Exponential Change

Naylor introduces exponential change and then explores the concepts which underlie it. He argues that people in general expect change to be linear when in fact technological change tends to be exponential. He explains that this means that people consistently make mistakes about what the future will be like. For most technological changes, people tend to over-expect change during the initial 2/3rds of the period and are then shocked when change occurs faster than they expect during the last 1/3rd. The chapter explains that this contrast between linear expectations and exponential technological change underlies the Gartner Hype Cycle, which illustrates how most technological changes are over-hyped during their initial stages, and then as actual progress falls behind expectations, there is disillusionment, before actual useful products are produced. The chapter concludes by arguing that the current disruption facing insurance companies is disruptive rather than incremental, and therefore, insurers have to be careful not to be caught out by misreading which stage of the Hype Cycle their industry is at.