by John Reiners
A week before Christmas, I was at a fascinating talk on how technology is transforming financial services. The informed audience was having a lively discussion with the expert panel. One question was on the impact that blockchain technologies are having on the industry. The panel member described how blockchain is at the peak of the hype cycle. The audience nodded to each other in acknowledgement, me included. Yes we all know of Gartner’s famous hype cycle – technology concepts can get overblown in the early stages before they settle down to more sustainable growth, many years later (if at all) - let’s move on to another interesting subject.
It was only over the holidays, in an idle moment when thinking again about this exchange that I questioned myself. Yes, the hype cycle is a useful concept – it relates to what we observe in the real world with the adoption of many technologies – I remember when everyone was talking about cloud technologies – a good five years before it became mainstream. Many describe the Internet of Things (IoT) as at peak of the hype cycle today. Yet the hype cycle can too easily be an excuse for lazy thinking. It could also lead to dangerous false conclusions - assuming that it is not worth engaging with the technology until it has moved beyond the hype stage. For the hype cycle tells you nothing about the duration of the cycle – whether widespread adoption is 6 months away or several years. It also doesn’t adequately describe the frenetic activity of industry players throughout the “hype” stage.
These thoughts led me to some recent research we have been carrying out here at Oxford Economics on IoT adoption. We found that leading industry players are investing huge amounts to establish leadership positions in the emerging technologies – for example researching into compelling use cases, developing industry platforms, building industry alliances and their own teams to respond quickly to customer demand – when it comes. I am seeing the same with blockchain. A consortium of banks is investing in research on how to apply the technologies and there are a large number of fin tech startups seeking funding for innovative solutions. So rather than the hype stage being a period of frothy and wasteful over enthusiasm there is a lot of important activity going on. Certainly some of that investment is speculative and some will be wasted – but some will pay off hugely as pioneers shape the subsequent adoption phase.
The lesson for me is that though models are useful, they need to be handled with care. More specifically, when it comes to technology adoption, if you want to shape the industry rather than be shaped by it (or just keep the score) – you need to think more rigorously to understand what’s going on behind the hype cycle and develop an active strategy. Those who wait and see risk being left behind.
John Reiners is Managing Editor, EMEA at Oxford Economics where he manages Thought Leadership projects on a wide range of subjects. Recent work has included the UK’s Digital economy, the future of global trade to 2050 and a global study on adoption of the Internet of Things (to be published early 2016).