The Technology Hype Cycle: As Example, Look What Happened With E-Commerce

If you are a technology decision maker, you need to know about the Hype Cycle. Indeed, this is the lifecycle process that most emerging technologies go through. As an example, eCommerce is a technology that is going through the Hype Cycle today. In this article, you will learn the basics of the 5 stages of the Hype Cycle. If you are not aware of the Hype Cycle for a given technology, you risk both failure and missed opportunities.

First, What is the Hype Cycle, What It Is Not, And Why Is It Important?

According to Gartner the Hype Cycle is “a graphical representation of the life cycle stages a technology goes through from conception to maturity and widespread adoption.” To explain, below are key questions, facts, and answers about this technology Hype Cycle:

1. What Do You Do With The Technology Hype Cycle?

The hype cycle provides an analytical model that you can apply to most, if not all technologies. So depending on your perspective, you can use the model for many things. For example, use it to make an investment decision. Also, businesses can use it to determine if it is the right time to adopt the technology. Lastly, you can use it to build a justification to kill a technology project or let it continue.

2. Why Is It Called A Hype Cycle?

Technology analysts use the word “hype” because the plot curve highlights the typical reception a disruptive or emerging technology gets as it matures. Undeniably, most emerging technologies involve a lot of hype and speculation, especially when it first starts getting applied.

3. The Hype Cycle is Really A Combination of Two Plots.

First, it depicts the amount of hype a technology gets as it evolves. The second plot is the innovation maturity level of the technology. Note: some technologies never mature (reach the final stages of the Hype Cycle); they just die and are all hype.

4. Hype Cycle Is Not A Repeatable Cycle.

A Hype Cycle for a given technology does not repeat. By comparison it is like a lifecycle for a living thing where it is born, progresses, and then dies. Also, technologies can move through each lifecycle stage at different paces. Specifically, some can move along at a normal pace, some accelerate through various stages, and others just sort of plod along.

5. The Technology Hype Cycle Has Similar Characteristics of A Financial Bubble.

The third stage of the Hype Cycle, “Trough of Disillusionment“, is a very similar phenomenon to when a financial bubble bursts. To compare, with a financial bubble investors get all caught up in the hype. This is because many investors get the Fear-of-missing-out (FOMO) feeling just before the bubble bursts. Similarly, this is what happens with technology and the Hype Cycle. In this case, technology decision makers focus more on buzzwords than business justification. As noted, this usually happens just before the technology goes into the Trough of Disillusionment. Click here for more information on financial bubbles.

Financial Bubbles: Simple Explanation Of What Is It, How To Recognize It, and How Does It Happen

For more on the Hype Cycle and related technology maturity processes, see ForeSight Guide’s Hype Cycles (Growth Cycles).

The Technology Hype Cycles Explained Using E-Commerce Cycle As Example.

eCommerce is now mainstream where most of us do our shopping online regularly. Back in the 1990s, this was not the case. E-Commerce technology is an example of a technology that has gone through all five stages of the Technology Hype Cycle. As an example, this includes where E-Commerce technology went through the Dot-Com bubble burst, Stage 3 Trough of Disillusionment. Now it is a mainstream technology (Stage 5, Plateau of Productivity). See below for a description of the five stages of the Hype Cycle. To better explain, I used e-commerce technology as an example going through each stage of the Hype Cycle over the last few decades.

Stage 1 – Innovation Trigger That Begins The Hype Cycle: The Technology Gets Discovered.

The innovation trigger stage of the Hype Cycle is when the technology starts to come out of the lab. At the beginning of this stage no commercially usable product actually exists, but the media starts to generate excitement and curiosity about the product. For example, the trigger point for eCommerce began in the 1990s. Specifically, indicators that this emerging eCommerce technology had the potential to become commercially viable included:

• Increased use of the Information Superhighway. By the mid ‘90s over 45 million people were using the Internet. 
• Invention of Web Browser. The browser was invented ushering in the world wide web (www)
• Ability To Secure Financial Transactions.  Netscape created the Hypertext Transfer Protocol Secure (HTTPS) which led to its use as a way to secure financial transactions over the internet.
• Setup of First eCommerce Site. In 1994, NetMarket went online touting itself as the shopping mall of cyberspace.

Stage 2 – Peak of Inflated Expectations: Technology Hyped That It Will Be-All And End-All.

The Peak of  Expectations stage of the Hype Cycle is when parent companies of the technology amplify the marketing hype to a fever pitch. Next, investors start investing in this technology. Also, success stories are published generating excitement and increasing public expectations. For example, the peak of inflated expectations for eCommerce began in the later part of the 1990s. Specifically, indicators that eCommerce was reaching its peak of expectations included: 

• Many eCommerce Websites Were Founded. There were numerous eCommerce startups. For example, one of them was Amazon, an online bookstore.
• Investors Flock To Bet On This New Game-Changer. Some of these eCommerce platforms would succeed, many would fail. Specifically, some of the eCommerce stars included eBay, Rakuten, Alibaba, Pets.com and Webvan. 

Stage 3 – Trough of Disillusionment: Realization That Technology Can’t Match the Hype.

The Trough Of Disillusionment stage of the Hype Cycle is when the technology begins to fail in real-life situations. Investors lose big, the public and media interest wanes. For eCommerce this stage started to happen in the late 1990s. Indicators that eCommerce was entering the Trough of disillusionment included:

• Dot-Com Bubble Bursts. This was where several eCommerce companies ran out of money and had to declare bankruptcy. Most notable were Pets.com and Webvan.
• Major Effect On Economy. Sometimes when the public loses interest in a technology, it can have a major impact on the entire economy. This was the case with the dot-com bubble burst where trillions of dollars in investments were lost throughout the economy.

Stage 4 – The Slope of Enlightenment: Technology Evolves And Starts Being Useful. 

The Slope of Enlightenment stage of the Hype Cycle is when the technology industry incorporates their lessons learned and starts producing better products and solutions. Specifically, this is when 2nd and even 3rd generation products start to appear. For example with eCommerce, this stage started in the early 2000s. Specifically, indicators that eCommerce was in the Slope of Enlightenment included:

• Payment Systems Evolve. PayPal started to catch on as an eCommerce payment solution. Many other payment systems were also introduced.
• Online Advertising Begins. Google Adwords was introduced in 2000. This accelerated the growth of eCommerce by making online shoppers aware of the products available online. Just one-click away.

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 Stage 5 – Plateau of Productivity: Technology Becomes Useful and Widely Adopted.

The Plateau of Productivity stage of the Hype Cycle is when a whole ecosystem for the technology is created and provides real-world solutions. At this stage, businesses and investors have predictability that their investment in the technology will have a consistent pay-off. For example, eCommerce this stage started in the mid-2000 and continues today. Specifically, indicators that eCommerce is in the Plateau of Productivity include:

• Large and Small Companies Are Using eCommerce Solutions. Large companies like Amazon and Walmart have created their own eCommerce solutions. Small companies are also able to leverage eCommerce solutions using the services of companies like Shopify and BigCommerce.
• eCommerce Ecosystem Expands and Matures. Whole sub-industries of technology have emerged to support eCommerce. This includes shipping solutions to enable businesses to ship their products globally, Also, other eCommerce-related solutions include multi-channel marketing, customer support systems to include live chat, social media for referrals / product buzz, order fulfillment logistics centers, and much more.

For more details and information on the Technology Hype Cycle, see F12’s What is the Hype Cycle and How To Avoid It, And Lido’s Gartner’s Hype Cycle for Businesses, and BMC’s Introduction to Gartner’s Hype Cycles.

The Meaning Of ECommerce – Stunning Ways This Technology Helps Businesses

For more information from Unvarnished Facts, see articles on eCommerce, Supply Chains, and Information Technology.