Deciphering the AI Hype: NOKIA’s Lessons for Today's Innovators

Artificial intelligence (AI) is very much the smartphone of our tech hype-cycle at the moment, exhilarating but also casting some doubt about the current state of tech. The hype cycle is a similar one to the old NOKIA smartphone era. But in moving from smartphone NOKIA to AI NOKIA, there are important lessons about how to deal with the hype and win in the long term.

NOKIA to AI: Understanding the Cycle of Innovation

Nokia’s experience in the first decade of the 21st century – along with that of BlackBerry and Ericsson and others – is a reminder that first-mover advantage in tech doesn’t necessarily ensure long-term success. The iPhone made Nokia and others seem as quaint as these old NOKIA phones did two decades before that. It’s important to remember how unpredictable tech cycles can be as we enter a new phase of the AI revolution.

The AI Hype: A Double-Edged Sword

The arrival of OpenAI’s ChatGPT has inevitably sparked a feeding frenzy in AI among the giants and startups alike. If the history of AI is an indicator, the current surge in activity (what I’ve started calling the ‘NOKIA moment’ in AI) suggests that many of these startups will fade, just like the early pioneers of AI companies of the 1980s and ’90s. The logic here is historical. Throughout the history of technology, we find the classic case of the pioneer who carved out a new technological category, only to fall by the wayside later on.

When is an AI Startup Worth the Hype?

Discernment is crucial in the frenzied AI marketplace. It is similar to the early history of firms such as NOKIA and mobile technology in the 1980s and 90s, where there was huge potential but not everyone achieved long-term success. The challenge for these AI startups is to find sustainable footing, and to focus on creating valuable applications beyond the ‘cool’ factor of breaking billion-dollar valuations. And if markets become regulated to the point of entanglement, they better get ready for the coming regulatory risk.

Regulation: A Navigation Beacon

And just like with the smartphone, regulation will guide the development of AI. The regulatory frameworks that are emerging around it hint at the cautionary principles that started to emerge at the time of the NOKIA peak, with the first laws around mobile internet access and data privacy. Startups must, as NOKIA did in earlier days, ‘what-if’ their way through this.

Cybersecurity: The Achilles Heel of AI

My prime example of how the current era of AI hearkens back to NOKIA’s day comes in the realm of cybersecurity. When smartphones were still new, privacy and security of the user’s data became burning issues – a topic suddenly back in the news now that the creepy implications of AI are starting to seep into business processes. Cybersecurity should be the first line of defence when designing a gen AI product, one startup founder told me, anticipating the avenues through which AI could potentially exploit them.

Data as the Cornerstone of Success

And the ultimate determinant of success for a startup at the forefront of tech will always be its data strategy: it was true for NOKIA when we expanded mobile tech; it is unquestionably true for AI ventures today. High-quality and well-maintained data sets are the unifying keys to building AI applications that are not only novel but sustainable over the long haul, avoiding the hype cycle.

Where is the AI Hype Cycle Headed?

As we contemplate the evolution of AI, further lessons from NOKIA’s ascent and transformation can act as useful waypoints along that journey. The history of innovation in AI, as in mobile technology, is full of ups and downs, of innovation surges and periods of stagnation. For every NOKIA that failed to adapt, there’s a potential beacon for new generations of entrepreneurs in AI to map their path forward.

Deciphering NOKIA's Legacy in the AI Era

NOKIA’s travails also embody a bigger story of how technology evolves – how the bar for success in any technological field keeps being raised, how companies must innovate but also be nimble enough to adapt to shifting winds in the tech world. It’s a kind of roadmap for any AI startup: innovate fast, but also anticipate regulation; prioritise cybersecurity; and treasure your data like the most valuable asset you have.

There’s more to NOKIA’s story than nostalgia. It’s a story of how out-of-synch technological cycles are a recurring part of change, and how things that tower today will be dwarfed tomorrow. As we absorb new developments in AI, we would do well to look backwards, at the past successes and failures of those giants who have been brought to their knees. If it’s true that innovation is always an iterative process, then we can also say that innovation must continually reinvent itself if it’s going to survive. No tech ecosystem is sturdier than the one that’s able to constantly rejuvenate itself.