Two months in as CMO of Anaplan, and there is one question in particular keeps popping up. What is Anaplan? The market reaction and results that Anaplan has seen since our launch shows that we are unquestionably disrupting the space. But, are we disrupting an existing category or inventing an entirely new one?
The question is not an esoteric one. Not only do we need to be clear to the market on what Anaplan is all about, we need to be clear in our own minds. When a company is clear about its point-of-view on the market and why it exists, vision and mission can be aligned with potential. When you’re not clear, you can think and act too narrowly and underachieve, or too broadly and fail to deliver. In both small and big ways, the answer to the category question determines how you attack the market.
A Whole New Category?
History shows that there is no bigger opportunity for a company than to create a category. Look at what the big guys did in the software world: SAP created ERP, Oracle created relational databases, and Siebel created CRM. These innovations armed the business world with capabilities that had previously been the stuff of dreams. They became the name associated with the category they created—even after their actual time in the sun was over.
Once a category is established, companies allocate budgets for solutions, people become responsible for selection and implementation, analysts cover the vendors, a partner ecosystem emerges to help carry it to market, etc. And, almost without fail, the companies that “created” the category lead and dominate that category. Think about what this means: customers set aside money for the product and the category leader is always invited to bid for the business. It’s no surprise that these category leaders / creators have the biggest market share and sell their solution at a premium.
So, the rewards for creating a category are huge. But actually creating a new category is no small task. It is a multi-year journey to convince the market that this new category exists and that it matters. In the end, the market itself decides, not the company.
Disrupting an Existing Category
On the other hand, there is something to be said for creating a quantum leap in an existing category. Palm invented the category of smartphone and has the patent to prove it, but Apple re-defined it. Today, iPhones make up nearly half the market share of smartphones. And of course, they sell at a premium price, as well.
Within an established category, companies know what they have with existing solutions, and they know where they fall short. Analysts develop at least basic criteria for evaluating product capabilities. New entrants can position and contrast against existing players. With capabilities, delivery models, price points, etc. in play, new companies can disrupt the market using multiple dimensions. The payoff, while perhaps not as big as creating a new category, can still be significant.
So how should Anaplan, and me as the CMO, look at this question? Having been through a few category battles in the past, I’ve learned to read some of the signs.
Here are a few things I’ve seen in my first two months that begin to answer the question:
- Analyst firms can’t figure out where we fit.
- Our technology is radically different than our nominal competitors.
- From one platform, customers have addressed a staggering variety of planning and execution use cases.
- Perhaps most important, customers are solving problems that they’ve been trying to resolve for years.
The last point above is the one that is most significant. When world-class companies, with really smart people and plenty of money tell us they are using Anaplan to solve long-standing, core business problems, I can’t help but think we are on to something radically different. After all, they tried just about everything else.
This all loops back to our original question: What is Anaplan’s category?
As a small but fast-growing company, we know that it’s not what we say but what we do with and for our customers that will determine whether we’ve created a new category or are creating major disruption in an existing category. We have to be careful not to force an answer to the question and potentially limit ourselves.
Anaplan is either a really important jump in an existing category, or it’s something entirely new. You, the market, will decide.
What do you think?
In the spirit of the transparent and collaborative culture we’re working to create at Anaplan, let’s open this up for discussion. It is important for me to ask…
- What do you think Anaplan is?
- Do you have any advice for us?
Please comment below or send us an email with your thoughts.
Only time will tell if we’re creating or disrupting a category. In the meantime, we’re going to think big, focus and together with our customers, we’ll find out the answer.