In that article, I also briefly identified the global chip shortage as a supply chain issue impacting millions of businesses, which could also become a significant barrier to businesses adopting A.I. at scale.
Let's talk a little bit more about the scale of the shortage.
Chips (or semiconductors) are used in substantially all the world's electronic devices – and the more complex machines can require not only more chips … but also more complex chips. For example, a modern car can have anywhere from 500-3000 chips in them.
When the pandemic hit, consumer demand shifts meant that semiconductor manufacturing had to slow down – and a foreseeable consequence of those actions presents us with the inconvenient truth that scaling back production can take up to a year-and-a-half. With demand increasing, the supply vs. demand ratio is getting more out of whack.
Luckily for you, semiconductor manufacturers prioritize the more lucrative goods (like smartphones and other consumer electronics), but that means that it will be harder for small businesses to get them – and it's also severely impacting the automotive industry.
You'll notice that the most affected brands have more production in North America. The reason for that discrepancy is that U.S. manufacturers depend heavily on chips from Asia. The Senate has recently approved $52 billion in subsidies for N.A. chip manufacturing, which hopefully will lessen that dependence over time.
I recently shot a podcast with Mike Koenigs about taking your ideas and transforming them not just into products but into platforms. It was also featured on Forbes.
Many of the most valuable companies (like Tesla, Apple, and Amazon) leverage platforms to scale past their initial products and create profitable ecosystems.
The video is 50+ minutes – but covers the topic in great depth, and Mike adds a lot of significant distinctions. I think you will like it.
Since recording this podcast, I've continued to make finer distinctions.
One such distinction, to help businesses plan around new technologies, was to ask two key questions.
What technologies that already exist are going to impact your industry the most in the next 3-5 years?
What technologies that you expect to exist are going to impact your industry the most in the next 5-10 years?
I ask these questions because adopting new technologies doesn't mean you have to invent something new. It can mean capitalizing on existing technologies and finding new ways to use them. Understanding what is "likely" lets you lean in the right direction and helps you visualize the most likely paths forward.
This helps you figure out where to spend focus, time, energy, and other resources. Remember, it is easier to follow and leverage a trend, rather than to fight it.
Since the beginning of time, humans have been confronted with disruptive new technologies. While technologies continue to change, human nature has remained relatively stable. As a result, predicting human nature is often easier than predicting technology.
So, rather than trying to predict what technologies will win, you can focus on which needs and capabilities are most likely to attract attention and resources. Innovation and technology will follow to satisfy the desire.
Knowing that, the question is what can you build that leverages your unique abilities and the likely path of your chosen market.
It sounds simple, but it's a powerful distinction and potential differentiator between you and your competitors.
The S&P 500 Index had another bad week and ended the month down 4.8%. It was the sharpest monthly decline since March 2020 – and finished a seven-month streak of gains. Here is a heat map chart showing how widely spread the pullback was last week.
It will be interesting to see how the S&P 500 Index fairs in October as the Delta variant continues to linger, the Federal Reserve plans to slow its purchase of government-backed bonds, and fear continues around the U.S.'s cash reserves and debt limit. Adding further pressure are the continuing shortages of many retail goods and computer chips.
But, for all the times we've expected a contraction, the market has shown remarkable resiliency in the past year and a half.
On a more lighthearted note, here are two charts I thought were interesting and worth sharing.
First, here's a chart from A Wealth Of Common Sense that shows the top 10 stocks in the S&P 500 in 5-year increments.
There are a lot of interesting takeaways you can glean from this chart. But I was surprised to see how much turnover there is. Also, in the 1980s, the top 10 companies were almost all energy companies, while today they're almost all tech companies.
Here's a bonus chart that shows the top 10 companies at the end of 2020.
With the McRib coming back on November 1st, you might want to invest now. Seems like a solid bet.
Perhaps the correlation exists because McDonald's only offers the McRib when pork prices are low enough? If so, McD's is reacting to the market (and not the other way around).
There are many ways to make money in fast food (including food sales, real estate, and commodities trading).
Talking about wealth distribution can lead to contentious discussions.
The fact that one group has "more" of something literally means it is not equal to what someone else has … but does it imply that it isn't fair or just? The arguments get nuanced fast.
Even how you look at the statistics can be confusing. You can focus on which group has what percentage of the pie. Or you could focus on which groups are gaining or losing based on the share they used to have of the pie. With that said, remember that the pie can grow or shrink, and the percentage of a population in a demographic can change as well. What you choose to focus on, and what you decide it means, impacts your stance on the meritocracy or unfairness of what is happening (and what we should do about what is happening).
So, while many people point to the increasing wealth of the 1%, it's worth discussing whether this represents inequality or simply the asymmetric distribution of wealth.
Today, the top 1% of the U.S. owns about 31.2% of the total wealth. That's up from 28.6% in 2010.
However, the total wealth pool has increased from $60 trillion to $112 trillion in that same period.
In other words, each demographic has seen an increase in wealth over the past ten years. A larger percentage of the pie has gone to the 1%, but each demographic has benefitted and our collective economic pie has grown.
So, what drives the asymmetric distribution of wealth?
There are multiple factors, but to name just a few:
The longest bull market in history benefits the top 1% more because they own a much higher percentage of corporate equities and mutual funds
The minimum wage hasn't increased since 2009, despite rising costs of living and other goods.
Technological changes influence both more menial jobs as well as creating more opportunities for tech giants
When you ask children what they want to be, many likely say YouTuber, Influencer, or some other variant of that theme.
Influence is a complicated thing. From an abstract perspective, it's the ability to affect someone else's behavior. A high schooler can influence their classmates. As entrepreneurs, we can influence our employees, our industry, and more. You can have immense influence over a small number of people or a little bit of influence over many people – both still count as "influence."
But, in this case, many of the most popular influencers aren't famous for changing the world; they are celebrities or just famous for being famous.
Below is a chart of the top 50 "influencers" by social media platform.
In the digital age, it's worth acknowledging social reach as power. People with a large platform have the opportunity to exert enormous influence – and it's why you often see the spread of misinformation reach far, fast.
It would be interesting to see how many of these people use their platforms to be a beacon to their followers (rather than a beacon to attract followers).
It would also be interesting to see how much (or little) engagement many of these "influencers" actually have with their followers (and how that level of engagement relates to the growth or decay of their followings).
While I assume that the readers of this post aren't in the business of being "Influencers," Most of us recognize the value of influence – and getting more of it.
As a result, it is probably worth thinking about influence as an asset. And now is time to think strategically about how to grow and use that asset better.
The top 100 companies account for over $31.7 trillion in market cap. Unsurprisingly the U.S. takes the largest portion of the pie, but China continues to make headway. Though, the U.S. still accounts for 65% of the total market cap value of the top 100 companies.
A lot of the staying power of the U.S. (and the fading of much of Europe) can be attributed to Tech and Retail giants like Apple and Walmart.
I'll be interested to see how the numbers change as both Tech and Retail continue to grow as industries. Will other countries find a way to compete, or will the U.S. extend their lead?
It's one of the few reports that I make sure to track every year. It does a good job of explaining what technologies are reaching maturity, and which technologies are being supported by the cultural zeitgeist.
Technology has become cultural. It influences almost every aspect of everyday life.
Identifying which technologies are making real waves (and will impact the world) can be a monumental task. Gartner's report is a great benchmark to compare reality against.
2021’s trends aren’t all that different from 2020 – but you can now find NFTs, digital humans, and physics-informed AI on the list. While there have been a lot of innovations, the industry movers have stayed the same – advanced AI and analytics, post-classical computing and communication, and the increasing ubiquity of technology (sensors, augmentation, IoT, etc.).
What's a "Hype Cycle"?
As technology advances, it is human nature to get excited about the possibilities and to get disappointed when those expectations aren't met.
At its core, the Hype Cycle tells us where in the product's timeline we are, and how long it will take the technology to hit maturity. It attempts to tell us which technologies will survive the hype and have the potential to become a part of our daily life.
Gartner's Hype Cycle Report is a considered analysis of market excitement, maturity, and the benefit of various technologies. It aggregates data and distills more than 2,000 technologies into a succinct and contextually understandable snapshot of where various emerging technologies sit in their hype cycle.
Peak of Inflated Expectations (Success stories through early publicity),
Trough of Disillusionment (waning interest),
Slope of Enlightenment (2nd & 3rd generation products appear), and
Plateau of Productivity (Mainstream adoption starts).
Understanding this hype cycle framework enables you to ask important questions like "How will these technologies impact my business?" and "Which technologies can I trust to stay relevant in 5 years?"
That being said – it's worth acknowledging that the hype cycle can't predict which technologies will survive the trough of disillusionment and which ones will fade into obscurity.
What's exciting this year?
Before I focus on this year, it's important to remember that in 2019 Gartner shifted towards introducing new technologies at the expense of technologies that would normally persist through multiple iterations of the cycle. This change is indicative of more innovation and more technologies being introduced than in the genesis of this report. Many of the technologies from the past couple of years (like Augmented Intelligence, 5G, biochips, the decentralized web, etc.) are represented within newer modalities or distinctions.
It's also worth noting the impact of the pandemic on the prevalent technologies.
Last year, the key technologies were bucketed into 5 major trends – but this year Gartner focused on 3 major themes.
Engineering Trust represents technologies that create the infrastructure of trusted businesses. The emphasis is on security, reliability, and repeatability of practices. Change is hard, and so is the integration of new technologies into existing businesses. That’s why it’s important to do it right the first time to prevent technologies from being cost centers. Sample technologies from this year’s hype cycle include real-time incident command centers, data fabric, and sovereign cloud. If I could include a technology not on the list – I’d heavily support the blockchain as an instrumental asset in this domain.
Accelerating Growth is the second theme, and it builds on top of “Engineering Trust”. Once you have a good business core you can focus on driving organizational and industrial growth. Last year, "composite architectures" was a trend that emphasized the shift to agile/responsive architectures and decentralization. This year, many of the technologies gaining attention are AI-driven tools that can be applied to improve and accelerate human-facing support. Think HR training, customer service, and onboarding. As a culture, we’ve become more comfortable with the ubiquity of AI and technology, and while there are still ethical and societal roadblocks, you can expect many new use-cases to show up sooner rather than later. Sample technologies from this year’s hype cycle include digital humans, industry cloud, and quantum machine learning. To see more of my thoughts on Accelerating Growth check out my article on “Turning Thoughts Into Things”.
Sculpting Change is the third theme and closes off what I believe is a very strong thematic year from Gartner. The nexus of this theme is that change is disruptive and that many of the technologies we will gravitate toward will be attempting to create order from the chaos. This is especially important in the context of rapid innovation, societal changes, and Covid-19. The emphasis of these technologies is on generalized and reliable technologies that are less brittle and specific than our current uses. AI is already a massively exciting space, but many of the use cases are too specific to be useful. Sample technologies include physics-informed AI, composable applications, and influence engineering.
If we compare this year’s list to last year, I think we’ve seen a massive increase in the maturity of “Digital Me”, the integration of technology with people in both reality and virtual reality. But, we’ve seen less progress on “Beyond Silicon” despite the massive chip shortage. It’s a space I’m hoping to see more improvement in, fast, to meet increasing demand.
Of course, I’m always most interested in the intersection of AI and other spaces. Last year, many of the emerging trends were AI-centric, and this year it feels as if AI has become the underpinning of broader trends. In my opinion, this points towards the increasing maturity and adoption of AI. Models are becoming more generalized, and able to attack more problems. They're becoming integrated with human behavior and even with humans.
As we reach new echelons of AI, it's likely that you'll see over-hype and short-term failures. As you reach for new heights, you often miss a rung on the ladder… but it doesn't mean you stop climbing. More importantly, it doesn't mean failure or even a lack of progress. Challenges and practical realities act as force functions that forge better, stronger, more resilient, and adaptable solutions that do what you wanted (or something better). It just takes longer than you initially wanted or hoped.
To paraphrase a quote I have up on the wall in my office from Rudiger Dornbusch … Things often take longer to happen than you think they will, and then they happen faster than you thought they could.
Many of these technologies have been hyped for years – but the hype cycle is different than the adoption cycle. We often overestimate a year and underestimate 10.
Which technologies do you think will survive the hype?
I am writing this while flying back from watching a Cincinnati Reds game in their Owner’s Box.
It was a great experience – and reminded me of how much you can learn from watching what professional sports teams do.
Frankly, the whole business of professional sports fascinates me.
They have to do so many things right … just to compete. This includes how they build and manage their team, cultivate their brand, support their communities and causes … as well as how well they handle the practical realities of the logistical, operational, and financial challenges they deal with constantly.
It is more than a business. For the most successful, it is a mission or stewardship.
Personally, I pay attention to football more than other sports.
In 2017, I lightheartedly questioned the future of the NFL as a result of bad press around concussions, crimes, and more. I questioned it as a fan that's been a season ticket holder for as long as I can remember. My Dad and I had season tickets to the Eagles when I was young, and to the Patriots when I was a teenager. Recently, I’ve been a Cowboys season ticket holder for over 30 years. I questioned it knowing that the NFL wasn't really at risk. To support that assessment of the NFL’s stability, consider that (despite quarantine) the league-wise Season Ticket renewal rate is at 92%… equaling a 5-yr high.
Part of the stability stems from doing so many things right (or at least well). Which takes us back to the point that you can learn a lot from how sports teams thrive.
There's a lot to learn not only from the NFL's longevity, but from what it's like to be a part of a team, from the coaching, and the management side of things.
Some of these lessons stem back to youth football … which I’m reminded of each time I get to watch a Dallas Cowboys practice at The Star.
Think about it, even in middle school, the coaches have a game plan. There are team practices and individual drills. They have a depth chart, which lists the first, second, and third choice to fill certain roles. In short, they focus on the fundamentals in a way that most businesses don't.
The picture, below, is of my brother's high school team way back in 1989.
Is it possible that most businesses are less prepared to win than an 8th-grade football team? At first, that may sound like hyperbole, but if you think about it … it's likely true.
Losing to an 8th-Grade Team
Even middle school and high school teams have a playbook for offense, defense, and special teams. They scout opponents and create game plans. They think about how to improve and coach the team … and each player. They strategize and drill to perform well each game. Meanwhile, they also work to string together wins to achieve a higher goal.
Contrast that with many businesses.
Entrepreneurs often get myopic … they get focused on today (or survival), and they often lose sight of the bigger picture and how all the pieces fit together.
The amount of thought that goes into football – which is ultimately a game – is a valuable lesson for business.
If an 8th-grade football team is equivalent to a normal business, what would happen to a business that operated similar to an NFL team?
Practice Makes Perfect
How you do one thing is how you do everything. So, they try to do everything right.
Each time I've watched a Cowboys practice session, I've come away impressed by the amount of preparation, effort, and skill displayed.
During practice, there's a scheduled agenda. The practice is broken into chunks, and each chunk has a designed purpose and a desired intensity. There's a rhythm, even to the breaks.
Every minute is scripted. There's a long-term plan to handle the season … but, there was also a focus on the short-term details and their current opponent.
They alternate between individual and group drills. Moreover, the drills run fast … but for shorter time periods than you'd guess. It is bang-bang-bang – never longer than a millennial's attention span. And they move from drill to drill – working not just on plays, but the skillsets as well (where are you looking, which foot do you plant, how do you best use your hands, etc.).
They use advanced technology (including advanced player monitoring, biometric tracking, and medical recovery devices … but also things like robotic tackling dummies and virtual reality headsets).
They don't just film games, they film the practices … and each individual drill. Coaches and players get a cut of the film on their tablets as soon as they leave. It is a process of constant feedback, constant improvement, or constant renewal. Everything has the potential to be a lesson.
Beyond The Snap
The focus is not just internal, on the team. They focus on the competition as well. Before a game, the coaches prepare a game plan and have the team watch tape of their opponent in order to understand the tendencies and mentally prepare for what's going to happen.
During the game, changes in personnel groups and schemes keep competitors on their toes and allow the team to identify coverages and predict plays. If the offense realizes a play has been predicted, they call an audible based on what they see in front of them. Coaches from different hierarchies work in tandem to respond faster to new problems.
After the game, the film is reviewed in detail. Each person gets a grade on each play, and the coaches make notes for each person about what they did well and what they could do better.
Think about it … everyone knows what game they are playing … and for the most part, everybody understands the rules, and how to keep score (and even where they are in the standings). Even the coaches get feedback based on performance, and they look to others for guidance.
Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.
Last week, ESPN televised a blow-out of Ohio's Bishop Sycamore high school football program by Florida's IMG Academy. The score was 58-0. But that has little to do with this story.
The supposed school in Colombus, Ohio, is not recognized by the state's athletic association … and the department of education doesn't list a school with that name. Despite that, they somehow scammed ESPN into scheduling the game.
Here are some of the troubling data-points.
The head coach of the team, Roy Johnson, has an active warrant out for his arrest
They falsely claimed they had multiple Division 1 college prospects
ESPN couldn't verify any of the players in their scouting databases.
The director of Bishop Sycamore claims the school is not a scam, and his son is in the program. On the other hand, the “school” currently doesn't even have a working website.
It's impressive that in this era of information access, a school could defraud the nation, not once, but twice.
I even heard that Cam Newton got picked up by Bishop Sycamore after getting dropped from the Patriots.
Not really … but this is an interesting story – and reflects how easy it is for “fake” things and get real coverage.
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