Economists will tell you it takes thirty years for a revolutionary new technology to infiltrate the world and really make a difference in our lives. Over the past five to ten years, we have seen some really amazing things be created. The hype on them is big, but the end results so far are not. It’s all hope and promise.
Greg Ip writes in the Wall Street Journal, “Hype always runs well ahead of reality, bringing failure and dashed expectations. Jeffrey Funk, an independent researcher, studied the predictions of breakthrough technologies made by MIT Technology Review, a magazine published by Massachusetts Institute of Technology. Of 40 predictions it made between 2001 and 2005, most never became a market worth more than $5 billion by 2015, and only one—data mining—become a market worth more than $100 billion. Meanwhile, the magazine completely missed smartphones ($400 billion), cloud computing ($175 billion), social networking, e-books, fintech and wearable computing. Mr. Funk says the lists better reflected the hottest trends in scientific laboratories whereas commercial breakthroughs are more often extrapolations of existing technology.”
Sometimes when you see innovation staring you in the face, you still make the wrong decision. I recall McKinsey and the other big consulting firms missing the call on cell technology for phones. Firms like Motorola totally missed the boat and made terrible business decisions which now have them out of business.
In some cases, the new technology is so radical a generation literally has to die off for it to be adopted. When Gutenberg invented the printing press, there weren’t enough people who could actually read to make it super useful. Infrastructure has to be developed. It was great to figure out how to harness electricity, but without delivery and the actual products in people’s homes, it was useless technology.
I think the same can be said for technologies like artificial intelligence that we have heard a lot about. Blockchain is another technology that has received a lot of hype. So far it is all sizzle and no steak. The technological changes can be so radical it’s hard to get them adopted inside companies that can actually implement them. The feedback we have received from big banks is that they are in no mood to rip up their tech stack to totally redo their internal technology. However, they will implement complimentary technology as long as the costs are right.
One behavior that the large decrease in the corporate tax rate might affect is the risk-taking appetite of big corporates. The costs for embracing and implementing new technology have just changed.
This year might be the year when you will be exposed to a radical new technology implemented by a company, but you won’t notice it because it will be running in the background behind the scene.