A Twitter reference from Robert Craven to a wonderful article (in the Telegraph got me thinking. My mind jumped straight to a series of publications from Gartner about Hype Cycles - I even sent Robert the link. On reflection, my leaping mind may need a little more explanation.
Observation
Every new technology, social or business hype cycle (and there are many) attracts a range of people. Just as the California Gold Rush - one of the best publicised hype cycles - attracted fools, charlatans, crooks and wise people in large numbers, so each modern hype cycle attracts a similar group of people and businesses. And many, just as in the Gold Rush, end up disappointed.
The Dangers
When you fall victim to a hype cycle, you are in danger of suspending your normal business judgement. Then you run the risk of either:
- Investing time and money you cannot afford in some doomed venture, or:
- Paying for a service linked to your passion that you do not need, will not benefit from and delivered by somebody who, if your normal antennae were working, you would not normally deal with.
Current Danger Zones
I was at a business event earlier this month when an excellent, reputable (they really know their stuff) local business was speaking on the subject of sustainable energy sources and how to profit from them through rebates etc. I asked the speaker about the thieves and charlatans and the degree to which his industry was plagued with them. This triggered a quick summary of horror stories ranging from blatant over-charging through to dangerous (likely to catch fire) installations. As a reputable business, my new contact has joined a trade association and is working to normal business standards - in an industry where most of us will encounter the sharks first.
Here is my list of potential hype danger-zones (Gartner list more):
- Sustainable energy
- Cloud computing
- Tax schemes
- Social Media
- Unified Communications
- Tablet PC's
- Smart-Phone apps
- Franchises
- .....
Please bear in mind that in all these examples, there are many many reputable businesses working very hard to deliver excellent value. The problem comes when we start reading about things in general terms and they become "the next big thing" - and we start to falter in the general direction of suspending judgement. The markets were caught out in the .com bubble in just this way - they assigned huge values to business models that were, at best, mediocre - if not worthless.
Warning Signs
As soon as a topic becomes a common theme in business seminars, you should start to be more alert - especially if you are asked to find large sums of money to attend whole conferences dedicated to the topic. As soon as a topic starts to get hyped, you run the risk of letting your guard down.
What to Do
If you are operating a business in a hype zone, you will need to take a number of steps to ensure that you clearly differentiate yourself from the sharks. Some of the areas where you might need to be careful are:
- Write your business plan with great care
- Join the trade association
- Get approved (if your business involves skill in applying a technology, many vendors have a certification scheme - from vinyl graphics to software)
- Write down, and publicise, your code of business ethics
- Test your proposition with at least three sceptics
- Avoid statements like "of course they will buy it, it hasn't got a wire" (source available on enquiry!!)
- Base your market assumptions on a realistic model - just because there are around 10million dogs in UK households (K9 Magazine) does not mean that the market size for your wonder-dog-slipper is 10million.
- Make sure that you are constantly aware of your less scrupulous competitors and their impact on your industry or profession.
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