So, the question remains: when in a company’s lifecycle does it make sense to think its time to establish a new category? The answer is clear—anytime. Throughout history, we’ve seen countless examples across various timeframes where companies seized opportunities to create new categories and develop products that fit into those categories.

Airbnb and Tesla are prime examples of companies that identified gaps in existing markets and successfully introduced new categories to address those gaps. Even established companies like IBM, which introduced the System/360 computer after 50 years in business, demonstrate that innovation and category creation can happen at any stage of a company’s evolution.

One compelling example of a company that innovated radically after more than a decade of existing is LEGO. Founded in 1932, LEGO initially gained popularity with its simple interlocking bricks that allowed children to build various structures and creations. For decades, LEGO maintained its core product line of bricks and sets, focusing on creativity and play.

However, by the late 1990s and early 2000s, LEGO faced significant challenges. Changes in toy trends and increasing competition from digital entertainment were affecting their sales. In response to declining revenues and a need to reinvent themselves, LEGO underwent a transformational journey.

In 2003, LEGO introduced a new product line called LEGO Mindstorms. This series combined traditional LEGO building blocks with programmable robotics components, allowing children to build and program their robots. This innovation marked a significant departure from their traditional offerings and catered to the growing interest in STEM (Science, Technology, Engineering, and Mathematics) education.

LEGO Mindstorms not only reinvigorated LEGO’s brand by introducing technology into their play experience but also opened up new avenues for educational applications. It attracted older children and even adults interested in robotics and programming, expanding LEGO’s customer base beyond its traditional demographic.

Following the success of LEGO Mindstorms, LEGO continued to innovate. They partnered with popular franchises like Star Wars and Harry Potter to create themed sets, expanding their appeal to collectors and fans of these franchises. They also ventured into video games and movies, creating a multimedia empire around their iconic bricks.

LEGO’s ability to innovate and adapt after more than seven decades of existence demonstrates the company’s resilience and foresight. By embracing new technologies and consumer trends while staying true to their core values of creativity and imagination, LEGO not only survived but thrived in a competitive market.

LEGO went on to prove that even long-standing companies can innovate radically by identifying new market opportunities, leveraging their existing strengths, and embracing technological advancements to stay relevant and appealing to new generations of consumers.

The concept of “suit sizing” is crucial here. It’s about creating a category that fits your capabilities and market position—a category that’s ambitious yet achievable. Startups, in particular, excel at this because they can move quickly and take risks that larger, more established companies might shy away from due to their size and organizational structure.

Large corporations often struggle to innovate in radical ways because they are risk-averse and prefer incremental improvements. They are more likely to compete within existing categories rather than carve out entirely new ones. This reluctance opens the door for startups to disrupt industries by introducing fresh ideas that resonate with evolving consumer needs and behaviors.

Ultimately, the companies that successfully design new categories and establish themselves as leaders in those spaces are the ones that dominate over time. This process isn’t just about creating a product; it’s about shaping perceptions and convincing consumers that your solution defines a new category where you are the undisputed leader.

Whether you’re a startup or an established company, the ability to innovate and create new categories is essential for long-term success. It’s about understanding market dynamics, identifying unmet needs, and executing with agility and foresight. By doing so, you not only differentiate yourself from competitors but also lay the foundation for sustained growth and industry leadership.

We hope these insights inspire you to think differently and strategically about your company’s place in the market.