Niche down, design your category, dominate the category. Seems simple enough. It's a strategy touted by the the majority of growth consultants, and at face value it's a good strategy. But here's the rub... The vast majority of them have NEVER built a category, and have no idea what it actually takes to do so. An even bigger majority has never done it in professional services.

Yet most of them will post "🔥hot takes" on LinkedIn about how niching down and owning the category is the safer and more lucrative choice. Again, their are technically not wrong, but most of them are completely irresponsible for touting this as the best, or even the only, solution to building a successful consulting firm.

Here's what I have found after working with and speaking to over a hundred founders and leaders of consulting firms. All of them know they need to niche down, so this isn't a "hot take" for them. They are simply afraid to do it because they don't know how, and because they don't know who to trust.

So let's explore why that is, and how you should think differently about your firm's positioning.

Category Design in Professional Services: The Debate

If you want to dive more into the concept of category design and whether you should employ it to build a more successful consulting firm, look no further.

Paul Syng and I are going to put it all on the line and debate this topic. We may ruffle some feathers, we may disagree on some things, we may agree on other things, but most certainly we will leave no stone unturned for you, the audience.

Join us next tuesday for Consulting Growth Insights Live

Different for the Sake of Being Different

"Different is better than better" they say. Meaning that it's better to anchor your brand in something different, than to anchor it as a better alternative to a competitor. This is 100% true. Anchoring to a competitor means you are giving up control of your market position to them - your position only makes sense in relation to them. This gives them more power, more clout, and more market prominence.

But category design in professional services often takes things too far. Firms end up coming up with random jargon to describe a common problem, simply for the sake of sounding different. They create "proprietary processes" with fancy sounding names, that are really just your typical Discovery > Alignment > Benchmarking > Strategize > Execute > Analyze process that everyone generally follows in consulting. They focus too much on making their visuals and words and marketing execution different, while everything else about them is about as vanilla as it gets.

Yes, different is better than better, but different needs to be substantiated and be seen as industry relevant. And here in lies the second part of the problem of category design.

People Don't Buy Consulting This Way

It's virtually impossible to create a new category in consulting. When prospective clients think about consulting partners, they are thinking about it in one of two ways:

1. We need more bodies to solve this problem or execute our plan
2. We need a unique set of skills/expertise to solve this problem that we don't fully understand

And they will anchor one of these two to an existing category of technologies or business functions. They will look for things like:

• Leadership consulting/coaching
• Digital transformation consulting
• Operating model consulting
• Innovation consulting
• ERP consulting
• Business process automation consulting
• CRM consulting

So the only way you can realistically "design" a new category is when a new technology comes to market or a core business function goes through a major evolution. Everything else is just marketing fluff and veneer.

Own an Idea

Within each category, there are muliple common problems that the typical client will need to solve. Your best way to position your firm, is to show that you understand one or more of those problems better than anyone else. The best way to do that, is to help them reframe that problem in a way that makes it easier to grasp and solve. This means you have to put in the work to deeply research the problem and to develop IP that helps your ideal clients to think about it differently.

You have to own the idea - how to think about the problem - which leads your ideal client to the solution - your services. Some of the most prominent consultants have done this, and written books about it:

• Simon Sinnek - Start With Why - but Simon is still a leadership consultant
• Roger L. Martin - Playing to Win - but Roger is still a strategy consultant
• Clay Christensen - The Innovator's Dilemma - but Clay was still an innovation consultant

And some of the top boutique consulting firms have done exactly this:

• IDEO coined the term and operationalized "design thinking", but they are still an innovation Firm
• Innosight (founded by Clay Christensen) owned the concept of "disruptive innovation", but they were still an innovation consulting firm.
• More recently, Refine Labs reframed the concept of "dark social", but they were still a demand generation agency for growing SaaS companies.

Sometimes an idea becomes so big that it becomes a category

• Jobs To Be Done (Also partly Clay Christensen) has spawned an entire army of JTBD consultants
• Story Brand is now a messaging framework that one can become certified in and become a "StoryBrand Guide"
• EOS has quite literally become a cult, where if you are a small business owner who hasn't read Traction and isn't running on EOS, your fellow business owners will look at you like you have two heads. I mean, I don't know about you, but I can throw a rock in any direction and hit at least one EOS implementer.
• Category Design has also become a bit of a cult, even though at it's core it is a positioning strategy. Oh and yes you can also get "certified" by going through the Category Pirates Category Design Academy.

When ideas become so big that they become a category, the IP often gets licensed, either formally or informally, as with most of the above examples.

Creating a Category Requires a TON of time and money

Look at four examples above. Every single one of them is based on years of research, which in many cases was done by an army of research assistants. Once the research is done, it needs to be packaged up and evangelized, which is where things like books, trademark/pattent applications, seminars, speaking tours, coaching academies, and academic residency comes in. And then you have to promote all these things.

Considering that the vast majority of consulting firms are small businesses, and don't have a grand vision to be anything more than that, category design isn't needed, and in many cases would be a fiscally irresponsible strategy to pursue.

You don't need to write a book to won an idea, though in many cases it can be helpful. You can also attach yourself to an existing idea (see licensing above), especially if you are an independent consultant, or you can develop your own frameworks and methodologies empyrically as you are doing the work.

A Niche Isn't a Category

You don't need to design a category to build a successful firm.

The majority of category design consultants don't even own their own category, yet they try to advise everyone else that category design is the only viable strategy to build a successful business. Many of them do, however, niche down as "category design consultants for SaaS" or "category design studio for agtech", and yes, many of them are successful, at least as far as independent consultants go.

Yes the big fish small pond concept of niching down makes sense, but that isn't the same as building a category. Function+Industry isn't a category:

• CRM consulting for hospitals isn't a category
• Operating model consulting for regulated industries isn't a category
• Change management consulting for public sector isn't a category

However, simply defining your niche isn't enough to position yourself effectively.

Differentiate to De-Risk

Effective positioning de-risks the buying decision for your ideal clients. And the only way to do that, especially if you want to grow your firm to greater than $15 million and avoid falling into the discount trap, you need to develop your your unique, industry-relevant IP. This IP will then serve as the context for both your functional differentiators (hiring strategy, delivery process, service design, etc.) and your go-to-market differentiators (marketing and business development).

And speaking of Differentiate to De-Risk, you should sign up for my upcoming workshop on February 19th.

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