How Slack Created a New Product Category, and how you can too

These days, incessant pings and buzzes from your workspace’s preferred team management software may seem like a fact of life. But not too long ago, the idea of having software beyond emailing to manage teams was beyond imagination. Then one of the market’s leaders stumbled into creating the perfect product.

Many people think that entrepreneurship is about building a new product. Although this can be the case, the most transformative businesses start by creating an entirely new market.

Undoubtedly, that is a lofty proposition. How can you think about a market that doesn’t even exist? The secret is finding a problem that isn’t seen as one, an inconvenience that is seen as being “just the way things are.” Slack’s development serves as a perfect case study for finding these problems.

Solving user problems and building better communication

When Stewart Butterfield founded his first company, team management was merely a means to an end. The end in question? Making a video game called Glitch. When Glitch failed to capture a large enough user base, Butterfield had to shut the game down. However, he didn’t close the company. Instead, he renamed the company Slack and made a new solution-oriented software its product.

As his team was developing Glitch, they encountered inefficiencies in their internal communication that led them to create a more streamlined system for their use. They developed a communication tool that allowed for better, more efficient, and easily searchable conversations compared to email. The software that would eventually become Slack began life as a means to this end. Seeing how well the system worked internally and noticing the vacuum in the market, Butterfield rebuilt his entire company around the product.

The core takeaway from the Glitch-to-Slack story is the importance of following your end user’s pain points and being flexible about what your product provides. Slack stumbled into discovering a new market because its employees were its customers. Without knowing it, they were designing a system that appealed perfectly to professionals working as a team to create a product.

As Slack cemented itself as a market leader in the space, it has continued to be curious about finding ways it can address users’ pain points. For instance, by adding features like Slack Atlas, an employee directory system, Slack demonstrated its continuous willingness to enhance its functionality and cater to the evolving needs of its users. This focus on continuous improvement and user-centric design has been key to its success.

Applying Slack’s strategies to manufacturing procurement

To get a deeper understanding of how Slack’s methodology can be used to identify new markets, let’s look at a totally different example: procurement systems in the manufacturing industry.

Factories need to order many parts to produce whatever product they are making. A procurement department’s job is to order the right parts at the right price. That may seem straightforward on paper. In reality, today’s procurement departments are plagued with countless problems.

Procurement departments often have databases where they store documents with parts drawings and prices. However, these databases are frequently outdated, poorly organized, or incompatible with other systems, making it difficult to retrieve accurate and timely information. As a result, obtaining new parts can still become a matter of guesswork, with orders sometimes being made based on scant descriptions over the phone. Furthermore, when employees leave their companies, critical knowledge is often lost, leading to inefficiencies and errors.

Critical knowledge in procurement includes detailed information about suppliers, pricing histories, negotiation tactics, and specific technical requirements for parts. For instance, experienced employees often have personal relationships with suppliers and a deep understanding of which vendors provide the best quality or most reliable delivery times. They also know the nuances of past orders, such as which parts required special handling or which suppliers were more flexible on pricing.

When these employees leave, much of this invaluable information goes with them if it hasn’t been properly documented and stored. This loss can cause several issues.
• Delays in procurement: New or remaining employees might not know which suppliers to contact or what specific details to ask for, leading to delays in obtaining necessary parts.
• Inaccurate orders: Without detailed descriptions and historical knowledge, there is a higher risk of ordering the wrong parts, which can lead to production delays and increased costs.
• Repetitive mistakes: Knowledge about previous issues with certain suppliers or parts might be lost, causing the same mistakes to be repeated.
• Increased costs: Lack of historical pricing information can lead to paying higher prices for parts, because new employees might not be aware of previous negotiations or discounts.

An experienced procurement officer might know that a particular component needs to be sourced from a specific supplier due to unique material requirements that aren’t documented in the database. If this knowledge isn’t transferred, a new procurement officer might choose a different supplier based on price alone, resulting in receiving a part that doesn’t meet the necessary specifications. This not only wastes time but also incurs additional costs as the correct part must be reordered, and production timelines are disrupted.

These problems only scratch the surface of procurement’s inefficiencies. Yet, until recently, no one in the industry was solving these problems. The reason why? No one knew they were problems in the first place.

Autodesk, renowned for developing AutoCAD, a staple in engineering design, attempted to extend its success into procurement solutions for manufacturers. However, its offering failed to gain broad adoption. The challenge was in the misalignment with procurement professionals’ specific needs, such as centralized supplier management and detailed cost analysis. Engineering software like AutoCAD, while excellent for design, often lacks seamless integration with procurement workflows. This disconnect, coupled with market perception issues, hindered Autodesk’s penetration into the procurement sector.

Prioritizing widespread adoption and problem-solving

Perhaps it’s not surprising that another company is now trying to solve these problems. CADDi is addressing fundamental challenges faced by procurement departments through its innovative software solution, CADDi Drawer. Central to its approach is a centralized digital database that houses all procurement-related documents, including parts drawings and pricing information. This searchable database is meticulously designed for easy integration with existing systems, ensuring real-time updates and comprehensive accessibility.

Using advanced AI algorithms, CADDi enables procurement professionals to swiftly locate specific parts with precision. This capability is crucial because it replaces traditional manual searches, which are often time-consuming and prone to errors. With AI, users can input search criteria like part numbers, specifications, or descriptions, and CADDi’s algorithms can quickly retrieve the exact documents needed. This not only streamlines the procurement workflow but also ensures that suppliers receive accurate information promptly, leading to improved communication and faster decision-making in sourcing and purchasing processes.

CADDi plays a pivotal role in mitigating knowledge drain within organizations. By digitizing and centralizing critical documents, including historical drawings and procurement records, CADDi ensures that valuable institutional knowledge remains accessible over time. This proactive approach is particularly crucial as experienced employees retire or move on from the company. Instead of losing critical information that resides only in the minds of departing employees, CADDi stores it in a structured digital format that can be accessed and used by current and future team members. This preservation of institutional knowledge not only reduces the risks associated with personnel changes but also facilitates continuity in operations and decision-making. It empowers organizations to retain and leverage years of accumulated expertise, thereby maintaining productivity and efficiency across different departments.

Another significant feature of CADDi is its ability to foster collaboration between engineering and procurement teams. The platform allows engineering teams to annotate drawings with specific requirements or modifications directly within the system. These annotations can include details such as material specifications, dimensional adjustments, or quality standards that are crucial for procurement professionals when sourcing parts or materials. By integrating these annotated drawings into the procurement process, CADDi enables seamless communication and alignment between departments. Procurement teams can easily interpret engineering requirements and translate them into actionable sourcing decisions, ensuring that purchased parts meet exact specifications and quality standards.

While the markets of Slack and CADDi may initially seem distant from your industry, they exemplify a fundamental principle: Challenging assumptions about user pain points can lead to groundbreaking market creation. By identifying and addressing these pain points effectively, both companies have redefined industry standards and demonstrated the transformative power of innovation rooted in genuine user needs.

By digitizing and centralizing critical documents, including historical drawings and procurement records, CADDi ensures that valuable institutional knowledge remains accessible over time.