how hypes delay innovations

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(2020-03) We all try our hand at predicting things. But how good are those predictions? The Danish Nobel Prize winner for Physics in 1922, Niels Bohr, spoke these wise words: making predictions is very difficult, especially when it comes to the future. It often goes very wrong: oil price rises from the past were poorly predicted, as were cobalt and lithium price rises nowadays.

Price increases are mainly due to shortfalls in production capacity and not at all to stock shortages. Stocks are dynamic and depend on price and innovation. In addition, price increases for raw materials tend to ease off at some point. In America, the phrase ‘there is no cure for high prices but high prices’ is extremely popular. Panic over reserves of raw materials for mass production of electric cars is therefore unfounded in the longer term. I”ll leave geopolitical panic out of this for the sake of simplicity.

Gartner Hype Cycle

Tunnel vision and what I call living in the moment, or not looking back for over the past two years and then extrapolating quite a bit on things is clearly illustrated by the Gartner Hype Cycle. The hype cycle is a visual presentation designed to provide insight into the level of maturity, adoption and application of certain technologies. The hype cycle looks at technologies which are increasingly being hyped until their expectations either don’t materialize or don’t deliver on time. Regrettably, these technologies are subsequently undervalued. Examples of technologies that have yet to reach the top of the hype curve include flying autonomous vehicles, distribution drones, 4D-printers, quantum computing and the robot car (more or less).

Shared Mobility has passed the top of the hype curve and is now on its way to becoming more mainstream. To be clear; with shared mobility I mean in this case the shared car. And not the train which already has a 180 year old shared mobility history. These hypes are also deliberately being pumped up because it is a form of marketing that is needed to attract money. Money is plentiful due to the worldwide expansion of credit facilities.

In 2016, Juicero Inc. of Silicon Valley designed a fruit press that was able to squeeze bags of sliced fruit and vegetables into a healthy drink. It raised US$120 million in 2016 and 2017 from investors, including Google. The financiers saw a golden future for the fruit press. However, it soon became clear that the bags could be emptied just as quickly and easily by hand. In short, Juicero went bankrupt and $US120 million disappeared down the drain.

Negative consequences

The disadvantage of this practice of hyping things up is that it takes much longer for innovations to become mainstream. If investments in battery electric and fuel cell vehicles had been pursued in the 1990s, market shares for zero emission vehicles would now be much higher. Since our expectations are always too high, the speed of technological development and distribution remains disappointing. Barring a few exceptions.

In addition, a commercial battle is being fought on social media. If Elon Musk refers to fuel cells as foolcells, he may be right according to many people. Yet he also has a commercial interest in this statement because every dollar that is spent on ‘hydrogen’ does not end up being spent on one of his technologies.

Equally debatable is Volkswagen’s statement by CEO Herbert Diess that his company has to transform into a tech company faster because otherwise it will end up like Nokia. It is primarily a call for financial support and industrial policy in Germany and Europe. They exert pressure through pointing to employment and a positive trade balance. This method of applying pressure has been used in the industry for more than one hundred years. Often successfully.

To come back to making predictions: we freely make predictions, even about 2050. Even though we don’t even really know what will be invented in 2030. And that could have a major impact on the future. Societal challenges are being tackled worldwide by universities and other research institutes. They know better than anyone that the future (and therefore also 2050) will not just happen to us, but that it has yet to be formed. And it is not the technology hype, but the hype of societal challenges which is an excellent asset in this respect.

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