CareerZ Cast Guide to Navigating the Technology Hype Cycle

Source: Gartner Group

Technology Adoption is Not Linear

Bill Gates once noted, “we overestimate changes in the next two years and underestimate changes in the next ten.” The root of that phenomenon is well-documented in books like “Innovators Dilemma” and “Crossing the Chasm” and visually represented in the Gartner Group’s “Technology Hype Cycle” (graphic above).

This article argues that, In market-driven industries, irrational behavior by market players is essential for systemic progress. Navigating the hype cycle as a technologist over the past 30 years has shown to me that understanding it can significantly increase entrepreneurs and corporate innovators’ chances of success.

What is the Hype Cycle?

The initial Technology Trigger stage generates excitement about the transformational potential, escalating into the Peak of Inflated Expectations, characterized by a surge in media and public interest. When reality falls short, a Trough of Disillusionment ensues. That is when technology stocks crash, investments are discontinued and technology startups die. The world moves on to hype something else.

Successful technologies and persistent solution builders navigate the Slope of Enlightenment, when the technology matures and its value is demonstrated, to reach the Plateau of Productivity, with widespread adoption and integration of the technology into various industries and applications.

That cycle is observed every time, usually over a period of 2-10 years for any horizontal technology with broad societal implications.

Why can’t we learn from the past?

If the hype cycle is real, wouldn’t it be more efficient for the industry to make rational infrastructure investments, gradually take the technology to maturity, validate its use cases, build the right last-mile solutions, and deliver value to users without the extremes of optimism and pessimism, the disruptive misallocation of resources, and the projection of unrealistic expectations?

Consider the Internet (peak 1999), 5G (peak 2021), and Blockchain (peak 2021). The massive upfront investments in infrastructure (data centers, cell towers, radios embedded in consumer devices) cannot realistically be made on business cases with short-term ROI metrics which is the norm in large capital-rich enterprises. So, we need irrational expectations and unrealistic optimism to justify them and put smart people to take the technology to maturity over time.

As of late 2024, with a peak of inflated expectations, large tech companies are spending billions of dollars on GPUs and data centers to let innovative solution developers play with the nascent technology of Large Language Models. The real transformational solutions will come in the next several years, after we go through the Through of Disillusionment.

Takeaways for Entrepreneurs, Product Managers, Corporate Technologists and Decision-Makers

In conclusion, here are some of the takeaways:

• The hype cycle is necessary – The long period needed to take a broadly impactful technology to maturity is not compatible with decision making process within capital-rich companies. The hype cycle (unrealistic expectations, irrational optimism) is the mechanism to justify and fund building the infrastructure. That is how capitalism works.
• The entities making investments and the ones realizing the returns on the investment are not necessarily the same – While some companies have long-term strategies and the understanding to sustain long-term investments, the hype cycle causes funding bubbles, often making individual investors and companies collateral victims in the process and enabling new (and different) market winners in the future.
• Timing is important – Understand your and your company’s role in the industry. If you are building infrastructure for the long term, sure, jump in early and embrace the hype. If you intend to deliver last-mile solutions, understand that neither the technology nor the market is ready early in the cycle. Get the funding while investors are behaving irrationally and make sure you have the runway to navigate the disillusionment stage, or wait until the technology and users are ready for broad adoption.
• The hype cycle can be transposed into a smaller scope – You can use a similar model to understand the adoption of new products and technology within a company customer base. Creating an inspiring vision requires (sometimes unreasonable) optimism. Complex projects will go through challenges and having the vision and persistence to overcome them is easier and defendable if you and others around you understand the adoption cycle. Making sure customers and markets are ready to adopt a new product/service/technology by the time you launch it is key to success. For more on that, see thought leadership article.

Call to Action

If you are a Product Manager or Entrepreneur developing LLM solutions, make sure you understand where the technology is today. The hype over AI is useful to get funding and can get you started earlier. But assuming that the technology can deliver today and users are ready to interact with a robot beyond basics language tasks and novelty is just unrealistic.

The same applies to any other technology product. Think about the concept of the Hype Cycle and use it to set optimistic visions, to manage technology and adoption challenges and protect the project, maintain a steady execution, and deliver products when customers are ready for it.

If this article was thought provoking to you, help to get it to your peers. Thank you.

About the Author

As a product/technology manager across different technology companies in different markets, I have successfully used the concept of hype cycle for 25+ years to manage the funding, timing, and expectations of product and solution development and delivery within the organization. The hype cycle is a useful framework to articulate product roadmaps and technology strategy. I engage with technology companies as a consultant and love to share those lessons with others.