Creating a new category is a long, hard, and expensive process. In the best cases, customers quickly see the value in the new category, change their ways, and adopt the new way of doing things. Even these seeming overnight success are the results of years of innovation and foundation building. They take time and a lot of money.
However, when the target customers are risk averse and the category creators are early stage startups, an innovator may simply not have what it takes to establish the category on their own.
For example, IT decision makers at large corporations are, almost by definition, risk averse. A big part of their job is to make sure that the company’s information infrastructure is always available. They are always busy behind the scenes keeping everything running well. No one notices when IT does their job well and everything runs as expected, but as soon as something fails, everyone starts pointing fingers at IT. Therefore, IT leaders often live by the mantra “if it ain’t broke, don’t fix it.” They are reticent to make changes, especially when those innovations come from unproven new vendors. By sticking with the long established industry “best practices”, even if something does go wrong, the IT leaders can claim that they did everything “right.”
So, what does it take to change their minds? Category makers need to develop a compelling story that explains why the long established industry standards no longer work or will soon cause major problems. They need to educate IT buyers on how their technology overcomes these challenges, and they need to convince those buyers that implementing their new solution is actually the lowest risk option for buyers. They then need to tell that story over and over again through multiple platforms with a high level of consistency so that it starts to sink in and eventually become ingrained in how potential buyers think about the future.
But early stage startups lack the three things most critical to creating credibility and trust with potential customers. First, they haven’t established their brand. Customers have never heard of them. They have no reputation and there’s no reason for customers to take a chance on them. Second, early stage startups often offer a relatively small part of the total solution. IT decision makers will need to combine the startup’s part with parts from other vendors to have a complete solution to replace the status quo. That increases both the effort and the risk for the IT leaders and often simply isn’t worth it. Third, telling the story loudly, persistently, and consistently will typically require a level of investment well beyond the resources of an early stage startup.
A powerful move to overcome these challenges is for startups to pull together into a coalition to clearly establish the viability and value of the new category in the minds of IT decision makers. Together these startups should develop one consistent compelling story that each can each tell over and over again to awaken potential buyers to the risks they are already taking and to position the new category as a great solution. Their combined voices create greater credibility and their combined spending creates greater reach. The unique capabilities each startup brings to the table adds to the overall value of the category, providing a more complete solution for the customer.
Click the link below to read my full article on what this looks like in practice.
Let me know if you need any help on your category making journey, whether that be on your own or as part of a coalition.