Future hype: turning abuses into uses
How entrepreneurs can manage the foggy future as a resource
The nutshell: A hyped future is both the friend and enemy of actors in nascent markets. For entrepreneurs, hype puts wind in their sails. But it risks disappointment for investors and other stakeholders. This study investigates three hyped situations and draws findings which direct entrepreneurs towards activating hype while managing its downsides by engaging in collective hype-stakeholder relations practices and enacting social proof.
Source: https://doi.org/10.5465/amj.2020.1583
Most people will be familiar with the Gartner Hype Cycle, a visual description of how the timing of future expectations is first overblown, then underestimated, before the gap between expectations and reality eventually self-corrects.
Hype happens when limited knowability of future situations allows hopes and dreams, or personal or organizational ambitions and agendas to rush in to fill the vacuum. That fluff can and should over time be replaced with robust method-led inquiries into the scope and timing of expected changes. With this, and the passage of time, hype evaporates.
But while that is going on, hype is a reality. And moreover, to be understood as an important resource for entrepreneurs seeking to gather momentum, as discussed in a 2022 Academy of Management Journal study, “Living up to the hype: How new ventures manage the resource and liability of future oriented visions within the nascent market of impact investing”. *
In it, Danielle Logue (UTS) and Matthew Grimes (Cambridge, Judge School) define hype as “a collective vision and promise of a possible future, around which attention, excitement, and expectations increase over time.”
This future promise is an essential ingredient of belief that mobilizes and maintains stakeholder support during the long and sometimes winding road to future creations. Hype is, the authors say, “endogenous to the process of creating new realities.”
But wishful narratives and unfulfilled expectations also create scepticism, rigidity and disinvestment, squeezing the stakeholder relationships which entrepreneurs rely on to sustain their project. Not least, entrepreneurs can become boxed in being held to their own hyped future view, making it hard to exercise necessary flexibility to respond to fast-changing nascent markets.
So hype is for entrepreneurs both a primary resource for motivating early engagement and a relational liability for sustaining it. The challenge for Logue and Grimes is to articulate how entrepreneurs can get its upside while evading its downside, and they investigate this by way of a longitudinal (since 2007) comparative study of three ventures in what they call “the much-hyped nascent market of impact investing.”
Their analysis reveals differences in how the ventures’ leaderships differently engage with and manage hype, from which they isolate three “cultural” best practices. These are:
Motivating future state: detailing the potential size and impact of the market, thereby refining attention toward a vision for market development
Locating the opportunity: presenting the nascent market as the fulfilment of hype, thereby shaping stakeholder understandings of it
Role-claiming: presenting the uniqueness of the proposed venture vis-a-vis other nascent market actors, thereby directing attention toward (or away) from one’s own organization
Along with this, three “relational” best practices are also established:
Configuring boundaries: communicating and promoting the qualifications for membership within the nascent market
Smoothing exchange: reducing information asymmetries, align expectations and increase perceived accountability
Local network brokerage: establishing interconnections between nascent market actors
Together these activities contribute to various dimensions of social proof, to create a collective and more widely endorsed, bought-into, rather than merely entrepreneur-led, view of the future.
This, the study argues mitigates hype’s disillusions, and so facilitates ongoing support and flexibility that entrepreneurs can expect to enjoy over the course of a sustained entrepreneurial opportunity.
* This topic was also presented and discussed in the session Hype: How We Promise, Expect, and Evaluate a Future at the recent Academy of Management Conference in Chicago.