Remember how a year ago every cryptocurrency with a cute logo was going to the moon? Looking back, the pandemic era crypto and NFT craze was an emotional roller coaster. First, there was the panic about missing out on the latest hot new thing, then the depression set in (for those of us who bought Shiba Inu at least) when we realized that many of our overeager investments were going to take a long time to pay off—if they broke even

The research firm Gartner has a chart that describes this exact pattern that frequently happens when new innovations hit the market. It's called The Hype Cycle:

In today's social media-fueled FOMO culture, new ideas can catch fire quicker than ever before—so quick that it's often hard to fully evaluate opportunities before they become over-valued. This means that businesses that want to be on the cutting edge are going to increasingly be jumping into new tech during the "inflated expectations" stage of the hype cycle.

In other words, for a lot of leaders, investing in new ideas will increasingly be bumpy, morale-testing rides.

In my own short career, I've had front-row rollercoaster seats in hype cycles for online advertising (pre-Google), infographics (remember those days?), and content marketing—all of which today are unquestionably sustainable, but at one point were overinflated, and at another point were over-pooh-poohed. Each time, I faced the questions of how to stand out in the market during the Peak, and how to keep my team and potential customers motivated during the Trough.

And it's all going to happen again. To me and to you, if we're doing our jobs right.

So how should business leaders lead during the hype roller coaster?

One of my own companies is currently in an industry—film production—that has a hyped-up new technology that seems to be heading for the Trough of Disillusionment fast. (The technology is called virtual production, which is basically like shooting movies on a Star Trek holodeck.) Since its splashy innovation trigger, which largely started with the making of the TV show The Mandalorian, hundreds of high-tech studios have popped up to capitalize on the innovation. Money has poured into the space as investors (myself included) have scrambled to get in on the action before the market gets saturated.

And now... folks are starting to murmur about how hard it might be to get their expensive studio investments to pay off.

Like crypto, AI, and other hard-trending recent innovations, this virtual filmmaking technology is clearly here to stay. But there's going to be some whiplash. Prices will inevitably bounce around. Users will be in over their heads. Vendors will overpromise and overcharge their clients. Some folks will overreact and swear off the whole thing. It's what we've seen happen over and over again with cloud software, electric cars, HDTVs, and so on.

Eventually things will settle. And like those other innovations, the result will be more opportunities for more people and businesses.

In the long run.

Two words that signal leadership opportunity...

Concerned about the impending trough in my industry, I recently conducted a set of surveys. I asked film industry leaders about what they were satisfied or dissatisfied with, what tools they planned to use, how they planned to capitalize on the trend. Etc. The output was a state of the virtual production industry report, and the data from it revealed a surprise that I think is the key for how any leader in any industry can successfully navigate the bumps of the hype cycle.

In the surveys there was one answer that stood out across the board:

"Not sure."

More technically difficult? 43% say, "Not sure."

Higher quality? Can you guess what 41% said?

Upon first glance, having "not sure" win a plurality of votes in a survey might seem like an anticlimactic result. But it basically explains the reason for the roller coaster shape of the Hype Cycle chart, and lays out a roadmap for leaders—and thought leadership—in any industry on what they can do to reach the so-called Slope of Enlightenment.

In the absence of information, we tell ourselves stories.

One of the core leadership principles of my teamwork training philosophy is that humans are very good at telling themselves stories to make things make sense—and if you don't tell people what the real story is, they will make up their own story.

(I often use the example of one team member missing a group Zoom call. In the absence of information, everyone on the call will have a story in their head about why the person isn't there. "They don't care." "This isn't a priority." Or, if one is feeling charitable, "Something important must have come up. I hope everything is all right.")

This tendency to tell ourselves stories when we lack information explains the Inflated Expectations portion of the Hype Cycle:

When an innovation is triggered, not a lot is known yet about the effects it will have, especially second-order effects. The answer to nearly every question about this new thing is, at this point, going to be, "Not sure."

Early adopters with pattern recognition or industry expertise who see the potential of the innovation (or who stand to profit from it) will tell themselves a story. "This is going to be huge!" "It will change the world because of XYZ reasons."

And maybe they're right! But early on, change is slow, and implementing new innovations is messy. So the initial "data" that finally comes back may be promising, but it likely will not live up to the inflated story—at least, not on a short timeline.

People now looking at the latest and the hottest thing still have limited and imperfect information. But the information they do have doesn't match the excessive hype. And so they tell themselves a story: "This is all a bunch of hooey." "These hype people are trying to hustle me." And "It didn't work because of XYZ reasons."

And maybe they're right. But usually, we're wrong about why things do or don't work when we don't have much data yet. And often, the problem isn't the innovation or its potential.

The answer to every question about this new thing is still, "Not sure."

This is where leadership needs to step in.

In both the Inflated Expectations and Disillusionment phases of the Hype Cycle, people make up stories based on limited information. For a new innovation to take hold sustainably, an industry needs information. Data points. Case studies. Education. Experience.

Often these things simply need time. But leaders of companies involved can accelerate the path to the Enlightenment phase by, well, enlightening people with this information as it comes about.

The thing preventing the latest innovation from snapping perfectly into the market is often simply that it's new. Users lack information on how to harness it. Smart processes, standardization, coordination, or business models that match the value the innovation can deliver are nascent or don't exist yet.

I'm basically making a case for thought leadership to help you cross the chasm during the messy middle of the innovation cycle. Buzzwords (and great books) aside, the upshot is this:

If you want to show leadership during a crazy hype cycle, find the list of things that people are "not sure" about and provide them with answers.

Do that enough, and people won't have to make up a story anymore. They'll have information showing that this was a great innovation all along.