Monday, January 12, 2009

Pinpointing Products in a Hype Cycle

Looking back at my career so far, I see a clear pattern of the type of work I enjoy the most. Without doubt it's Research and Development. The bleeding edge stuff. Working at the R&D Labs of Virtusa as a Research Focus Lead before I moved on to WSO2, it was one of the best practices to read Gartner reports before investing resources on a new and potentially profitable technology. It is there that I was first introduced to the Gartner Hype Cycle. Every week the R&D leaders would get a mail summarizing the latest reports and we in turn would dig into interesting areas and do quick feasibility studies on upcoming trends.

When you have done this itteratively for several years, this pattern of thought kind of sticks to you. So everytime I hear someone passinately advocating a certain new technology, subconciously I try to see where it fits in the Hype Cycle. WSO2, where I work at the moment, is also a research oriented company. New technologies are put on the table frequently and are either integrated to our products or brand new products spawned. But working on the bleeding edge runs the risk of getting disoriented, especially when you are a startup pressed to generate revenue.

In my opinion, the amount of revenue generated by a product depends on at what stage of the hype cycle it is in. Imagine that someone (Let's call them company A) somehow managed to turn a latest technology into a product offering, immediately after the Technology Trigger. You will undoubtedly manage to rake in money during the technology's journey through the marketing buzz and hype generated by media. Relatively inexperienced and naive CIOs will flock at your stall to buy your product. But is this sustainable? No. Can you forecast your revenues using the money you're raking in today? No. Is it wise to raise more funding based on todays earnings? No.

Why? simpley because you're in a bubble and it's bound to burst once the technology reaches the Peak of Inflated Expectations. If you wrongly forecasted future revenues and was unfortunate enough to act based on these forecasts, you are in for a rude shock. You might probably lose faith of the VCs or worse lose your startup altogether.

So what if another company (Company B) develops a product based on a technology that is at the Peak of Inflated Expectations? Again, things might not go as planned. Users are finally getting frustrated by all the hype and are begining to look elsewhere for their silver bullet. The technology is travelling a sliperry slope towards the Trough of Disillusionment. The users feel cheated by products from the the likes of Company A, who took their money yet never delivered what they read in the papers. Company B would have a tough time selling their product to begin with. This may not necessarily be due to their product being an inferior one, but more a case of being at the wrong place at the wrong time.

The only option for Company B right now is to wait till the technology hits rock bottom to reach the Trough of Disillusionment.They can spend this time fine tuning the product, improving performance, removing bloat and most importantly defending it from the internal and external forces who want to kill it. Why? because the next stage is the Slope of Enlightenment and all those users and potential new clients will finally see the light. Case studies will emerge on how a certain comapny increased productivity using the technology and how government X is planning to use the technology to improve infrastrucutre and transparency etc, etc.

Company B should be ready with a proper marketing strategy at this point and a few case studies either from their limited clientele or based on hypothetical scenarios. Because sales are about to pick up for them only if they are ready. If a proper marketing strategy is in place Company B will undoubtedly see business picking up for their product offering and most importantly, this time around it is safe to forecast. Why? Because unless you do something really stupid, things can only go up and stabilize as the technology matures in the Plateau of Productivity.

After a long read, here are my predictions on where certain technologies of today stand in the hype cycle. This prediciton is based on my work in some of these areas and what industry analysts say in general. So please feel free to comment.