Creating category innovation in an entrenched market

Many of today’s start-ups are born from a "me too" idea, the tweaking of a current product or solution to make it incrementally better. While those businesses often do achieve success, it is highly unlikely they will achieve "unicorn" status.

The true unicorns are the visionaries who create an entirely new category in an entrenched or ignored market. Usually these entrepreneurs are motivated to solve a well-known but ignored problem - something often accepted by consumers as the norm – and do so by applying a simple, customer-centric solution delivered in ways contrary to what’s expected. These entrepreneurs aren’t focused on simply pushing a product, they are focused on re-training consumer perception to create a mind-shift or movement - in the most wildly successful way, of course.

Category creation feels different

There is no way to properly describe the deep satisfaction and adrenaline rush that comes from innovating a solution that adds value and improves quality of life. When you develop and deliver a solution that customers tell you they "couldn’t imagine having previously done without", that’s when you know you’ve hit unicorn gold.

Even more complicated than creating category innovation is creating a new category in an entrenched sector such as telecom, healthcare, aviation, pharmaceuticals, auto, or other saturated industries is not for the weak. It takes tremendous imagination, foresight, courage of conviction, and the strength to challenge the status quo. These are your Steve Jobs, Richard Bransons, Jeff Bezos, and Elon Musks of the world - and if you have what it takes, it can also be you.

What separates the true innovators in entrenched markets from the followers are a few fundamental elements, that in combination lead to success for a start-up where previously only the mega corporations played: a deep understanding of the competition, the boldness to buck tradition, leading with vision and surrounding yourself with people that share your 'why'.

Search out the entrenched markets for your opportunity

By nature, entrenched markets are ripe with entrepreneurial opportunity. The next time you have an experience where you think, "that was awful and why do we do this that way?" and the only answer you can get from people is "because that’s the way we’ve always done it," you have found your opportunity to carve out a new category and create category innovation.

Identify the game-changer

Having an understanding of the void you are filling isn’t enough - you also need to fully comprehend who is effected by the problem, their particular interests, and even the interests of other stakeholders. Evaluate the current competition beyond superficial differentiators and think about how you can change behaviors, not just make dollars. And consider how much the current solutions in the marketplace cost and how your solution may outweigh the benefit or value they already provide. Consider who is the payor, current customer and consumer and could those roles change?

Break the mega market rules and make your own

Successfully creating a new category in an entrenched market relies on doing things differently. In a developed market, the traditional barriers to entry are generally cost-prohibitive for a start-up, because they are already set up to keep out new entrants by the power players in that space. So, find a different route to your customer. Identify who the influencers are in your space, how they communicate with their audience, and how else your customers can access your product?

Using tools and models from other more innovative industries and applying them to the entrenched one you are attacking can be one way to break in without a frontal assault, which would almost certainly get you nowhere against big players.

Trade shelf space for virtual space

Amazon has opened up tremendous opportunity to start-ups that manufacture products. For instance, medical device distribution is highly entrenched and the margin shrinking - my company PELV-ICE uses Amazon as a distributor, fulfillment center and warehouse, all at very low cost. Having a product that is available globally without complicated, margin-shrinking distribution deals is becoming more and more viable. Also, having a global online presence will introduce brick and mortar retailers to your start-up and can even reduce the cost of hiring a sales and marketing force. 

Know your 'why' like your own name and repeat it often

Your 'why', as Simon Sinek so eloquently explains, is the core of your innovation and it should guide everything your company does, the ways in which your product works, and how is delivered to the customer. Surround yourself with people and organisations that chant your why with you. 

Be the small fish in the big pond - but have big fish on your team

As a start-up creating category innovation in an entrenched market, you must have strategic alliances with companies and experts that are larger than you. If you have a compelling value proposition, then large suppliers, factories, and leading experts will take a gamble on your innovation and success. They will lower minimums, allow exceptions, and even attach their enforcement to your innovation. When these three things happen, you’ll know you are well on the path to success.

Understanding these innovative niche strategies for breaking into an entrenched market with a new category, and putting them to use in combination with your product or solution - always guided by 'why' - can lead to the birth of a unicorn. It is the truest unicorns that create change by putting the vision before the sales goals in the marketplace who achieve lasting success.

This is a guest blog and may not represent the views of Please see for more details. Thumbnail image from gettyimages.


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