The Trend Attention Cycle and how it can help evaluate emerging technologies

12K
12K
Nov 20, 2015 · 5 min read
Technology trends are like waves. Each of them is unique but they all follow a similar diffusion pattern.

As Peter Sondergaard stated back in 2013, every company is now a technology company. This means that every company has to deal with questions like “How far is virtual reality from the mass market?”, “Will Meerkat, Periscope or both survive?” or “Is this a good moment to invest in 3D Printing?”.

We have too many cards in play to casually erect believable futures, William Gibson

Unfortunately, there is no crystal ball to answer all these questions. But a systematic analysis of the present can help make substantiated predictions about the future. One well-established methodology for analyzing the status and potential of a technology is the Gartner Hype Cycle. Once a year, the consulting company evaluates the diffusion status of more than 2000 emerging technologies based on public expectations. We think that attention of expert media sources in particular can be seen as a valid indicator of the potential of a technology. Expert media journalists act as opinion leaders and gatekeepers, and therefore significantly determine the future success of a technology. With the 12K INDEX, we built a tool that makes it easy to quantify the attention for any given topic in the world’s leading tech media sources over time. We have used the tool to analyze the expert media attention for hundreds of tech trends and identified a typical pattern that we call the Trend Attention Cycle.

Trend Attention Cycle, Source: 12K

The identified cycle is comparable to the Hype Cycle and other diffusion models like the Issue Attention Cycle. It starts with the emergence phase, when a technology first gains attention. Some experts see potential in the technology but it is not yet foreseeable how relevant the technology may actually become. Early stage technologies provide the opportunity to be a first mover for risk-affine companies. The attention takes off during the expansion phase when new players, business models and ideas pop up everywhere. The expansion phase is the optimal period to address a trend publicly and jump on the hype bandwagon but also carries the danger of overestimation of the technology and over-priced investments. The trend attention reaches its vertex when the frequency of groundbreaking news slows downs and the future path of the technology becomes more clear. At the maturation phase, the technology stops being a trend and becomes a market. Technologies in the commodification phase are still a huge market but less and less interesting for the expert media sphere. The media attention declines quickly when existing technologies start getting replaced by new emerging technologies.

All models are wrong but some are useful, George E. P. Box

The Trend Attention Cycle is obviously just a model and doesn’t describe the diffusion of every tech trend correctly. But it can help us understand technologies. For example analyzing the expert media attention over time is very helpful if you want to predict if a technology is overhyped. Technologies that suddenly appear are more likely to blow over than technologies that grow slowly but steadily over a long period of time. Great examples of technologies that are far from being overhyped, even if they’re extremely fashionable right now, are Robotics and Artificial Intelligence. On the other hand, trends like Wearables or MOOCs that face a sharp downturn after the vertex came more or less from nowhere.

Source: 12K INDEX

The Trend Attention Cycle can also help estimate the market sizes for technologies. In most cases the expert media attention is a leading indicator for the economic potential. Most technologies clearly reach the highest market volume soon after expert media attention peaks as most tech journalists want to cover the next big thing and not today’s big thing. The curves for market volume and expert media attention of netbooks and tablets clearly show this pattern.

Sources Tablets: GFK Digital World, 12K INDEX | Sources Netbooks: IHS, 12K INDEX

A critical point in the Trend Attention Cycle is where a technology leaves the expansion phase and reaches the vertex. One illustrative example is the consumer 3D printing market and the acquisition of MakerBot through Stratasys. Back in 2012, the tech scene was super excited about consumer 3D Printing and MakerBot. But the excitement declined fundamentally in 2013. A few months after the expansion phase ended, Stratasys bought MakerBot for $500 million and had to adjust the book value of MakerBot to $180 million in October 2015. This case illustrates how analyzing the expert media attention can help to objectify decisions. People tend to interpolate the past development of a trend and therefore overestimate the potential of a technology at the vertex of the Trend Attention Cycle.

Source: 12K INDEX

The examples above illustrate how we use the Trend Attention Cycle to evaluate new technologies. We obviously don’t believe that a tool can replace cognitive abilities, but we are convinced that 12K INDEX can help analysts make more substantiated and objective estimations. Try it out and let us know what you think.

12K

Written by

12K

A software company operating at the intersection of machine learning and data science. Our specialty is to gather, structure and leverage data. // www.12k.co

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