Mastering The Hype Cycle » Business Hype Cycles

List of our 2009 Hype Cycle Reports

Mark Raskino — Fri, 04 Sep 2009 12:25:16 +0000

Between them they cover over 1650 technologies.

Now available to clients via our
Hype Cycles 2009 special report landing page:

Hype Cycle for Consumer Mobile Applications
Hype Cycle for Consumer Technologies
Hype Cycle for Contact Center Infrastructure
Hype Cycle for Content Management
Hype Cycle for Context-Aware Computing
Hype Cycle for Data Center Power and Cooling Technologies
Hype Cycle for Data Management
Hype Cycle for E-commerce technologies (September)
Hype Cycle for Emerging Technologies
Hype Cycle for Enterprise Communications Applications
Hype Cycle for Enterprise Information Management
Hype Cycle for Global Consumer Communications Services
Hype Cycle for Human-Computer Interaction
Hype Cycle for Identity and Access Management Technologies
Hype Cycle for Infrastructure Protection
Hype Cycle for Master Data Management
Hype Cycle for Mobile Device Technologies
Hype Cycle for Networking and Communications
Hype Cycle for PC Technologies
Hype Cycle for Photovoltaic Solar Energy
Hype Cycle for Printing Markets and Management
Hype Cycle for Semiconductors
Hype Cycle for Server Technologies
Hype Cycle for Smart Grid Technologies
Hype Cycle for Social Software
Hype Cycle for Storage Hardware Technologies
Hype Cycle for Storage Software Technologies
Hype Cycle for Telemedicine
Hype Cycle for the High-Performance Workplace
Hype Cycle for Web and User Interaction Technologies
Hype Cycle for Wireless Devices, Software and Services
Hype Cycle for Application Architecture
Hype Cycle for Application Development
Hype Cycle for Application Infrastructure
Hype Cycle for Application Infrastructure
Hype Cycle for Business Continuity Management
Hype Cycle for Business Intelligence and Performance Management
Hype Cycle for Business Process Management
Hype Cycle for Business Process Outsourcing
Hype Cycle for Cloud Computing
Hype Cycle for Consulting and System Integration, 2009
Hype Cycle for CRM Customer Service and Field Service
Hype Cycle for CRM Marketing Applications
Hype Cycle for CRM Sales
Hype Cycle for Data and Application Security
Hype Cycle for Governance, Risk and Compliance Technologies
Hype Cycle for Human Capital Management Software
Hype Cycle for ICT in India
Hype Cycle for IT Operations Management
Hype Cycle for IT Outsourcing
Hype Cycle for Manufacturing Product Lifecycle Management and Production
Hype Cycle for Open-Source Software
Hype Cycle for Procurement Applications
Hype Cycle for Real-Time Infrastructure
Hype Cycle for Software as a Service
Hype Cycle for Supply Chain Management
Hype Cycle for Virtualization
Hype Cycle for Automotive Demand Chain and Supply Chain Technologies
Hype Cycle for Banking and Investment Services Customer Technologies
Hype Cycle for Banking and Investment Services Operations Technologies
Hype Cycle for Communications Service Provider Infrastructure
Hype Cycle for Communications Service Provider Operations
Hype Cycle for Consumer Goods
Hype Cycle for Education
Hype Cycle for Financial Services Payment Systems
Hype Cycle for Government Transformation
Hype Cycle for Healthcare Payers
Hype Cycle for Healthcare Provider Applications and Systems
Hype Cycle for Healthcare Providers Technologies and Standards
Hype Cycle for Life Insurance
Hype Cycle for Media Broadcasting
Hype Cycle for Media Industry Advertising
Hype Cycle for Media Industry Content
Hype Cycle for P&C Insurance
Hype Cycle for Retail Technologies
Hype Cycle for the Telecommunications Industry
Hype Cycle for Transportation
Hype Cycle for Utility Industry IT and Business Processes
Hype Cycle for Utility Industry Operational and Energy Technologies
Hype Cycle for Vehicle-Centric Information and Communication Technologies (Vehicle ICT)

Yes the ‘Long Tail’ is probably passing through the Hype cycle

Mark Raskino — Mon, 13 Jul 2009 20:16:49 +0000

[this post also appears in Mark Raskino's GBN Blog]

I was asked recently by Economist correspondent Ludwig Siegele, whether Chris Anderson’s ‘Long Tail’ is following the Hype Cycle. This might sound like a contrived conjunction of two abstractions but actually, it is a very good question. The Long Tail is a new management science idea, some might say ‘management tool’. If it is a powerful insight it will be turned into business strategy method and applied to make money. It is therefore a management science innovation which, business managers can either choose to believe and adopt, or not. We think such things do follow the Hype Cycle.

For the Hype Cycle to be in play, two conditions must be met. First there must be social excitement wave surrounding a new innovation that companies are considering adopting. Second, the innovation cannot simply work first time and every time ‘out of the box’ it must require evolution through application across markets to reach its potential efficacy. Both of these do appear to be in place for the Long Tail.

Chris Anderson’s original insight and subsequent book created a surge of interest in this new way of looking at sales and inventory business model dimensions in the Internet era. His suggestion was that the value of the vast virtual-store inventory tail of e-commerce would outweigh the head – those high volume products a store based retailer has shelf space to keep in stock. Many managers have been trying out the idea and researchers have been testing it. For example in 2005 a US retail CIO told me he thought the long tail effect was impacting his business. ‘Customers come in our stores expecting that we can stock every item in every size, because that’s what they are used to on the website – but there is no store format, no matter how large, that we could build to meet their expectation’. However in 2008 other researchers claimed that Anderson’s theory was disproved by e-commerce sales data and Chris has partly accepted their analysis. So the idea may be in the Trough of Disillusionment but it is not dead.

It’s bubble has been pricked, it is deflated but not done. The concept is now being refined by the market – as a big thought hits the reality of use. For example, in the original idea the long tail of inventory was more valuable than the short head. However data appears to suggest that is not the case for some of the online businesses that should clearly demonstrate it – particularly those in music and video retailing. That does not remove all value from idea – it simply conditions it.

Perhaps the tail will never outweigh the head – that doesn’t matter if many more managers extract more business value by focusing some of their attention on that tail, as a result of bearing Anderson’s eloquent mnemonic insight in mind. Perhaps there are secondary effects too – e.g. people attracted to the tail are cross-sold items from the popular head list, so both grow in proportion.

Why does it matter? Because you need to understand how ideas move through the Trough of Disillusionment even better than you understand how to deal with Peak of Inflated Expectations. Good new management idea viruses, apparently killed off by a few well aimed attacks, usually don’t die. They simply lay dormant for a while and morph. If your competitor is learning to adapt to them, you may suffer a nasty cold later on.

Chris Anderson has a new book out – its called Free: The Future of a Radical Price. This one is already creating some controversy and it has been attacked by Malcom Gladwell (of Tipping Point and Blink fame). If you are a middle ranking leader in a large company, trying to decide which of these management ideas to apply and when to get serious about using them- it does make sense to scrutinize their progress with you cast your ‘hype cycle eye’. Don’t jump in just because it’s ‘in’, but equally – don’t stay out just because it’s ‘out’.

The FT suggests the Hype Cycle might apply to hedge funds.

Mark Raskino — Thu, 11 Jun 2009 17:55:15 +0000

In a Financial Times online article dated June 2nd, Mr. David Smith – the Chief Investment Director of GAM (part of the Swiss wealth management company Julius Baer) discusses the hedge fund bubble burst of 2008. As part of his analysis he says:

The research group Gartner tried to prove the potentially positive outcomes of bubbles in its theory of the “hype cycle”, in which mass adoption of any product begins with a “technology trigger” that generates significant interest. This leads to a “peak of inflated expectations”. When reality fails to live up to these hopes, the industry enters a “trough of disillusionment” in which many businesses leave. Those that remain continue through to a “slope of enlightenment” in which a more practical understanding of the technology’s potential is reached. The final stage is the “plateau of productivity”.

One key factor missing from Gartner’s analysis is capital. The surge to the “peak of inflated expectations” can only occur if capital is cheap and freely available. And this is a key point to remember when analysing the hedge fund bubble of 2008.

The Gartner Hype Cycle was created to analyse technology innovations progress through their markets from an adopters point of view. While we are always very happy to see its use extended to other fields, it is not a general economic theory about bubbles and we would not wish to give that impression. We are not economists.

Mr. Smith makes a good point about the availability of capital. While the hype cycle will be in play for even the simplest and cheapest of innovations, its magnitude can certainly be amplified considerably by freely available capital. The dot com bubble is the most obvious example. The Silicon Valley funding of web 2.0 is another.

Hedge funds are not a new invention; they have been around since the early 1950s. Forbes Invstopedia suggests there was a hedge fund boom peak in 1968, followed by a crash in 73-4, then another boom in the 90’s which saw a major fallout in the early 2000s. So we have just passed through a third wave. It therefore seems likely hedge funds form a repeated cyclical, or boom-bust investment market, like property, that rises and falls repeatedly. Over the medium term (perhaps 5 to 10 years) this can sometimes be mistaken for a hype cycle. We have noted the difference before in this Blog. In the Hype Cycle two underlying curves create the shape: the social excitement bell curve plus the innovation performance maturity S curve. It is not obvious that hedge funds in their current form are a new invention, maturing in their technical performance, in this decade.

So on balance, it seems unlikely that the Hype Cycle model can be applied to the current situation of the hedge fund industry. However it is possible that the hype cycle applies to some financial instruments – where they are genuinely novel innovations. For example, as we have raised in this blog previously, it is possible that the Hype Cycle applies to the instrument at the epicenter of this recession – the CDO.

I am certainly no expert in financial investment vehicles. So if anyone cares to expand on this debate, I would be very happy to hear from them.

Innovation still a priority

Jackie Fenn — Mon, 06 Apr 2009 16:23:56 +0000

At a recent Gartner event I conducted an informal poll of 16 emerging technology managers. The results showed that most were experiencing relative stability in their staffing and funding. Less than 10% had experienced, or were projecting, staff cuts, and half were expecing to grow their staffing and funding levels by 2010. This may be counter to expectations in an economic downturn, but in fact mirrors our experience with inquiries from our clients, where we are still seeing a strong level of interest in emerging technologies and innovation. The lessons from the dot com era, when many organizations were blindsided by the rapid adoption of the Internet and felt they should have been better prepared, have been relatively enduring. Since that time we have seen a steady stream of interest from clients who want to formalize their emerging technology activities and processes to make sure they don’t miss “the next big thing”. Organizations realize that they need to innovate even (especially?) in tight economic times.

However, the same poll showed that around half of the organizations were shifting toward shorter term results, and focusing more on cost reduction than on growth. Still, over a quarter were refocusing on growth and longer term activities. This reflects the overall mood that companies feel they need to emphasize cost reductions and short term results in the current economic climate, but also shows that these trends are never “one size fits all”. The importance of making sure that your innovation activities are aligned with your organizational scope and goals - be they cost-cutting, growth, or a balance of each – is still paramount.

Hype cycle sightings beyond IT

Jackie Fenn — Thu, 26 Feb 2009 18:03:00 +0000

We continue to see hype cycles explored in interesting ways beyond the IT industry:

One of my favorite recent reads, which I am still figuring out how to put into action, is Timothy Ferris’s 4-hour Work Week. In the 4-hour Workweek Hype Cycle, “Brick” asks whether the hype cycle applies to the ideas in this very successful book, and I think they probably do given backlash/Trough-style posts such as this one.

Meanwhile Martin Lersch asks the question on all our lips – Has Molecular Gastronomy Reached the Plateau of Productivity? Apparently this scientific approach to figuring out what tastes good is rapidly moving up the Slope – perhaps I need to take a look and see if it can redeem my pathetic cooking skills.

Thanks to Susan Moore in Gartner’s Australia office for spotting the hype cycle used in a British Council publication English Next, which looks at the future of English as a global language (see page 109). Author David Graddol asserts that “we may now be somewhere between the ‘trough of disillusionment’ and the ’slope of enlightenment” with respect to English as a global language.

For those German-speakers among you, the Sueddeutsche Zeitung has used the hype cycle a couple of times to explain the fickleness of celebrity popularity, including soccer players and stars on the quiz show “I’m a Celebrity – Get Me Out of Here!” (thanks to Lars Basche for finding these).

Finally, in Love and the Gartner Hype Cycle, Amy Qui gives a touching analysis of how the hype cycle applies to relationships, concluding appropriately that ”this Hype Cycle is quite a generic formula applying to different things besides the technology.”

Measuring a ‘functional food’ Hype Cycle

Mark Raskino — Wed, 21 Jan 2009 16:24:23 +0000

I have been reading a fascinating piece of academic work published in 2006 by Olavi Uusital of the Tempere Universtity of Technology in Finland and Kjell Grohaug at the Norwegian School of Business and Administration. In ‘Expectations and Consequences of International Partnership: The Case of Benecol’ they use the Hype Cycle to describe and measure the fortunes of the company that introduced Benecol (a fat spread substitute for margarine specifically designed positive heart and arterial health effects).

Here (with their kind permission) is a key chart from the paper:

Benecol Hype Cycle - Uusitalo, O and Grønhaug, K. (2006)

This is another example of using a stock price as a proxy indicator for ‘expectations’ – the variable on the Y axis of the Hype Cycle. This works because for the period tracked, the fortunes of the company originating the innovation (Raisio) were so closely linked to a single innovation.

It’s a nice piece of work that demonstrates well, how the Hype Cycle can be measured – at least aproximately – and how it can be applied to a technology innovation outside the domain of IT.

Really long hype cycles

Jackie Fenn — Tue, 04 Nov 2008 19:37:17 +0000

In the 1920s, Russian economist Nikolai Kondratiev described cycles of repeating boom and bust in the global economy, each lasting 50-60 years. Other economists have developed the Kontratiev wave theory in more detail, including Carlotta Perez in her book “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages”. Perez ties the economic cycles to distinct sets of technological advances: The Industrial Revolution (starting in 1771); The Age of Steam and Railways (1829); The Age of Steel, Electricity and Heavy Engineering (1875); The Age of Oil, the Automobile and Mass Production (1908); and the Age of Information and Technology (1971), which is still underway.

What’s interesting of course is to look at the pattern of each previous “technological revolution” to see if it sheds any light on the future of our current one (information and technology). Perez points out that the pattern certainly looks familiar so far: an eruption phase with a rapid growth of core technologies, followed by a frenzy phase consisting of an explosive expansion of infrastructure and financial speculation. In every other technological revolution, the frenetic build out of the infrastructure and the financial bubble that accompanied it was followed by financial collapse – again, sounds familiar. The good news is that, if the model holds true, the next phases (synergy and maturity) are where we’ll start to see the real impact of the technologies on business and society. Just as the car led to social constructs such as suburbs and shopping malls, information technology will continue to transform the way we live and work.

And yes, the hype cycle overlays perfectly onto Perez’s charts of bubbles and crashes and eventual maturity. It seems that we reserve our greatest enthusiasm and financial speculation for anything to do with infrastructure – canals, railways, highways or the Internet. Perhaps it’s no coincidence that the Kondratiev waves span a generation – we need a new set of suckers… I mean speculators, who haven’t seen it all before and are willing to fuel the (seemingly essential) massive, global experimentation of each technological revolution.

World Bank blog ponders a Microinsurance Hype Cycle

Mark Raskino — Mon, 20 Oct 2008 16:03:43 +0000

The World Bank’s PSD blog wonders whether the Hype Cycle applies to microinsurance, observing that microcredit appears to have been passing through one. We think so yes – the Hype Cycle does apply to this type of market model innovation. The microcredit ‘invention’ dates back to the work at Grameen Telecom in the early 1990s but the real innovation ‘trigger’ came when major companies started to experiment with the associated business ideas – for example P&G’s single serve and Hindustan Unilever’s experiments. Following on from there, we see clear peak-hype milestone events for microcredit such as the publishing of C.K. Prahalad’s excellent book ‘The fortune at the bottom of the pyramid’, the operation of a UN International Year of Microcredit 2005 and the award of a Nobel prize to Mohammed Yunnus in 2006. Here’s another example of why hype isn’t simply ‘bad’ – such radical ideas for poverty alleviation required very widespread socialization – perhaps almost saturation coverage – to break through and achieve critical mass. However, the reality of mass microcredit delivery over the last couple of years has not been all plain sailing. A revelatory article in Harvard Business Review late 2007 by Steve Beck & Tim Ogden at Geneva Global called ‘Beware of Bad Microcredit’ pointed to several weaknesses and disappointments. (Tim, by the way, who has since moved on, was at Gartner a few years ago and helped us to get the Hype Cycle book started.)

If Beck and Ogden are even half right then the ‘trough of disillusionment’ would appear to be setting in but that’s OK. The trough is an inevitable and necessary evolutionary stage for an innovation – it’s when the practicalities get ironed out through the experimentation and learning of many players. The Hype Cycle applies to microcredit because this is an innovation that must be adopted by a market and evolved by that market. It cannot be delivered as a perfect model for all situations and applications out-of-the-box. But quite reasonably it generated high initial excitement – after all, truly great new ideas for addressing global poverty do not appear often.

It seems to us quite reasonable to assume that microinsurance will have a hype cycle. It will be interesting to track.

The Financial Times notes a Bio Fuel Hype Cycle

Mark Raskino — Mon, 06 Oct 2008 09:38:23 +0000

Over the summer, as we prepared for the publication of the book, we noticed many appearances of the Hype Cycle in places outside its normal domain of IT. We were delighted to see it used by FT journalist Philip Stafford in an article that appeared in the David Blackwell column in May. In a piece titled ‘You can believe the Hype Cycle’s take on technology’ Philip compares the parallels he sees in the ‘clean technology’ sector and its rapid rise of private equity investor excitement to that of the the dot com boom. He also notes how biofuels seem to be heading quickly into a deep trough of disillusionment.

Have you seen the hype cycle somewhere outside IT? Do tell.

Could you have a Hype Cycle for just ‘retail’?

Mark Raskino — Sat, 27 Sep 2008 19:21:03 +0000

No – because retail is a very broad and ongoing activity area. You might see a repeated multi-year up-down business cycle in retail and you will see seasonal cycles but these are not hype cycles. Yet, with just couple of bounding constraints on this vast business domain we might uncover newer and more innovative business concepts within retail that are indeed subject to hype cycle effects. Let me give you an example:

Constraint one ‘modern’
Constraint two ‘India’

There might well be a hype cycle going on in Indian ‘Modern’ Retail right now. Take a look at this article reappraising the recent gold rush to extend Western style organized retailing – shopping malls, supermarkets and all the rest- to the growing Indian middle classes. There are some tell-tale keywords here:

“Modern retail in India is proving to be fraught with stress for new entrants who had embraced it as the next sunrise sector, drawn by the hype of an impending consumer market revolution propelled by the buying power of a vast and expanding middle class.”

“…patience seems to be running out among many new retailers, who are slowing expansion, paring the number of outlets, cutting headcount and in some cases, considering exiting…

“That’s a sea change from three years ago when modern retail was thought to be the next big thing after information technology and telecom in a country of more than one billion people.”

That sure sounds like a fall from ‘peak of inflated expectations’ towards a ‘trough of disillusionment’.

We think the Hype Cycle does apply to major new business and management ideas, not just technologies. In this case, sorting out business model details that work well is the management science part of the equation that appears to be running behind the social expectations.

What unusual business Hype Cycle situations have you noticed recently? We’d love to hear about them.