Hype!

I meet a lot of company founders and directors who have some notional idea that the tech they are developing (or developing with) is red hot and the next big thing. There are a number of ways this ends up being the case, previous experience or background, specific opportunities or in some odd cases just a gut feeling. The one that is probably most common is hype. The media has a fantastic way of making us feel that there is a fabulous technology world just in front of us and that we should all ride that wave. The difficulty for business owners is to what extent these visions are real or unlikely. In the 80's we were told we would be riding around in a Sinclair C5, more recently we're promised the utopia of same day Amazon deliveries via drones. So what is really driving all this and how can business owners make more informed decisions on future tech?

I blame Gartner!

There is some established wisdom on this subject. Gartner Inc is a technology research and and advisory firm that is widely regarded. They have long been associated with something called the "Gartner Hype Cycle". This describes the path that most new technologies take through the eco-system of development and then usage over a period of time. That hype cycle is essentially a five stage process:

What this diagram shows is the common path followed by new technologies in the digital era. So what do these stages relate to?

Technology Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.

Peak of Inflated Expectations: Early publicity produces a number of success stories—often accompanied by scores of failures. Some companies take action; many do not.

Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.

Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.

Looking back over the last 20 years this is a pretty consistent assessment of the journey most new tech takes.  

So the challenge for most businesses becomes at what point do you use a new tech to make the most of it? Its not easy to call. If you're an early adopter you can spend a lot of money waiting for the market to develop and appear under you. If you call it too late then the market is dominated by an 800lb gorilla that is soaking up all the customers and revenue. It then just becomes about marketing spend to generate market share - also expensive.

Personally I lean towards early rather than late. Its more rational to have products and services building momentum as the market develops than having to free up huge amounts of cash to make a marketing splash. Being seen to be in the market first/early also has other business benefits for companies creating tech, patents etc.

So how do we prove that the Gartner Hype Curve is valid as a way of understanding the tech market?  Here is the Gartner Curve for 2013:

As you can see from this there are several technologies that are in all the press, autonomous vehicles, 3D Printing, Drones etc. that are all reaching the peak of inflated expectation. Amazon are not going to be doing deliveries by drone and a Google Car is not going to drive you anywhere any time soon. If you study the diagram carefully I think its an accurate representation of where all these technologies were 1 year ago.

So what is the way to assess this? Its really just the age old question of risk versus reward:

Innovators are creators of technology not users of technology. It costs a lot to develop new tech and can take years. The rewards however are huge, particularly with patents.

Early Adopters are inclined to take something that's a little under developed and help shape it. Early adopters tend to become join venture partners or form some other commercial relationship which means they use the product for less than the market rate further down the line.

Early Majority companies are the first real customers for new tech. They realise the benefits early in the technology life cycle and form early client-supplier partner relationships with tech companies.

Late Adopters generally come in when the technology is maturing, has established markets and customers. They are not innovating and tend to be using well embedded tech on low commercial margins. Often they're described as resellers.

Laggards are companies that come to the party just about as its over and everyone's gone home. They are slow to adopt and are seen as technologically backward.

Dependant on what part of this scale your company adopts the risk and reward goes up and down. The earlier your company appears the higher the risk and the higher the reward. No company wants to be seen as a Laggard and this should be avoided at all costs.

The only thing worse than a bad decision is no decision. Every company in the tech space should understand where it fits in the scale above and then match that to technologies on the Gartner Curve. If you think your an innovator then your currently working with drones, 3D Printing and Crypto-Currencies. If you're a late adopter then you're integrating speech and analytics into your products.  Either way make a choice and develop your strategy accordingly.