Cross-Department Bearing Check

Why the Category Strategy Assessment Is Needed

One challenge we see regularly with clients is a failure to recognize and pursue the right initiatives, given their category strategy. For example, one of our clients was in the early stages of creating a new category. It had outlined the broad strokes of this direction through it's strategic narrative, but it wasn't apparent what to do next. Product, marketing, finance, and the remaining departments needed to understand what they should be doing each quarter to support the strategy. Without a clear sense of what respective priorities, they were at risk of getting sidetracked or missing out on opportunities they should have seized. The Category Strategy Assessment is one way to combat that. It's designed to do three things: surface what's happening in the business; assess threats and opportunities; and map out the options that will help the business improve its odds of success. All this is done in the spirit of creating alignment across the executive team.

How the Category Strategy Assessment Is Structured

Current Category Strategy and Category Strategy One Liner

The assessment begins by confirming your company's current category strategy as a reminder to those participating in the exercise. It follows with a one-line description of what succeeding with this category strategy looks like for your business. Again, this assessment is not designed to develop a category strategy itself; it is only intended to plan your company's efforts in relation to it.

Category Strategy Components

Category strategy is too broad to address directly, so to aid in a more specific evaluation, the assessment breaks down category strategy into its constituent components. There are ten components, organized into five categories, as follows:

• Company Readiness: These components pertain to your internal capacity to prosecute your category strategy.
  • Strategic Narrative: This is the core document that defines your brand's point of view (its beliefs) about the problem and the solution. If your category strategy has changed, the narrative may need revision.
  • Internal Alignment: This refers to whether your organization at large has a consistent and complete understanding of your category strategy and narrative.
• Building Belief: These components pertain to your company's ability to rally the market behind the beliefs stated in your strategic narrative.
  • Market Adoption of the Narrative: This refers to the market's adoption of or resistance to the ideas in your strategic narrative.
  • Strike Planning: Strikes are high profile events that are designed to jolt your customers into thinking differently. They often involve multiple departments. (This concept comes from the book Play Bigger).
• Solution: These components pertain to the product(s) or service(s) that your company is developing in pursuit of its category strategy.
  • Product Roadmap: A healthy product roadmap should bring the ideas in your strategic narrative to life. An unhealthy one is too incremental or reactive.
  • R&D: These efforts should keep the company poised to define the future by exploring what's next. If this area is under-resourced or taking the company sideways, it's worth discussing.
• Revenue: These components pertain to actions the company takes to drive and retain revenue. Sales, marketing, and related departments are both users and evangelists of your strategic narrative.
  • Brand & Product Marketing: These efforts should convey the right stories, emotions, and information to the market. If belief starts to erode or buyers become confused, this area needs work.
  • Demand Gen, Sales, & Customer Success: This refers to any function directly responsible for revenue generation or retention. These teams must be equipped to use the narrative well.
• Assets & Relationships: These components pertain to the assets a company may need to acquire or the relationships it needs to build and foster to successfully pull off its category strategy.
  • Financing, M&A, and Investor Relations: Strategic investments, funding events, analyst briefs, internal investments, and M&A activity must support the larger category strategy and tell a consistent story.
  • Strategic Partnerships: These may augment a company's category strategy or prevent competitors from gaining an advantage.

Category Strategy Assessment Questions

For each of the ten category strategy components, there are four questions:

1. What's the State of Affairs? This is an opportunity to take a fresh look at what's happening related to this component of your category strategy (or what's not happening). Consider addressing what's working well, where you are challenged, or if conditions have changed.
2. What Should We Be Thinking About? This builds upon the previous question by asking you to consider the ramifications of the state of affairs. For example: are there issues that need to be resolved? Are there opportunities that should be pursued? Threats on the horizon that need defending against?
   1. In some cases, it may be worth breaking out this question further: What will the consequences be if the business fails to act appropriately? And what opportunity can be captured if the business makes the right moves?
3. Health: This is a quick scoring question, designed to surface the areas of category strategy that are in most need of attention. Rate each component as Healthy, Needs Attention, or Critical Issue. If you are unsure, rate it as Unknown.
4. What's Next? This question is designed to capture your thinking about what the business needs to do in response to the conditions that have been described so far. In other words, what is the "job to be done" in order to make each aspect of the category strategy successful?

Industrial HVAC Co. had recently developed a new HVAC product that dramatically simplified building maintenance for its customers. The company had completed its category strategy and strategic narrative months ago. Since it was first to market with new technology, it had decided that "category creation" was the proper category strategy at the time. While the company was confident in its new direction, the hurdle it now faced was getting its customers to understand why its products were different and what benefits they conferred.

However, when conducting its Category Strategy Assessment, it uncovered a major point of friction: its product came in too many configurations, and it was difficult for prospective buyers to understand what was being offered or how to measure its performance relative to offerings from competitors. Their new category was valid, but seen as abstract.

Through the discussion that followed, the executive team decided on two actions. First, it would reconfigure its product offering to simplify the number of options on offer. Second, it would build a free, publicly available online tool that prospects could use to quickly find the right product for their application and review its performance specifications. These changes dramatically lowered the barriers to the market's adoption of its new category. Now Industrial HVAC Co. is seeing a record number of product inquiries from new customers.

The Category Strategy Assessment is intended to be used as a cross-department exercise. It's not designed for each department to use in isolation. Category strategy initiatives, while often led by a single department, are rarely executed (successfully) within the confines of a single department. For example, marketing and product may need to coordinate on the launch of a major product update. Finance, strategy, and engineering may collaborate on the acquisition of a key technology. When conducted collaboratively, the assessment can help secure cross-departmental participation from the outset.

This assessment is likely to surface more opportunities than can be reasonably pursued in a given quarter. The point is not to pursue them all. Instead, the assessment is a way to surface, filter, and select the most critical opportunities. If it's used to merely expand the list of initiatives, then you risk spreading resources too thin and executing none of them sufficiently well. As this assessment is designed as a group exercise, facilitating the ensuing discussion requires thoughtful judgment.

The Category Strategy Assessment is not intended to develop strategy itself; it's designed to surface departmental-level initiatives that may be required to support the strategy.

• The 6 Category Strategies
• When Should You Create a New Category?