Chapter 4. Models – Foundations for Organizational Foresight

8. Hype Cycles (Growth curves with hype)

The hype cycle is a change curve model for the social attention to, investment in, and the adoption of potentially disruptive new ideas or technologies. It was developed by Gartner, the market research and advisory firm behind the Magic Quadrant marketing category model described earlier.

The Hype Cycle (Wikipedia)

The Hype Cycle (Wikipedia)

The hype cycle as Gartner depicts it has five stages (see picture below), as follows: The first stage occurs when a Technology Trigger (potential breakthrough) materializes, and first-generation (expensive, customized) products or demos are produced. Increasingly, this potential breakthrough gets popularized by industry insiders or the general press, and a Peak of Inflated Expectations (to remember this stage, think of “PIE in the Sky” thinking and action) occurs. Entrepreneurs, evangelists, journalists, investors and impatient future-thinkers all have strong social and economic incentives to portray the state of the science, technology, or product to be much more than it is or can be in the near term. These first two stages are the hype stage, after which the cycle is named.

In the third stage, we see an aptly-named Trough of Disillusionment, where various scientists, engineers, journalists, investors, and public react negatively, sometimes strongly, to the previous hype, and their stories create their own negative counterhype, sometimes pushing social expectations below where they deserve to be. Until or unless the product improves itself, market interest wanes, investment capital dries up, first-round competitors run out of startup funding, and slow-moving R&D initiatives may at this stage be prematurely terminated by short-sighted managers.

Gartner calls stage four the Slope of Elightenment, and they draw it with a negative second derivative (curving down over time), but this isn’t the most common case. We should instead call this phase the Slope of Exponential Performance, as it is typically a slope that is gently curving upward in product performance and adoption, throughout the entire stage. Only at the end of the stage does it go through an inflection point and start to curve downward, as a Slope of Saturation, in the last phase of an S-curve.

The Slope of Exponential Perormance starts when the product enters a second-generation, usually much later than hype predicted, and starts to climb beyond early adopters (5-10%) into larger market share. Again, Gartner calls stage five the Plateau of Productivity, but as we’ve said, this stage is also somewhat misnamed, as it is best understood as a stage of increasing market saturation, a Slope of Saturation, the familiar S-curve of product and technology adoption. Beginning in stage three, as real growth finally gets started, various professionalization, standardization, and best practices begin to take hold, and third-generation products and services emerge. In stages four and five, some of these are finally good and cheap enough to move the product into its last markets, creating market saturation, for that particular product at least.

The hype cycle attaches itself to a special class of potentially disruptive growth curves, where various self-interested actors unconsciously work together to overhype the story and timescale of new product or service development, and capture value as soon as they can plausibly do so, typically well before the technology is ready. The sexier the technology’s potential seems (3D printing, genetic engineering, brain-machine interfaces) the more overoptimistic and accelerated the hype. Predictably then, human greed and unconscious or conscious dishonesty, in the form of overclaiming and lack of critical evaluation are always part of the modern story of disruptive new technology attention, investment, and adoption.

Tesla is a good example of a company led by a CEO that has been using and stoking the hype cycle since its inception. Elon Musk is constantly being hyperbolic in his own vision of the future, and displaying an aspirational reach that exceeds his grasp. Whether Musk can find enough investors to buy into his vision, investors willing to ride out the trough of disillusionment as execution and profits are slower to materialize than anticipated, is still an open question. Hype is a dangerous tool to use. Amazon, by contrast, is led by a CEO, Jeff Bezos, that has generally avoided hype, though it has an equally grand long term vision. It also courts long term investors willing to be patient, and watch the company operate at a loss for years, as long as it is gaining share. Between the two approaches, the Amazon approach is much safer, and it remains to be seen how Musk fares. I for one wish him well and would love to see him tone down his hype.

The Four Stages of a Bubble

At left is a useful update of the hype cycle reenvisioned for investing. This cartoon model, the Four Stages of a Bubble, was developed by transportation geographer Jean-Paul Rodrigue. Bitcoin, and cryptocurrencies in general, offer great examples of this cycle at present.

Keep in mind that as the S-curve of technology adoption occurs for any valuable new technology, or for the stock of any company offering that technology, successive bubbles and corrections will occur all the way up to market saturation, which may take years or decades. For particularly interesting or valuable technologies, that means, many successive phases of Mania and “Blow Off” will occur. A smart investor in any valuable technology or service that is still early in the exponential phase of its S-curve adoption will stay in the market for most of the time on the way to market saturation, exiting only for short periods during significant downturns. Tony Robbins and Peter Mallouck’s Unshakeable: Your Financial Freedom Playbook (2017) offers some great data on that particular strategy, and is well recommended.

A better model for tracking technology development (first-gen, second-gen, etc.) than the hype cycle is the technology readiness level (TRL) model, originally developed by NASA and the US Department of Defense for use in technology assessment, transfer, and management programs. TRL models tend to disregard socioeconomic factors that incentivize overpromotion of immature technologies, so they should be combined with the hype cycle model to forecast social attention, investment, and adoption cycles.

Fenn & Raskino (2008)

Fenn & Raskino (2008)

For good tips on how to manage these classic attention, investment, and adoption patterns, see Fenn and Raskino’s Mastering the Hype Cycle (2008). Both authors are Gartner Fellows. When your team is aware of a hype cycle, they can use countercyclical (contrarian) strategy wisely. For example, in R&D and startup situations with great new technology it is usually wise to stay in stealth mode as long as possible to avoid triggering inflated expectations, which will attract competition. Conversely, if you don’t believe a technology yet has enough engineers or money working to make it real, you might yourself trigger or jump on a hype bandwagon. Some sly competitors will engage in aspirational promotion of a next gen tech or platform, but are careful not to overinvest too early themselves, and instead wait to buy others assets once they enter the trough of disillusionment. If you are a large company considering acquisitions, purchasing a company at end of its trough of disillusionment, just as second-generation technologies are nearing market, or waiting until third-generation and the start of exponential growth, may be the wisest strategy.

Showing 2 comments
  • Graham

    For a contemporary example of the Four Stages of a Bubble, Bitcoin seems to fit the bill very well. And although more difficult measure, the Hype Cycle immediately brings to mind Tesla.

    • John Smart

      Thank you Graham! I agree entirely. I’ve added both examples to the page, and really appreciate the helpful feedback. Warm Regards, John.

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Table of Contents


Chapter 2. Personal Foresight – Becoming an Effective Self-Leader

Chapter 2: Personal Foresight

Becoming an Effective Self-Leader

Chapter 4. Models – Foundations for Organizational Foresight

Chapter 4: Models

Foundations for Organizational Foresight

Chapter 7. Acceleration – Guiding Our Extraordinary Future

Chapter 7: Acceleration

Guiding Our Extraordinary Future (In Process)

II. Global Progress: 5 Goals, 10 Values, Many Trends

Innovation: Our Abundant Future
Intelligence: Our Augmented Future
Interdependence: Our Civil Future
Immunity: Our Protected Future
Sustainability: Our Rebalanced Future

III. Universal Accelerating Change

Great Race to Inner Space: Our Surprising Future
Entropy&Information: We’re Running Down & Up
The Puzzle of Meaning: We Have No Einstein Yet
Trees, Funnels & Landscapes: Intro to Evo Devo
Big Picture Change: Five Scales of Accelerating ED
Transcension Hypothesis: Where Acceleratn Ends?
IDABDAK: Social Response to Accel & Developmnt
We’re On a Runaway Train: Being Accelaware

IV. Evo Devo and Exponential Foresight

Seeing It All: Accel., Diverg, Adapt, Convrg, Decel.
Natural (I4S) Innovation: The Evolutionary Drive
Natural (I4S) Intelligence: The Human-AI Partnership
Natural (I4S) Morality: Why Empathy and Ethics Rule
Natural (I4S) Security: Strength from Disruption
Natural (I4S) Sustainability: The Developmental Drive
S-Curves: Managing the Four Constituencies
Pain to Gain: Traversing the Three Kuznets Phases
Hype to Reality: Beyond Hype Cycles to Reality Checks
Exponentials Database: Measuring Accelerations
TINA Trends: Societal Evolutionary Development
Managing Change: STEEPCOP Events, Probs, Ideas
A Great Shift: A Survival to a Sentient Economy

V. Evo Devo and Exponential Activism

Building Protopias: Five Goals of Social Progress
Normative Foresight: Ten Values of Society
Top & STEEPCOP Acceleratns: Positive & Negative
Dystopias, Risks, and Failure States
Three Levels of Activism: People, Tech & Universe
A Great Opportunity: Exponential Empowerment


Chapter 8. Your Digital Self – The Human Face of the Coming Singularity

Chapter 8: Your Digital Self

The Human Face of the Coming Singularity (In Process)

I. Your Personal AI (PAI): Your Digital Self

Digital Society: Data, Mediation, and Agents
Personal AIs: Advancing the Five Goals
PAI Innovation: Abundance and Diversity
PAI Intelligence: Bio-Inspired AI
PAI Morality: Selection and Groupnets
PAI Security: Safe Learning Agents
PAI Sustainability: Science and Balance
The Human Face of the Coming Singularity

II. PAI Protopias & Dystopias in 8 Domains

1. Personal Agents: News, Ent., Education
2. Social Agents: Relat. and Social Justice
3. Political Agents :  Activism & Represent.
4. Economic Agents:  Retail, Finance, Entrep
5. Builder Agents :  Work, Innov. & Science
6. Environ. Agents : Pop. and Sustainability
7. Health Agents :  Health, Wellness, Death
8. Security Agents :  Def., Crime, Corrections

III. PAI Activism & Exponential Empowerment

Next Government: PAIs, Groupnets, Democ.
Next Economy: Creat. Destr. & Basic Income
Next Society: PAI Ent., Mortality & Uploading
What Will Your PAI Contribution Be?

Chapter 10. Startup Ideas – Great Product & Service Challenges for Entrepreneurs

Chapter 10: Startup Ideas

Great Product and Service Challenges for Entrepreneurs (In Process)

I. 4U’s Idea Hub: Building Better Futures

Air Deliveries and Air Taxis: Finally Solving Urban Gridlock
Ballistic Shields and Gun Control: Protecting Us All from Lone Shooters
Bioinspiration Wiki: Biomimetics and Bio-Inspired Design
Brain Preservation Services: Memory and Mortality Redefined
Carcams: Document Thieves, Bad Driving, and Bad Behavior
Competition in Govt Services: Less Corruption, More Innovation
Computer Adaptive Education (CAE): Better Learning and Training
Conversational Deep Learning Devsuites: Millions of AI Coders
Digital Tables: Telepresence, Games, Entertainment & Education
Dynaships: Sustainable Low-Speed Cargo Shipping
Electromagnetic Suspension: Nausea-Free Working & Reading in Cars
Epigenetic Health Tests: Cellular Aging, Bad Diet, Body Abuse Feedback
Fireline Explosives and Ember Drones: Next-Gen Fire Control
Global English: Empowering the Next Generation of Global Youth
Greenbots: Drone Seeders and Robotic Waterers for Mass Regreening
High-Density Housing and Zoning: Making Our Cities Affordable Again
Highway Enclosures and Trail Networks: Green and Quiet Urban Space
Inflatable Packaging: Faster and Greener Shipping and Returns
Internet of Families: Connecting People Over Things
Kidcams: Next-Gen Security for Child Safety and Empowerment
Kidpods: Indoor & Outdoor Parent-Assistive Toyboxes
Microdesalination: Democratizing Sustainable Fresh Water Production
Noise Monitors: Documenting and Reducing Noise Pollution
Oceanside Baths: Sustainable Year Round Beach Enjoyment
Open Blood Scanners: DIY Citizen Health Care Sensor Tech
Open Streaming Radio: User-Centered Audio Creation and Rating
Open Streaming Video: User-Centered Video Creation and Rating
Open Values Filters: Social Rankers, Arg. Mappers, and Consensus Finders
Personal AIs: Your Private Advisor, Activist, and Interface to the World
Pet Empowerment: Next-Gen Rights and Abilities for Our Domestic Animals
Safe Closets: Fire-, Earthquake-, and Intruder-Proof Retreat Spaces
Safe Cars: Reducing Our Insane 1.3M Annual Auto Deaths Today
Safe Motorcycles: Lane Splitting in Gridlock Without Risk of Death
Shared Value Insurance: User-Centered Risk Reduction Services
Sleeperbuses and Microhotels: Demonetized Intercity Travel
Space-Based Solar Power: Stratellite Powering and Weather Management
Stratellites: Next-Gen Urban Broadband, Transparency, and Security
Touch DNA: Next-Gen Home Security and Crime Deterrence
View Towers: Improving Urban Walkability, Inspiration, and Community

Chapter 11. Evo Devo Foresight – Unpredictable and Predictable Futures

Chapter 11: Evo Devo Foresight

Unpredictable and Predictable Futures

Appendix 1. Peer Advice – Building a Successful Foresight Practice