s great, that that works. Well, okay, all right, great. Let me take one step back to and apply this to one other thought here is that a market category or a category of business or service or product, or whatever it really is. All it is is a space in people’s heads, right? I mean, you know people, and one of my, one of my colleagues, likes to say that, you know that most business owners think of the Think of the market, like it’s the weather, like it’s it just exists. You can’t change it, right? But that’s not true, because the market exists in our heads. And if it exists on our heads, it can be, you know, influenced and and it can open up new spaces. And so that’s what you’re trying to do here. You’re trying to create a new space in people’s minds that didn’t exist before. You know, an easy example of that is, if you think about, I’m sure, Henry, like you and your family were going to have, 15 years ago, a discussion about buying a car, there was no conversation about, are we going to buy an electric car? We buy a gas pump, right? And because that, that that space in people’s minds just wasn’t there, you know? And all these years later, thanks to Tesla opening it up, and then, actually, importantly, Tesla paving the way for every others GM and Ford and Volkswagen and BMW or whatever, to make electric cars. We now have a vibrant space in our minds that says an electric car is an option. You know, it was created out of thin air, because we can, you can do this with and you can do this on a small scale or a big scale.

Henry Lopez 23:40
Yeah, that’s such a great metaphor. Kevin, I’ve often heard it by other marketing experts talk about a parking space and thinking of it that way, right? That there’s this space in our mind that we hold for these different categories. Here, what we’re doing, of course, is helping people create a new space, huh? I didn’t thought, I hadn’t thought about solving that problem that way, but we do that by first triggering or getting somebody to connect. Yes, I have that problem. Okay, here’s how we do it differently. Yeah, how’s that we solve that problem? As you work with clients small and large, what are some of the other common mistakes that they make that you see related to this topic of differentiating themselves?

Kevin Maney 24:16
Yeah, there’s, I’ll tell you about another thinking tool that can be pretty helpful and, well, this seems like it mostly applies to technology, which it certainly does in a big way. I think it also can have an influence in many different kinds of businesses. So there’s a there’s a concept that we actually there’s this great book came out more than a decade ago, probably, but it’s got by an author named Steven Johnson, the book was basically a study of innovations throughout history and why they caught on at the particular time they caught on. Where Good Ideas Come From. Is the name of the book. That’s the name of the book. Yeah. And so one of the hinges in the book is this concept that he calls the adjacent possible, which actually he stole from biology, and we stole from him, and modified it a bit too, if you think about. Now, there’s two factors that go into when something catches on or why it works. So one is what the technology or the is capable of doing. So in tech circles, it’s, you know, certainly you know what the technology or computers or software or whatever, but you know it could be kind of electric car work and run far enough, or, you know, can you use AI to schedule people so well that that dishwasher repair person would show up, you know, exactly on time?

25:28
So that’s one factor and the other,

Henry Lopez 25:30
does that? Does the technology work, or does the product or service or solution work, right?

Kevin Maney 25:34
Right? And, you know, something crazy like quantum computing is like, outside of the realm of what works right now, but, you know, well, someday it’s, you know, it’s a lab experiment. The other factor is, us humans like what we can get our arms around and decide to adopt. If you kind of graph those two things together, the space constantly moves, because technology keeps getting better, we keep bringing things into our lives. So if you, if you think about that, and think about the business that you’re in, if you’re landing in the space that we would call the possible, right technology exists. It works. Everybody knows what that is, and adopts and brings into your life. If your business is in that space, your categories that already exist, and there’s probably a leader who already has that, you know, winning thing. So your your goal in that space is to try to maybe compete on price or a couple of features, and you’re going to get, you know, some 7% market share, something right? By the way, nothing wrong with that. There are 1000s of businesses that are exactly that, right. Nothing wrong with that at all. On the other end of that spectrum, if you go out into the space of the what call it the not yet possible, right? Technology is still iffy, you know, not really totally working, or the product or whatever, and we don’t quite understand how to use it in our lives yet. If you’re out there somewhere and you you start a business, you say, this is what we’re doing. You might get some early adopters kicking the tires, but most people are going to say, like, I don’t get that. It doesn’t quite work yet. I’m not ready for that. If you’re waiting for like everybody to catch up to that you might run out of time and money before you know it ever happened exactly.

Henry Lopez 27:07
I’m there. I’m counting on those early adopters to buy it, and that’s usually not enough, right, right? So it’s certainly not enough for small business owners with limited resources. I can’t get there fast enough. Can’t get the scale fast enough.

Kevin Maney 27:19
So what Johnson came to realize, you know, over the over the centuries, right? Is that when something really catches on and works is when it lands in the spot that’s this thin band between those two spaces, right? It pushes the concept of, you know, what the product can do, just a little bit beyond, like, what has existed before. So it seems like cool and new and interesting, and it pushes us a little bit to feel like we’re getting something that’s new and different. It’s not the same old thing. It’s not like too hard to understand. And when you can land in that space, that’s when you really make people feel like, Oh, this is really cool and new, and I understand it, and I want to. I want that right so you’re not, you’re not having to. And again, like the the on time dishwasher repairman is a great example. Is right? If you could nail that. And people say, like, I understand why I need that. Understand that that works. Technology works. I get it. It’s it’s better than what’s already in that possible area. It’s not too weird that I can’t understand how it’s going to work. You’re not going to send a robot to mighty dishwasher, right?

Henry Lopez 28:23
Exactly, because, yeah, again, I can wrap my arms around it. I understand how that works. Now, it could be that as the provider, I’m using technology to facilitate that, but that’s not the point. The point is that the consumer understands how that would work,

Kevin Maney 28:37
yes, right? And also believes that it’s something new and interesting, right? If you can land in that space. The other important thing is to understand that that space constantly moves forward, progresses. If you’re really smart about it, then you tell the story of what you can do now landing in that adjacent possible. But also have a hint of, I know where this is going. I’m going to be able to take you on a journey as this capability, this product, the service, gets, you know better, you know, maybe and again, I’m sorry to keep going back to this metaphor you set up. But you know, in the dishwasher repair thing, if today I could say, you know, we use AI so we can schedule a repairman, is going to be there within a one hour window. But you know what? This is going to get so good that within the next two years, we’re going to be able to tell you what exact time, and it’s always going to be at the exact time. And we can envision a day five years out, when, when we’re going to send a robot to fix

Henry Lopez 29:32
your or the dishwasher is going to self diagnose and send us ahead of time what’s broken. So we’re right, exactly. So there’s we not happened with the dishwasher. Continue with that story. He came, oh, this, this pump is broken. We got to order the part. Okay. That would have saved me time money again. Now I have to schedule a second visit for him to come out, because he had to get the part.

Kevin Maney 29:53
Yep. That’s, that’s great, yep. And so you’ll be able to make people feel like you’re going to take them. On a journey as things change and get better. That’s, that’s a powerful place

Henry Lopez 30:04
that also, I guess, Kevin creates, I don’t know, in my words, some stickiness. This is still my provider with this, because look at how they continue to innovate to help me make my life easier. Yeah, yes, exactly yes. All right, and that’s what they expect. You know, I guess that’s one of the reasons, for example, that people stay loyal to Apple because they are excited and waiting for the next upgrade or the next feature. And they’re excited it’s going to be even better wait till the next version of it comes out, and I’m going to line up for it because I want the next technology boost. Is that fair?

Kevin Maney 30:35
Yeah, yeah. And there’s a sense of the that Apple, Apple’s a great example that, because there’s a sense that Apple is going to help me move to the future. I’m not going to be left behind if I’m

Henry Lopez 30:46
exactly if I stick with them, they’re going to help me get there and leverage that technology I get it. So the opposite of that, then back to the question about where you see people making a mistake is is, is not taking that approach. It’s not helping people with knowing you’re going to take them on this journey. What is the common mistake that you’re seeing related to this?

Kevin Maney 31:08
Two mistakes. So one is that we’re going to land in the already possible

Henry Lopez 31:13
got it? That’s where we went off on talking about Steve Johnson’s book, and

Kevin Maney 31:17
we’re going to end up saying that we’re 10% cheaper and always you’ll be fighting that battle. That’s one mistake. The other mistake is to be too far out, right? So that people don’t believe this thing is going to work, or don’t understand how it’s going to work. That’s a mistake. Yeah, and even if you do the great job of landing in that adjacent possible space, overlooking having that story to tell that says we know how they were, stick with us. We’re going to take you on a journey as technology changes or as things change. Love it, or is the or is the town changes, or whatever you know the changes are about. But that’s and again, that all that all circles back to if you’re a business owner, the most important thing you could constantly keep your finger on is that context is making sure you understand how things are changing so that you can constantly be on top of the right problem.

Henry Lopez 32:06
And I have found in my years in business ownership, Kevin, that one of the ways to do that well is to be as close to the customer or the client as possible and listen to and observe and watch and study how they’re using if you have a current solution, how they’re using it? I’ve always found that to be critical. What can happen to us as business owners, as we can as we grow, start to separate ourselves from talking to the customer. Does that make sense? That that’s partly where I continue to be in in that context?

Kevin Maney 32:35
Yeah, yeah. No, it is. But it’s more than just talking to the customer, right? It’s because you want to understand, like, everything that’s going on around the company, around them, yeah, yeah. So again, going back to the example,

Henry Lopez 32:47
because, again, the customer is not going to necessarily tell me, oh, but if you did this, I really would love that they there. Don’t know that I need to put that together based on their lives and the context around them that’s evolving, yeah.

Kevin Maney 32:59
And your customer is not necessarily going to, you know, be the one that walks in and says, you know, but you know, but my the neighborhood’s changing. It’s, you know, people are getting older, or whatever is happening. And, you

Henry Lopez 33:09
know, they don’t see the macro, necessarily.

Kevin Maney 33:12
And that’s my job. You need to do that. You need to do that. Fair, fair,

Henry Lopez 33:15
great stuff. All right, so the book, again, that we’ve been referring to, that Kevin Manny has just published is the category creation formula, A Practical Guide to discovering, designing and writing new market categories. And then thanks for the other book recommendation by Steven Johnson, where good ideas come from. I’ll have links to Kevin’s book as well as that book on the show notes page to this episode at the how a business com. Let me step back, Kevin, why did you write this book?

33:40
Your question. So 10 years ago, 2016

Kevin Maney 33:43
and again, you started about off by telling everybody, I mean, I’ve been a journalist, writing about the tech industry and an author of many books over the over the years. And that was, that was, you know, my career. And 10 years ago, I was a co author of a book called play bigger that caught on right? It sold super well, and and play bigger, was the book that introduced this concept of category design, and I wrote it with these other Silicon Valley guys, and turned into something that, once the book was out, that like CEOs and investors and whatever we’re calling us to say, please help us do what you wrote about in the book. So that. So I started a consulting business to actually, like, do these category design projects with companies. By doing that for 10 years, I, you know, I and my business partner developed new concepts and new ways of thinking. The category formula we talked about, the adjacent possible. These were all things that are didn’t exist in the play bigger universe. Back then, we didn’t know about them. I’ve also been worked with, like, we’ve worked with like, 50 companies over the years, spoken to hundreds more, and through all of that, learned a lot about, like, what works better or what doesn’t work from the previous book, you know, new ways of doing things. So all of that, we decided, like, we’ve learned so much in 10 years, and captured all of that. This new book, and we framed it as essentially, like we’re just going to give away what we do and how we do it, so it literally is a step by step.

Henry Lopez 35:09
Yeah, this is more of a how to book, then then play bigger was,

Kevin Maney 35:13
yeah, it’s absolutely it’s just you could run this playbook and you read it, understand exactly what this is all about it. You could run the play that we you know, that we do with large clients.

Henry Lopez 35:24
Excellent, excellent. You know, I think one of the key takeaways here on this topic of the book and our conversation is this is the big challenge for us as small business owners, is for all kinds of different reasons. We end up in saturated markets trying to differentiate ourselves. At the end of the day, we end up then competing on price, and that that’s a downward spiral. So this is a great way to even within those saturated segments, identify where we can create a whole new category, as we have defined here today.

Kevin Maney 35:57
Yep, I’ll tell you another story that, because you’re asking about mistakes, right? And so there’s one other interesting mistake, and I can tell you a story that goes along with it, that is completely outside the realm of technology or usual business. And that mistake is actually creating a category that doesn’t matter or that nobody wants, because you that’s also possible, right? You could go through this whole exercise and, you know, create something that seems brilliant, but and one of the stories we tell in the book is about the knuckleball in baseball, and because so empirically, I ran, ran the numbers, and of all the knuckle wall pitchers that have ever pitched in Major League Baseball, 12% of them are in the Hall of fame. Of all the players that ever played in baseball, 2% are in the Hall of Fame. Wow. So you could derive from that the idea that you know what the knuckleball is, actually a very effective pitch, and in fact, there’s a lot of advantages to it, because pitchers can pitch more often that doesn’t tire their arm out. Knuckleball pitchers tend to pitch into their 40s, because they don’t get burned out. There’s all these advantages. And yet, baseball has decided that the only pitchers that really wants are ones that can throw 95 miles an hour, interesting. And so there’s this whole spiral effect that, because that’s what major league baseball wants. I mean, nobody teaches a kid how to throw knuckleball so no more knuckleballs. And more knuckleball pitchers don’t come up. There’s only one knuckleball pitcher in the major league now, by the way.

Henry Lopez 37:24
And does the MLB not want that because there’s less home runs, less hits? Is that? Why or why do they not want that?

Kevin Maney 37:31
It’s, you know, the the the industry, the sector, whatever, yeah, has made a collective decision that the pitchers at once are hard throwing pictures, that the knuckleball is too weird and unpredictable. We don’t know how to coach it. And you know, and even though you could potentially prove that the knuckleball would actually a double picture, would

Henry Lopez 37:50
actually, especially in this era of analytics, you would think the numbers point that way. But anyway, so.

Kevin Maney 37:56
So essentially, the knuckleball is a category of product that the audience doesn’t want

38:04
interesting. That’s a good example, yeah.

Kevin Maney 38:06
And so that’s, that’s not a place you want to be. And by the way, you know, you hear the, you know, it seems like a cliche that, you know, oh, you know, somebody else is. Some competitors came into my category, and so that helps validate the category. You think that’s like writing it off, but it’s actually important, because if you see others saying, we’re doing this too, it means that you’ve done you’re created something that should really exist and that people are going to want. And if it doesn’t happen, you probably should take that signal as like, well, maybe this isn’t the greatest category to be in, right, right?

Henry Lopez 38:40
And it goes back to the, you know, the point of being that pioneer? Well, pioneers get arrows sometimes, right? So, and then they end up dead before they can get to maturity. Another wonderful analogy there. I get what you’re talking about there. All right, let’s, let’s wrap it up. Kevin, what’s recap here? What’s, what’s one thing that, if I’m listening as a small business owner, I’m looking to start my first small business. What’s one key takeaway from this conversation?

Kevin Maney 39:03
I think there’s a very simple one, which is, it’s better to be different than to try to be better. And different is what sticks in people’s minds and wins you loyal customers, and separates you from having to be competing on price or features. And you know, this methodology that we have is one way to try to figure out how to be different.

Henry Lopez 39:24
Love that the challenges, though, I think, though, is it’s harder to be different than to be better. Is that fair? Absolutely, absolutely, especially when my better is, oh, we’re just going to deliver better customer service, or I’m going to have a cheaper price

Kevin Maney 39:39
and, it, you know, and it’s and it’s easier to think about better too, because it’s like, okay, I know that this thing exists and how it works. So I can go into that. I know there’s an audience for that.

Henry Lopez 39:49
So I’m going to deliver the same mouse trap, but mine’s going to be a nickel cheaper, or I’m going to bundle it, or whatever that might be.

Kevin Maney 39:55
And again, going back to, there are a zillion businesses that are like that. And. Many people make a great living doing that, but if you want to be more ambitious, if you want to be somebody who really stands out, then making that leap to different is the way to go.

Henry Lopez 40:11
Love it. Where do you want us to go to find out more about you? And also, the book is available anywhere you might buy a book. It’s available on Amazon. But where do you want us to learn more about you.

Kevin Maney 40:21
Well, there’s a there’s a site for the book itself. Okay, great. Category, the category creation formula.com, can go there. And, of course, I’m Kevin Manny. I have my own website that has all the different books and writings, and I’m a musician and composer, and I have that stuff up there too.

40:41
It’s any renaissance man.

Henry Lopez 40:44
You’ve done it all. The category creation.com is that what you said the

Kevin Maney 40:48
website was the category, category, the category creation formula.com.

Henry Lopez 40:52
Formula.com. I thought I was missing something there. And I’ll have that link on the show notes page for this episode as well. In case you’re listening somewhere where you can’t write it down. Just go to the Howard business.com search for Kevin or the category creation. It’ll come up and I’ll have a link to that page. This is a great book. Thank you so much for this conversation. Very enlightening, very valuable and actionable, which is also what I always love. Thanks for being with me today, Kevin. Thanks for having me, Henry. This was fun, excellent. This is Henry Lopez. Thanks for joining us on this episode of the how of business, my guest today, again, Kevin Maney, I release new episodes every Monday morning. You can find the show anywhere you listen to podcasts, including the how a business, YouTube channel and at my website, the how of business.com thanks again for listening.