Sometimes it seems that every week there’s an excited headline proclaiming the latest earth-shattering discovery that will solve all of humanity’s health problems. You’ve probably realized by now that not all of these headlines come to fruition. So just how do you figure out which ones actually have some substance behind them?
It’s a pressing question for investors (https://longevity.technology/news/longevity-investing-navigating-hype-cycles-to-preserve-reputable-technologies/). Developing new technology can be an extraordinarily expensive and time-consuming process. You need to be sure it’s worth it. This is especially true in an economic downturn, with wider questions about the financial sustainability of many institutions and industries.
Hype cycles aren’t just about snake oil. They normally do start with some promising new research. The potential then gets inflated beyond proportion. A few good results, perhaps a particularly attractive or easy-to-use device, and one positive headline can catch the attention of the world. Social media helps it spread far faster than any correction or clarification, and before long, it’s all anyone talks about. Every other company rushes to get in on the trend and other projects fall by the wayside.
According to the Gartner Hype Cycle, there are five stages to this hype cycle process. First there’s the “technology trigger” when it’s first introduced, then the rapid rise to the “peak of inflated expectations” where everyone becomes invested and realism is rapidly overtaken by speculation. This is when things start to go downhill, first through the “trough of disillusionment” when people realize it’s not all it’s cracked up to be, then the “slope of enlightenment” when they set more realistic expectations, and finally the “plateau of productivity” when everything balances out and the technology is either integrated or discarded based on its actual usefulness.
These hype cycles keep happening because people are always going to be tempted by simple solutions to complex problems. For investors, managing hype means careful investigation of a company’s motivations (is it genuinely building something long-term or just jumping on the hype train?), the experience of personnel (there should be both scientific and business experts involved), whether they’ve put all their eggs in one basket, and if they’re considering the impact of legal regulations (new technologies aren’t always regulated, but that can change rapidly and you need to be prepared).
Being aware of hype cycles can allow investors to make more informed decisions for long-term sustainability.
