In the latest episode of the SME Growth Podcast, hosts Richard Buckle and Dave Parry discuss the fascinating topic of hype.
The topic choice was prompted by a reflection on a 2015 article in the Harvard Business Review that made two intriguing predictions. One forecast the impact of Tesla on the automotive industry, ultimately underestimating its disruptive potential. The other prediction revolved around 3D printing, envisioning a future where it would revolutionise manufacturing, ultimately overestimating its impact.
This intriguing contrast between predictions and outcomes prompted Rich and Dave to delve deeper into the realm of hype and its influence on marketing, as well as perceptions of emerging technologies. In this podcast episode, we unravel the dynamics of hype, examine its role in shaping our expectations, and make some predictions about the next technological hype cycle.
Firstly, what is hype?
Hype can generate widespread attention and anticipation, sometimes bordering on the sensational, but it may not always align with the actual value, impact, or longevity of the subject in question. Through marketing and media attention, hype can create high expectations that may or may not be met when the hype subsides and reality sets in.
The Gartner Hype Cycle
The Gartner Hype Cycle consists of 5 phases, with each one relating to the adoption of new technologies. These phases are often used as reference points in marketing and technology reporting, with each stage having different associated risks and opportunities.
The Hype Cycle represents a cycle of excitement, anticipation, and eventual realism in the world of technology and innovation. It reflects how humans tend to gravitate toward new and adventurous opportunities, driven by the potential for change. Understanding this cycle can help individuals navigate the world of emerging technologies and make informed decisions about when to invest or adopt.
Phase 1: Technology Trigger
The first phase of the Hype Cycle is the "Technology Trigger." This phase marks the introduction of a new and often ground breaking technology. It's the point where people become genuinely excited about a new innovation, often justified by its potential applications.
Phase 2: Peak of Inflated Expectations
During this phase, often referred to as the "Peak of Inflated Expectations" early adopters play a significant role. These individuals and investors enthusiastically embrace the new technology, sometimes driven by the fear of missing out on a ground breaking trend.
Substantial amounts of money can flow into these innovations viewed as ‘the next big thing’, regardless of their eventual success or failure. This is where the ‘Greater Fool’ theory can occur, which is where individuals invest in the hope of selling to someone else at a higher price, all contributing to hype. NFTs, and their recent demise are an example of this.
Phase 3: Trough of Disillusionment
Following the peak, the Hype Cycle enters the "Trough of Disillusionment" phase. Here, the initial excitement fades as the limitations and challenges of the technology become apparent after the initial hype. This decline is often marked by criticism and the emergence of negative aspects that were previously overlooked during the peak of inflated expectations.
Electric Vehicles (EV) are a great example of this. As the technology becomes more widely adopted and used by the general public, more challenges and issues come to the forefront. In the context of EV, examples include range anxiety, lack of charging infrastructure and environmental concerns related to battery materials. However, despite the disillusionment, there is still a significant user base and progress being made, typically representing a small percentage of the technology’s potential. This marks the beginning of the ‘Slope of Enlightenment’.
The psychology of early adopters
Here, it’s interesting to consider the psychology of early technology adopters, and how they often remain passionate about the technology despite the setbacks. Investors are often drawn to emerging technologies and innovations and positioning themselves strategically to capitalise on opportunities. This can often involve being in the technology ecosystem, rather than the technology itself, which can be safer and potentially more profitable.
For instance, in the context of electric vehicles, the technology trigger that ignited interest and investment was the advancement of lithium-ion batteries, particularly their ability to store more power and charge and discharge rapidly without the issues associated with previous battery technologies. Cooling technology also played a crucial role in making electric vehicles viable, as early prototypes faced overheating challenges.
Phase 4: The Slope of Enlightenment
The Slope of Enlightenment is the phase where early adopters have paved the way, and the technology begins to mature. Market consolidation, refinement of products, and the weeding out of less viable ideas characterise this stage.
Case Study: Tesla
Tesla’s near-collapse is a great example of how companies can thrive through the Slope of Enlightenment. Tesla, facing bankruptcy took remarkable steps to secure enough funding to weather the storm. Elon Musk, the company's CEO, leveraged this accomplishment to gain investor confidence and secure another round of funding, ultimately helping Tesla survive and thrive.
Phase 5: The Plateau of Productivity
The ‘Plateau of Productivity’ is the final stage of the Hype Cycle. During this phase, 20% to 30% of the potential audience has embraced the technology, and it becomes part of mainstream culture. The initial excitement and scepticism have waned, and the technology becomes a commonplace part of everyday life. One such example of this is the television, where early adoption gave way to ubiquity.
Looking Forward: What Are the Potential Future Technology Triggers?
The emergence of technology triggers such as space tourism and self-driving cars provides intriguing parallels with the development of artificial intelligence (AI) and its accompanying hype cycle. Self-driving cars are perfect hype-cycle example. A few years ago, there was a surge of excitement and high expectations, accompanied by predictions of car ownership decline. However, this has now transitioned in to the ‘peak of inflated expectations’ phase.
And, just as self-driving cars once generated excitement and high expectations; AI has experienced similar cycles of optimism and anticipation.
The Hype Cycle of AI
AI has had a huge hype surge, particularly over the past year. The wavelength of these hype cycles has shortened over time, largely due to the rapid evolution of technology, making them more frequent and overlapping. AI is receiving significant media attention, particularly with technologies like ChatGPT and MidJourney, and this has triggered both enthusiasm and concerns for the application.
AI has gone through a rollercoaster of multiple hype cycles, including periods of high enthusiasm and subsequent disillusionment. It’s likely that AI will continue to evolve rapidly, with its use in various fields. Although its final implications remain unclear, it’s certainly interesting to see the hype curve for AI in action.
Is VR the next technology trigger?
It’s interesting to think about what the next technology trigger could be. In the podcast, Rich discusses his views on virtual reality (VR) technology. He views VR as the next technology trigger, with the technology becoming more interactive and user-friendly. Potential applications of VR include in business settings and in online meetings, and investment from brands such as Apple likely to accelerate its adoption.
Conclusion: Embracing the Future
Understanding the phases of the Gartner Hype Cycle offers valuable insights into technology adoption, the psychology involved, and the potential pitfalls of overinflated expectations. While new technologies are often exciting, it’s important to critically assess the promises and predictions surrounding new technologies, recognising that while hype generates excitement, it often goes past reality.
As we navigate the uncertain terrain of emerging technologies, including AI and potentially VR, hype cycles, and the Gartner Hype Cycle is a reminder to separate genuine innovation from hype.
LISTEN TO THE PODCAST
Apple Podcast: https://podcasts.apple.com/us/podcast/episode-41-where-are-the-latest-ai-tools-on/id1654715808?i=1000630298714
For all other platforms: https://podcasters.spotify.com/pod/show/wellmeadow
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