Emerging technology often enters the scene amid a blaze of excitement, only to disappoint in the short-term. Over the long-term, however, that same technology often overperforms. Broadband, smartphones, and cloud computing all faced their share of skepticism before adoption exploded.
Apple’s initial effort in tablet computing, the Newton, didn’t last, but it set the stage for the success of the iPad years later.
What does that tell us, then, about how companies can assess the potential impact of a new generation of emerging technology, from artificial intelligence, to quantum computing, autonomous vehicles, crypto, blockchain and the metaverse?
Above all, companies must develop an investment approach—and a funding mechanism—that fosters a deep understanding of emerging technology and allows them to react with flexibility should conditions abruptly change.
“Something usually goes wrong, that’s the way life works,” said Brad Smith, Microsoft president and vice chairman, during a panel discussion at London-based policy institute Chatham House that was livestreamed to registered guests. “But it is so hard to predict it in a fast-moving technology field. One needs agility and humility to keep adapting.”
These are crucial skills. Half of the companies that constituted the Fortune 500 in the year 2000 had fallen off the list by 2017, a high rate of turnover that reflects the ways in which technology has made it easier for new companies to enter a market and take share.
So, how can companies make technological disruption work in their favor?
When it comes to technology, experience is deeply intertwined with understanding. “Sometimes I think the best thing is just to play with the stuff,” entrepreneur Martha Lane Foxtold the Chatham House panel.
Not experimenting with the technology could be viewed as a dereliction of duty, according to Lane Fox, president of the British Chambers of Commerce and chancellor of the Open University, as well as co-founder of karaoke company Lucky Voice and former director of Twitter.
Companies must invest, at the proof-of-concept or research-and-development level, in a range of emerging technologies, with the understanding that they can’t know for certain how those efforts will pay off over time.
The goal is to be a little bit ahead of the market, but not too much.
“I think there’s a big difference between the hype curve and the value curve, or the reality curve,” Jeff Wong, global chief innovation officer at professional services firm Ernst & Young, said in an interview. “I love technology at the hype-curve level, imagining what is possible.… But we invest at the reality level,” he said.
He doesn’t want EY to invest too far ahead of the reality curve when it comes to generative AI, although the investments are growing.
“In innovation, we are accelerating our investment into AI, including generative AI. It is definitely a faster acceleration into projects in AI than in other technologies,” he said. His approach to investments in Web3, quantum computing concepts and blockchain are based on where he thinks they are on the reality curve.
The key is to be able to adjust technology investment with speed and agility as conditions demand. From a budget perspective, that means starting with incremental adjustments that can be accelerated or slowed down as milestones are assessed. Wong favors keeping some of his annual budget in reserve, instead of deploying it all at the beginning of the year.
As venture capitalist Vinod Khoslatold CIO Journal during the 2016 presidential election: “You don’t plan for the highest likelihood scenario. You plan for agility.”
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