Crisp consultant, “playbook” Generative AI Strategy ready to “copy-paste.” Image via Midjourney.
How to separate noise from signal and put new technologies in context
Back when I lived and worked in Japan in the hotel industry in the 90’s, I can distinctly remember that moment in 1994 when I joined my first Internet forum and started exchanging emails from my Apple PowerBook 180c.
In an instant, it became stunningly clear to me that the Web would transform the world, and I had to be part of it.
As millions gradually moved their work, play, and social activities to the Web through the late 90’s, I saw two contrasting viewpoints emerge:
- Established businesses and Enterprises dismissed it as a “waste of time,” only good for geeks, and unfit for “real” business
- Another group saw the potential of the Web as a great way to “cash in.” Hyping it as “Business 2.0,” they claimed the established rules of income and profit no longer applied, and all anyone needed was a website to unlock endless riches as long as you followed their advice.
The Internet hype reaches its peak
After moving back to New York later in the 90’s, I watched as the hype group grew in size, noise and power, selling more and more services of varying quality and credibility as businesses looked to migrate to the Internet.
Things eventually got so overheated in New York’s “Silicon Alley” that as long as you knew some basic HTML and could “fog a mirror,” you could get a high-paying job in the “Digital Gold Rush.”
And these were the kinds of “Internet consultants” many businesses were paying top dollar for.
After 9/11 (I was at the Twin Towers that day, but that’s another story), the inevitable downturn of the Internet hype cycle crashed into some other hard realities.
Suddenly everyone’s high hopes for the Internet and almost everything else vanished overnight, and the big correction came.
It turned out sham Web 2.0 businesses that burned through billions of investor money like Pets.com and Webvan.com couldn’t “reinvent the physics of business” after all.
What was really interesting to me was how much bad advice established big consultancies dished out to their clients while cashing in fat paychecks and suffering no backlash themselves.
In one infamous example, strategy consultancy McKinsey advised AT&T cellphones would never amount to more than a niche for geek enthusiasts, causing AT&T to lose crucial early ground in the nascent technology.
Excessively Under-, Then Over-Hyped
So I saw that most business people had gotten the Web all wrong:
- Too many had overly undervalued its transformative power for far too long, until it made their businesses obsolete
- But many others had excessively over-hyped it once they saw it as a way to cash in by playing on people’s natural “Fear of Missing Out” (“FOMO”)
Consultancies became like the “house” in a Vegas casino, playing both sides, while all the while raking in sky-high fees regardless of the consequences of their bad advice.
The next wave of peak tech hype — Generative AI
Depending on when you’re reading this, as of September 2023, it seems we’re seeing a very similar cycle play out all over again in the current fever pitch around Generative AI.
Even Alphabet CEO Sundar Pichai got swept up in his own “AI mania” at Google’s recent I/O conference:
But what does Generative AI really mean for you, your company, and your products & services?
- Is your leadership oblivious and fearful, hoping it will go away?
- Are or are they experiencing their own “FOMO,” putting pressure on you to immediately adopt Generative AI in some form, and looking for answers in the wrong places?
Most importantly, what will Generative AI mean for your industry and your customers in the future?
A better way to put new technologies in context — “Flattening”
New technologies constantly come and go, but we can take a longer-term view to understand the impacts they could have on your business.
Instead of rushing to either a knee-jerk “dismissal,” or a FOMO-fueled rush to “jump on the bandwagon,” here’s one view that can help you take a step back and better put new technologies in context.
Roger L. Martin shares a helpful perspective through his concept of “flattening” technologies in his Medium piece, “Information Technology & Strategy.”
The blast radius of flattening tech
In Martin’s view, every once in a while, technologies emerge that “flatten” everything else, eventually taking out entire industries and all their related and supporting businesses.
This incredible destruction is matched by equal or greater value creation as new industries rise, together with their supporting products, services, and related businesses.
Obviously, the Web is our most recent example of a “flattening” technology.
One classic example of an industry the Web “flattened” was print advertising.
Breaking down the walled gardens
For years, the Yellow Pages and most newspapers sold display and classified ads, raking in billions as they planted themselves squarely between sellers and buyers as the gatekeepers connecting that two-sided marketplace.
Empowered by Google search that finally unlocked its potential, users flocked to the Internet, destroying the print-based gatekeepers’ previously lucrative revenue streams almost overnight.
Anyone expecting to run a business today needs to either make the Web an important channel in their “Where to Play” strategic choices, or risk going out of business.
Not all recently-hyped tech has turned out to be “Flattening”
Blockchain and crypto represent a large set of technologies that were supposed to revolutionize currency and the very nature of “trust” itself through decentralization.
During my time at a global tech consultancy a few years back, I saw the rise of this hype first-hand, as we scrambled to productize ways for our clients to implement blockchain technologies for their businesses.
As of this writing, blockchain and cryptocurrencies have largely become havens for speculative trading, mostly by using the classic hype-cycle play of preying on gullible people’s FOMO.
Note the steep drop-off in the image below, and that the technology is currently stuck deep in the “Trough of Disillusionment.”:
Once again, we’ve seen how bad advice played on people’s FOMO as scores of organizations and billions in value have been wiped out as cryptocurrencies featured prominently in the failures of FTX, Silicon Valley Bank, and First Republic Bank.
So despite all its hype, I wouldn’t bet on blockchain coming out of this “Trough of Disillusionment” anytime soon, if ever.
I would argue it remains just a “cool” piece of technology still looking for a real customer problem to solve.
It certainly won’t “flatten” anything except for more gullible people’s bank accounts suffering from FOMO who believe their “ship has come in.”
The only option now for most crypto investors is to HODL and pray that things eventually turn around.
Will AI become another Web or another Blockchain?
While Generative AI certainly has the potential to be a flattening technology, in many respects, it’s still far too early to tell.
In a recent splashy “white paper,” McKinsey shared the classic gushing hype-cycle projections selling the promise of billions of dollars in massive worker “productivity” increases to stressed Enterprise executives who’ve given up trying to entice their disengaged workers to come back to the office.
McKinsey is clearly very effective at selling a very special brand of consulting services to a very specific audience here.
While it’s still too early to say whether or how Generative AI will impact your industry, I would recommend you consider extremely carefully before investing your company’s hard-earned money to hire any strategy consultancy claiming to give you the key to turning Generative AI into productivity and riches.
The reality of many consulting approaches
Don’t be fooled. Even if they don’t look like used-car salesmen, they’re still there for the same reason: to prey on your FOMO.
For the ridiculous cost of a long-term engagement, an army of consultants of varying quality will come in and run their “playbook” on your organization, starting with lots of “research.” At the end of it, you’ll get a templatized “strategic plan” copied and pasted, and then “search-and-replaced,” for your business and industry.
I’ve been part of those engagements from both sides.
What you get really isn’t worth what was paid, as much of these “strategic plans” either end up getting scrapped, or worse, getting followed, to disastrous results.
I’ve also seen non-anecdotal evidence the same strategic plans have been given to totally different companies in different verticals, operating in different countries and vastly different markets.
Strategy is your single best way to put Generative AI in context
“You don’t have a useful strategy if it isn’t built on the flattening technology impacting your industry.”
Roger L. Martin, “Information Technology & Strategy”
If you’re operating in an industry that’s ripe for “flattening” via Generative AI, your only choice is to immediately go deep on two things:
- Research for yourself to better understand ways in which Generative AI may impact your industry.
- Understand that success at this dynamic inflection point will come down to how well you’re able to design your own strategy with your unique customers and business in mind.
Once we understand the dynamics of hype cycles, how technologies can “flatten” entire industries, and the value of strategy, we finally have a frame of reference and can avoid unnecessarily either dismissing or over-hyping Generative AI.
Those who dismiss it will remain stuck in the past, hoping it will all just go away until it’s too late.
But those who over-hype are the ones you really need to watch out for, especially because they’re always selling something. Regardless how nicely they dress, or how slick their presentations or websites are, beware of anyone playing on your FOMO selling something that seems simply “too good to be true.”
Ultimately, your route to success through these uncertain times will be to make ongoing strategy design a core in-house competency, and an ongoing regular habit across your entire organization so you can respond appropriately to the challenges Generative AI and new technologies will continue to represent.