3 Reasons Why Subscription Businesses Fail

Subscriptions are hot (and not).

Companies and investors love subscription business models since they generate recurring revenue that translates to predictable cash flow. The more money a company is likely to make in perpetuity, the higher its share price.

From 2012 to 2019, the subscription economy grew more than 300%, and 75% of companies selling directly to consumers said they would offer subscription services by the following year.

However, with so many companies hopping on the subscription bandwagon, competition is fierce, and some big players are having trouble keeping their customers. According to Gartner, “only 20% [of subscription businesses] will succeed in increasing customer retention.”

What’s causing the subscriber boom and bust? What makes an otherwise promising subscription business bleed customers? And how can companies engender loyalty to hold on to their subscribers?

Before we answer that, we have to pinpoint what a subscription business is.

More Than Recurring Revenue
A subscription is not defined by recurring revenue alone. Rentals, leases, and memberships generate recurring revenue, but none are subscription business models. So, what’s the difference? A subscription is when the customer pays for the future delivery of a good or service involving a degree of variability.

If you’re asked to name a subscription business off the top of your head, you might think of a magazine subscription. Subscribers pay an annual fee without knowing what articles they’ll read in the latest editions of Time or Harvard Business Review.

Many businesses call themselves subscriptions but aren’t exactly. Amazon’s “Subscribe & Save” makes for great alliteration, but shipping a predetermined item on a fixed schedule is a delivery service, not a subscription. Similarly, financing, leases, rentals, and monthly fees give customers access to a predictable good — a car, a home, or a tuxedo — so they’re not subscriptions either.

Fundamentally, a successful subscription business’s economic value is a function of the strength of the habits they create. Over the past decade, I’ve studied the fundamental attributes of habit-forming products to identify how companies hook consumers. I identified four steps successful companies build into their customer experience — what I call the “Hooked model”:

  • Trigger (which prompts customers to use the product)
  • Action (the habitual behavior)
  • Variable Reward (which satisfies users’ need for the service)
  • Investment (which makes the product more valuable to the user with use)

A closer look at the Hooked model reveals common errors companies make launching and running subscriptions:

1. Too Many Steps to Psychological Relief
Have you ever decided not to use Netflix because you know it’ll take too long to find something good to watch? I often waste more time searching than watching.

The endless scroll of options on today’s Netflix is a far cry from the mailed DVDs that originally made the company a success. The red envelope–wrapped disc simply needed to be opened and put into your player. No choices, no thinking—just watch what you previously picked. Netflix stole Blockbuster’s customers by busting the incumbent’s habit through ease of use.

When the habitual action of your product becomes more difficult to use than other options for satisfying the same need, your subscription business is in trouble. You’re at risk of losing consumers at the action phase of the Hooked model.

Today, it’s Netflix on the defensive. With so many entertainment options offering frighteningly swift dopamine boosts (think YouTube, TikTok, Instagram), Netflix can’t go back to the days when subscribers would play whatever came in the mail—but the endless choices came at the cost of simplicity.

Netflix is aware of this problem and is trying to simplify selecting a movie or TV show. The streaming service is experimenting with a “Play Something” function, quickly picking what to watch for viewers. However, this doesn’t quite hit the mark.

People don’t want to watch just anything. They’ve come to expect something good to watch. It’s telling that viewers are hacking their own solutions to fix this problem by using Chrome extensions to add critics’ scores to the site to make picking what to watch easier.

2. Not Offering Enough Novelty
Here’s the thing about humans: We’re not wired to feel satisfied for very long.

Our brains come pre-installed with a piece of mental software that makes us tire of the old and seeks out the new. It’s called “hedonic adaptation,” and it’s the reason lottery winners and paraplegics tend to eventually revert to the same levels of happiness they felt before their respective life-changing events.

Our tendency to quickly return to a baseline level of satisfaction leaves us vulnerable to the one supernormal stimuli we find hardest to resist: surprise!

Variable rewards make gambling engaging, television interesting, sports exciting, and social media habit-forming. People are insatiably curious and constantly looking for the new and better thing. On the flip side of the coin, they will stop paying for subscriptions that don’t offer perpetual novelty.

Consider the current “anything in a box” trend. From lingerie to bones to slime, you can pay to receive a box filled with just about anything these days. Some of these services, like the classic “book of the month club,” have been around for centuries. But many come and go quicker than you can say, “Why would anyone want to subscribe to bones in a box?”

A key reason customers churn out of subscription services is declining variability. After a few months, box subscription companies struggle to keep up the element of surprise for each delivery of socks or protein bars. When the ratio of interesting to mundane is too low, customers lose interest and find (usually cheaper) alternatives.

Thankfully, there is a way to boost the ratio of variability and sustain interest in the subscription service: getting users to improve the service with use, AKA the investment phase of the Hooked model.

3. Lack of Stored Value
Software as a service can be a very profitable subscription business. The gross margins on SaaS products are legendary, and companies selling habit-forming software for a monthly fee are rewarded with high valuation multiples.

Since their products are often free to try, SaaS companies have a competitive advantage over software requiring a high upfront cost. Acquiring new users is relatively easier with less friction in the way.

Keeping customers, however, is another story. Ask anyone working in SaaS to name their most important metric, the one that keeps them up at night, and they’ll tell you it’s customer churn. If you can’t keep your customers hooked, they’ll stop using and stop paying.

Many subscription services neglect the critical fourth step of the Hooked model, the investment phase. Here, the user puts something into the product that makes it better (and stickier) with use. I call this principle “stored value.”

Stored value can take many forms, depending on the type of service. Contributing data, adding content, accruing followers, making connections, and building a reputation are just a few examples of how subscribers can make the product more valuable over time. Many companies use the Hooked model to improve their subscription services with use.

Take Clockwise, one of my portfolio companies. The SaaS calendaring tool is used by big names like Airtable, Asana, and Atlassian — and that’s just working down the alphabetical list of the company’s 15,000 corporate accounts. Clockwise raised $45 million earlier this year and claimed its tool has “unlocked two million hours of focused work time.”

When used individually, the software learns the best times to recommend future engagements and time boxes. Francis Larkin, vice president of marketing at Clockwise, told me the tool adapts to the user’s energy levels and finds time for focused work. He also said, “We have a setting to help with Zoom fatigue, where we’ll automatically give you a break after two or three hours of back-to-back meetings.”

But the service really shines when it is used throughout the enterprise. “We absolutely see the most benefit when used across an organization because time is a shared resource,” Larkin said.

The more users invest in the service by inviting their colleagues and booking time on their schedules, the more visibility and flexibility each user has. Clockwise can seemingly make time by synchronizing schedules in ways not previously possible. It’s a classic network effect that stores value the more it is utilized, making the product more habit-forming and stickier with each pass through its Hooked model.

Better than Boxes
Subscription services are also making inroads into categories previously rife with failure.

Consider your morning cup of joe. If you subscribed to a coffee-bean delivery service, you’d likely enjoy it for a while, but as the novelty wore off, you’d probably cancel it—as many have with countless failed coffee-in-a-box subscription services.

Subscription services don’t win on unit price or quality alone. It’s almost impossible for subscription services to compete once shipping is factored in and you realize those beans cost more than the ones you could buy during your regular trip to the grocery store or are no better than those on sale at the third-wave coffee shop down the street.

But if the coffee subscription service had something unique to offer beyond price, you might stick around. For customers, stored value can justify paying a higher price and can keep them coming back.

Consider Bottomless Coffee. When customers sign up for a subscription, they receive a small, super-accurate Wi-Fi–enabled scale. The customer keeps the coffee on the scale, so the company “learns from your consumption and reorders for you at just the right time,” according to Bottomless.

In the case of Bottomless Coffee, the service ensures customers never run out of fresh beans. Instead of having to remember to buy or receive too much or too little or wait for delivery on a fixed schedule, Bottomless customers get precisely what they need, when they need it, as long as they keep subscribing.

Getting just-in-time coffee ensures it never gets stale. But collecting consumption data also helps Bottomless tailor future deliveries to customers’ tastes, thus storing value.

For instance, if Bottomless sees a particular coffee roast is being consumed quickly, it can infer that the customer enjoys it more and send a similar variety with the next shipment, giving the customer a variable reward from the novelty of a new roast and ensuring the selection is not too outside the customer’s taste preferences.

Bottomless plans to expand into all sorts of household products sent to consumers on their schedules and according to their preferences, not the company’s. By getting customers to store value in the service with use, Bottomless can potentially disrupt its industry by offering something non-subscription services can’t provide: personalization at scale.

By making the most of the Hooked model, subscription businesses can avoid the common pitfalls that cause customers to churn and build the kind of service customers enjoy for life.

Copyright Nir Eyal. All rights reserved.

4 Mental Traps That Kill Productivity

Productivity has many enemies: too many meetings, external triggers like interruptions from coworkers, and multitasking the wrong way, to name a few.

But more often than not, it’s mental traps that trip us up.

“Mental traps are habitual modes of thinking that disturb our ease, take up enormous amounts of our time, and deplete our energy without accomplishing anything of value,” psychology professor André Kukla wrote in his book, Mental Traps: The Overthinker’s Guide to a Happier Life.

Learning to recognize these mental traps disarms them, enabling us to move past their threat to our productivity.

Here are some common mental traps, accompanied by a solution to set you free.

Mental Trap: The Planning Fallacy
According to the American Psychology Association, the planning fallacy, is “the tendency to underestimate the amount of time needed to complete a future task, due in part to the reliance on overly optimistic performance scenarios.”

Underestimating the time you need for certain tasks means that you’re constantly unable to stick to a timeline. If you’re a freelancer whose clients have strict deadlines or part of a team that depends on you to complete a project as expected, meeting deadlines is crucial to your professional success.

Misjudging how much time you need to tackle tasks also means you’ll try to accomplish more than is possible in one day, which will cause an imbalance in your life. If you take on too much at your job, you might have to reallocate hours reserved for other domains of life—yourself and your relationships—to finishing those tasks.

Those high expectations, plus the low control you have in meeting them, are a guaranteed formula for burnout. After sacrificing hours previously meant for fun, self-care, or sleep, you’re likely to enter a state of emotional, mental, and often physical exhaustion brought on by prolonged or repeated stress.

Solution: Don’t Use a To-Do List Without Timeboxing
On their own, to-do lists are a trap. With no constraints, they don’t show force prioritization trade-offs nor help you stick to a realistic schedule.

Timeboxing, on the other hand, is a time management technique by which you reserve a specific period of time in your calendar for each activity. It’s a great way to beat the planning fallacy because it enables you to visualize your time. (If you’re new to timeboxing, try this schedule maker template to get started.)

You can use time tracker applications to monitor how much time you usually need to complete a work project, a recipe, a workout session, and more. Once you have a good idea of how long something might take you, plot it in your timeboxed calendar. This should give you a good idea of what you can realistically do in one day.

Be liberal with assigning time to your tasks. Don’t limit yourself to the minutes you need for the best-case scenario of productivity—timebox for your worst-case scenario. If you finish early, then you have breathing room to take a break.

Mental Trap: Liminal Moments
Liminal moments are transitions from one thing to another throughout our days. Have you ever opened a tab in your web browser, got annoyed by how long it’s taking to load, and opened up another page while you waited? Or looked at a social media app while walking from one meeting to the next, only to keep scrolling when you got back to your desk?

By doing these actions for “just a second” or “five minutes tops,” we’re likely to do things we later regret, like getting off track for half an hour.

Solution: The 10-Minute Rule
Next time you feel the urge to check your phone in a moment of boredom or distraction, tell yourself to wait just 10 minutes. It’s likely that once the 10 minutes are over, your urge will be over.

The 10-minute rule, also known as “surfing the urge,” is when you take a breath to notice your sensations and ride them like a wave, which helps you cope until the feelings subside.

Surfing the urge is effective at helping me deal with all sorts of potential distractions, like googling something rather than writing, eating something unhealthy when I’m bored, or watching another episode on Netflix when I’m “too tired to go to bed.”

Mental Trap: The Mere Urgency Effect
The mere urgency effect is the “tendency to pursue urgency over importance,” as defined by this recent study. It says, “People may choose to perform urgent tasks with short completion windows instead of important tasks with larger outcomes.”

In other words, we tend to prioritize the completion of the five-minute menial task rather than the important project that will take us hours of work.

Email is a perfect example. It’s the curse of the modern worker. The average office-dwelling worker receives 100 messages per day. Even if you can tap out a reply in just two minutes for each one, that adds up to more than three hours daily. It will consume all the time you need for more important tasks if you let it.

Solution: Plan Focused Work Sessions
Timeboxing can protect us from the siren call of menial tasks. In your calendar, reserve a period for focused work, and let your family, coworkers, boss—anyone who might try to approach you in that time—know that you’ll be unavailable.

This will eliminate the guilt or anxiety you feel over not responding to emails every 30 seconds because your boss and coworkers will know you’re not slacking–you’re Indistractable.

Planning focused work time will also let you know that any other task you do in that time is a distraction. You might be tempted to recheck your inbox or, if you’re working from home, quickly throw some laundry in the wash—but that’s off-limits during your focused work time.

Mental Trap: Shame for Not Getting Everything Done
Humans aren’t machines, so we’re going to have moments of low productivity, even if we’re proactive about managing our time and attention. Making yourself feel shame about your lack of productivity isn’t going to do you any good.

Maybe you’ve made yourself feel shame for sleeping in instead of getting up for your early morning workout. Or maybe distraction was able to steal your attention more than usual today.

Don’t give in to self-blame. That toxic guilt will only make you feel even worse and can, ironically, lead you to seek even more distraction in order to escape the pain of shame.

Solution: Self-Compassion
Everyone struggles with distractions from time to time. The important thing is to take responsibility for our actions without toxic shame.

Self-compassion makes people more resilient to letdowns by breaking the vicious cycle of stress that often accompanies failure.

If you find yourself listening to the little voice in your head that sometimes bullies you around, it’s important to know how to respond. Instead of accepting what the voice says or arguing with it, remind yourself that obstacles are part of the process of growth.

Talk to yourself the way you would to a friend. We tend to be our own worst critics, but if we talk to ourselves the way we’d help a friend, we can see the situation for what it really is. Telling yourself things like, “This is what it’s like to get better at something,” and “You’re on our way” are healthier ways to handle self-doubt.

Feelings of guilt are yet another reason to use a schedule builder over to-do lists, which perpetuate harmful self-stereotypes because they act as a constant reminder that you didn’t do what you said you’d do.

Copyright Nir Eyal. All rights reserved.

One Question to Ask Yourself to Know Your Future

And to change it too.
The German writer and philosopher Goethe believed he could predict someone’s future based on one simple fact. “If I know how you spend your time,” he wrote, “then I know what might become of you.”

Seeing how you spend your time reveals your values and, thus, shows where your investment of time, attention, and effort will lead you. The trouble is that too many of us spend too much time distracted rather than focused on the things that matter. Wasting time on distractions, which we’ll later regret, leads to a life filled with missed opportunities.

Using a few of the concepts I discuss in my book, Indistractable, you can become the person you want to be without letting distractions lead you astray.

Who Do You Want to Be Tomorrow?
Either way, the best way to draw up a draft of who you want to be is to home in on the characteristics you want to embody—also known as your values.

According to Russ Harris, author of The Happiness Trap, values are “how we want to be, what we want to stand for, and how we want to relate to the world around us.” People make time for what they want. For example, one of my values is to be a caring, fun, and involved father to my daughter.

These values then act as a roadmap to becoming your ideal future self. You can use them to guide you toward the activities that help you fulfill those values.

To support my value of being the father I want to be, I created a system with my daughter: Every week, we randomly select from a jar containing pieces of paper with a fun activity scribbled on each, and then we do that activity.

By consistently putting in this time to be fully present with my daughter, I feel confident that I’m becoming the kind of father I hope to be.

Listing your values and the activities that push you to meet them reveals any gaps between how you spend your time and who you want to become.

Let’s say you want to be an author. Unless you’re spending time writing regularly, it’s all but guaranteed that you won’t publish much. You have to make time for it or it won’t happen.

Dedicate Time to Your Future Self
Too often, people don’t make time for their values.

They let outside influences like external triggers bulldoze how they intended to spend their time or allow internal triggers to drive them to distraction.

But here’s the thing: Your life in the future isn’t going to look the way you want it to unless you take control of your time and attention.

The best way to make our ideal future come to fruition is to turn values into time.

Timeboxing, a well-studied time and attention management technique, facilitates that. It involves reserving specific periods in your calendar for traction, the activities you planned to do in advance to live out your values.

Knowing exactly what we should be doing each day and when we plan to do it helps us fight distractions and create a timeline for achieving goals.

Unlike checking something off a to-do list, using a timeboxed calendar enables us to learn how long different tasks take us. That, in turn, informs a feedback loop for our progress.

So, if you have a goal to write a book, putting that on a to-do list is a recipe for never getting it done. But if you timebox 30 minutes a day for writing, you can track how much progress you make in that time and do some simple math to get an estimate of when you might complete the first draft.

Once you’ve realized that you generally write 200 words in an hour, for example, you can calculate that it would take you about 200 hours to write a 40,000-word manuscript.

That’s actually not much considering the average American spends nearly five hours per day watching videos!

When it comes to living the life—and the future—you want, making sure you allocate time to living your values is the best thing to focus on. Plan your time and your future is in sight!

Copyright Nir Eyal. All rights reserved.

5 Productivity Myths Ruining Your Life

Busting these myths will set you free from productivity woes
Every time I hear a productivity myth described as fact, I cringe as if listening to a snake oil salesman peddle his cures.

Let me tell you, when I was writing my second book, Indistractable, I endlessly researched productivity and time management. I tried a lot of recommended methods and techniques myself.

Some of them can be so incredibly helpful in controlling your attention and managing your time.

But productivity myths hold you back. They aren’t just inaccurate—they have the potential to hinder your productivity rather than help.

By letting them go, you can make room for productivity methods that actually work. Here are five myths you should stop believing now.

Myth: Motivate Yourself to Focus with a Reward
Do you tell yourself that if you just finish that one project, if you just focus for one hour, if you just buckle down for today, then you can treat yourself to something? You can go out for a nice dinner or get a cappuccino at a café or buy yourself something.

How has that been working for you?

For hundreds of years, we’ve believed that motivation is driven by reward and punishment. But the truth is, the root cause of human behavior is to relieve discomfort. All motivation is a desire to escape discomfort. Even when we think we’re seeking pleasure, we’re actually driven by the desire to free ourselves from the pain of wanting. And when we feel that discomfort, we are prone to distraction.

If you feel discomfort, also known as an internal trigger, such as anxiousness or restlessness, when you try to accomplish a certain task, then an arbitrary external reward is not going to motivate you to overcome that discomfort.

Instead, add a bit of play to the task itself.

Ian Bogost, a professor of interactive computing at the Georgia Institute of Technology, says that fun and play can be a part of any difficult task. They can even be used as tools to keep us focused.

The idea is to pay such close attention to your task that you find new challenges you didn’t see before. Those new challenges provide the novelty to engage our attention and maintain focus when tempted by distraction.

For example, if you’re struggling to sit down and write an article, give yourself a time limit, or try to write it as fast as you can. Operating under a constraint adds a fun element.

Myth: The “Best” Productivity Apps Will Help You Focus
Don’t fool yourself into thinking that, when you’re struggling to accomplish the task at hand, perusing the internet for the app that will help you focus is productive.

Searching for the holy grail of productivity apps is just another distraction. Spending hours searching for and trying out the best productivity apps is wasting time.

Productivity apps are not one-size-fits-all. You have to be intentional about finding the right productivity for you.

That means using this fail-safe trick in your search for the right productivity apps: First diagnose the problem, then search for the solution.
If you’re having trouble sticking to tasks, then you might try an app or software that facilitates a precommitment pact, like FocusMate.

Myth: Multitasking Destroys Productivity
It’s true that most forms of multitasking aren’t effective. We can’t tinker on our phone and be fully present with our friends at the same time. We can’t simultaneously absorb information shared during a meeting and write a report.

People not only commit more errors when juggling many tasks but also take longer—sometimes double the time—to complete the tasks.

But there is one brand of multitasking that does effectively help you save time: multichannel multitasking, the concept of pairing one complex task with a lower-level task that uses a different sensory input.

Multichannel multitasking is a way to navigate the two limitations of the human brain: one, its limited processing power—the more concentration a task requires, the less room the brain has for anything else—and two, its limited number of attention channels, meaning it can only concentrate on one sensory output at a time.

As long as we’re not required to concentrate too much on any one channel, we’re able to do more than one thing at once.

We can make calls while walking, listen to podcasts while cleaning, and cook meals with friends and family.

We can even use temptation bundling—which involves multitasking with one task you enjoy and one you don’t—to motivate us. For example, you might exercise while watching your favorite TV shows.

Myth: You Have to Be Ready to Successfully Pursue a Goal
Do you have a goal, aspiration, or milestone so big that you keep putting off until you’re “ready”? This could be writing a book, going back to school to advance your career, opening a business, running a marathon… Whatever it is, you dream of it happening but keep saving it for someday because you’re “just not in the right place” to do it now.

Well, what exactly do you need to be ready for? Sure, with certain ventures like opening a business, you need to be financially prepared. But you can start working towards your dream now, no matter what your current financial situation. The myth of readiness is actually a detriment to your productive pursuit of a goal or dream.

Declaring yourself “ready” or not means thinking you have to have a quality output standard. It focuses too hard on the destination and outcomes and not enough on the journey, so getting started seems overwhelming.

We have to redefine what being “ready” means. In reality, you’re ready to pursue a goal when you can put in the time to work toward your goal for as long as you said you would.

As long as you schedule time for working toward this goal in your timeboxed calendar and stick to it, you’re doing everything you need to be doing.

Stop thinking of your goal or dream as something to finish. Just because you haven’t finished something doesn’t mean you haven’t made progress. You just have to work on it without distraction.

Myth: A To-Do List is all You Need
When we need to manage all of our tasks, a common approach is to make a to-do list. We write down all the things we want to do and hope we’ll find the time throughout the day to do them. But often these tasks get pushed from one day to the next. It’s not an effective way to manage our time. To-do lists aren’t useful for productivity for the same reason the myth of readiness isn’t.

Being productive, or making good use of your time, and finishing tasks are not the same thing. Output isn’t the only measurement of accomplishment. Treating it that way doesn’t take into account the journey of long-term goals and thus discourages people from pursuing those goals.

Yet to-do lists measure productivity based on output.

Stop making yourself feel like you’re not doing anything just because you didn’t check off a box today. If your task is an important project, it’s going to take time. It’s not something that can be done in a day.

Supplement your to-do with a timeboxed calendar and see how your productivity mindset changes as a result. You can use this free schedule maker to get started.

Ready to become even more productive? Learn how to create new habits and measure your progress using my free habit tracker.

Copyright Nir Eyal. All rights reserved.

Role of Humans in a Digitalized Society

While robots which vacuum the carpet, mow the lawn or deliver lunch are cute time savers, their possible entry into the workplace can be scary. Employees who have spent years performing a routine task can be threatened by the idea of technology taking over their job. People in customer facing roles (cashiers, bank tellers, check-in agents) may argue that use of self service or remote interfaces ‘dehumanizes’ the company.

Business leaders today know they must digitalize to compete, survive and grow in today’s world. However, success is often contingent on employee support. A recent Forbes study of 2000 global companies found that 80% considered their digitalization effort a failure – due to lack of management support or employee adoption. By investing the resources and time needed to gain employee commitment, companies can avoid the disappointment, cost and lost opportunity that comes with a failed project.

Technology: Greater Employee Freedom and Value
Gaining support starts with understanding why and how technology can enhance the employees’ worklife. This can be greater ease of completing projects, the ability to work from home occasionally or opportunities to learn new skills, possibly leading to higher salaries.

In many companies, use of technology frees people from performing mundane tasks such as data entry or manual production line work. They are then able to ‘move up the chain’ so their contributions are valued more highly. Consider the accountant who used to simply log expenses and transactions into the bookkeeping system. By encouraging clients to electronically transmit and store this data, he or she now has time to analyze expense patterns and provide the client with valuable advice on ways to reduce expenses.

The high cost and limited availability of employees, combined with the need for competitive growth, has led to wide-spread use of technology from self-service check-in to online banking services. However, digitalization remains a challenge for many traditional, retail and professional service businesses.

For success, digital initiative needs to:

  1. Involve and engage managers and employees in discussions and workshops to understand the positive impacts of digitalization.
  2. Provide training or resources for employees to learn the new skills required for future success
  3. Be integrated into all employee development and reward programs
  4. Demonstrate ways in which employees can benefit from technology

Ultimately, digitalization, whether it is through introduction of robotics or new systems to streamline operations, will lead to more interesting work, greater employee engagement and company value.

European Supermarket Leverages Digitalization to Increase Revenue and Employee Satisfaction
With new online competition, success in the retail grocery market is increasingly challenging. When tasked with implementation of technology to reduce the cost and increase efficiency of customer checkout, one supermarket leadership team took a creative approach.

As they piloted new self-serve checkout stations, they found customers were both unsure of how to use the kiosks to scan and pay and concerned that adoption would cause the local cashiers to lose their job. To address these issues, a few cashiers were trained to help customers use the kiosks while welcoming back customers and encouraging shoppers to visit again for specials.

This led to faster checkouts via the kiosks and more return visits, while the employees found they enjoyed the customer interaction. Therefore, the store manager created a new training program for employees to gain in-depth knowledge in a particular product area. They were then assigned departments (meat, produce, household items) of the store in which they would be available to answer customer questions, provide advice or guide shoppers to new or promotional items.

The result was higher store revenues, increased customer loyalty and differentiation as ‘the store where I like to shop’. However, the real benefit was to the employees who were freed from repetitively scanning items, accepting payments and offering receipts to delivering real value to customers and their company.

Technology, whether robotics, self-service kiosks, artificial intelligence and online systems are coming in all industries. By committing to digitalization, then facilitating employee adoption and training in new skills, business leaders can increase their company’s results, while enhancing employee satisfaction and value.

Copyright Jennifer Vessels. All rights reserved.

Millennials Demand Top-notch Management

The (digital) natives are restless
During the Oslo Business Forum in March, there were many discussions on characteristics of and how to work with the digital native talent of millennials and GenZers. To help companies and leaders challenged with gaining the greatest productivity and loyalty from young workers, Jennifer Vessels published an article for OBF on this topic. It originally appeared at www.obforum.com/article/4-tips-to-developing-millennial-and-generation-z talent.

You’ve just hired a newly educated employee full of energy and promise. You believe they will contribute to your company’s growth. But how can you as a leader develop their talent?

Digitalization is a key imperative for 2019—with many companies investing in the recruitment of millennials and Generation Zers to gain digital competence and new ideas. While they bring innovative approaches, the latest generation also comes with high expectations.

From Next Step’s Silicon Valley perspective, we see that millennials and Generation Z (Gen Z) play a key role for businesses to grow in the digital era.

Knowing their skills are coveted by startups, corporations, and consulting firms, millennials often approach new jobs asking, “How is this going to help me achieve my goals?” They expect self-fulfillment, challenge, and appreciation from managers and co-workers. Without these, they will leave. A recent Harvard Business Review study showed that over 30% of millennials quit within six months of hire and over 50 percent after 18 months.

Managers need to do the following to develop and retain millennial and Gen Z employees:

Recognize their value by understanding each employee’s goals, showing appreciation, and rewarding their successes
Engagement starts with a warm welcome by leadership and co-workers—with lots of fun digital swag to say, “we are delighted you are here.” From day one, managers play a critical role in development. They must understand the employee’s career and personal goals and recognize progress.

Feeling valued by management and co-workers with small rewards for achievements is the most critical factor in any employee’s decision to stay or leave a company—with digital native talent this is more important, as they have many options available.

Challenge them with interesting opportunities to have an impact
Millennials and GenZers are known for their desire to make a difference and for their impatience. They want to have an impact and grow immediately—otherwise, they will move on to alternative career options.

To gain commitment, work assignments must be aligned with their personal interests and passions. When they fully understand the company and department objectives and how achievement of these will impact the world AND their objectives, anything is possible.

Empower them through clear goals, milestones, and check-ins
Digital natives have a lot of energy and high ambitions. They want flexibility and freedom in their work. However, they often lack the experience and context of situations to be successful if left on their own.

Effective empowerment means setting very clear, specific goals, outlining recommended approaches, planning key milestones, and regularly checking in on progress. In addition, regular meetings provide the manager with opportunities to recognize and reward accomplishments.

Coach and mentor growth
To achieve their high ambitions, digital natives want to learn, get feedback, and explore ideas with their managers, peers, and mentors. Mentorship programs and coaching sessions create lasting value.

When engaged, millennial and Gen Z talent can accelerate digitalization and innovation.

However, to gain return on investment in these digital natives, managers must listen, develop, challenge, empower, and coach them. While this may require new leadership approaches, it pays off as all employees perform at higher levels when they feel valued, empowered, coached, and developed.

Copyright Jennifer Vessels. All rights reserved.

Human Centric Leadership Pays Off

Leadership during periods of uncertainty, and change is never easy. Today, the task is even more daunting due to ‘pandemic fatigue’, the distance of working from home, new digital tools and employees’ fear of illness and personal economic impact.

Traditional management techniques such as setting challenging goals, tying incentives to results, and measuring KPIs can lead to resistance or burnout as employees struggle to meet expectations.

Today’s environment requires a new ‘human-centric’ leadership approach. By shifting the focus from the results to the people, future-ready leaders are experiencing increased employee engagement.

Human-centric leadership starts with understanding each employee’s feelings, needs, and goals – prior to consideration of the company objectives, strengthens commitment and long-term results. Keys to success are:

Building Trust
By showing employees you care, are willing to listen and committed to supporting them, you lay a foundation of trust.

Asking team members how they are feeling; inquiring (appropriately) about their family depends on the relationship. Being transparent, balancing confidence with vulnerability, then creates a culture of trust and a safe haven for employees.

Embracing Diversity
Each person on your team (irrespective of cultural background, generation, or gender) is unique. By getting to know each employee through open one-to-one meetings (video or, if possible, in person), human-centric leaders build deep relationships while gaining valuable insight into each person’s motivators.

Adaptation of management approach to meet each person ‘where he or she is’ creates commitment. Recently, leaders have found that some people need short, frequent 1-1s; or crave human connection, so monthly outdoor walking meetings are important, while others what the challenge to learn new tools.

Longer term, knowledge of key motivators can be used to define personalized incentive programs (extra vacation days, gift cards for favorite online stores, access to company cabins) to reward achievements.

Empowering Success
Global leaders, including Amazon, Google, and Ritz Carlton, attribute their success to empowerment. Their employees go beyond ‘the day job’ to innovate, define new solutions, deliver outstanding customer experiences, and move the company forward through uncertainty.

The keys to successful empowerment are to:

  1.  Assign people to teams and initiatives which align with their personal goals and motivators
  2. Set clear direction of what needs to be achieved, allowing the employees to determine how to reach the goal.
  3. Allow the team the time, space, and creativity to explore, experiment, and then move toward agreed-upon milestones – without restrictive time pressures or reporting demands
  4. Acknowledge that failures can and often will occur
  5. Leverage one to one’s as coaching opportunities

Team Building
As humans, we all have a desire to belong to a community. While social distancing requirements make historical team development activities difficult, there are alternatives for getting people together.

Some of the techniques used by human-centric leaders to build a sustainable team culture include:

  • Weekly video lunches; happy hours; quiz time or drum circles (using kitchen utensils) • Walk and talk sessions outdoors instead of video 1/1s
  • Open office time – a couple hours/week when the manager is available on video for anyone who wants to talk
  • Group picnics to celebrate milestones
  • Best recipe; garden; cool picture contests

Wondering what is right for your team? Just ask a few people what would make them feel connected and supported and give a bit of levity to the workweek.

The time has come for human-centric leadership. COVID-19 has disrupted all aspects of business, creating many opportunities for innovation as societies, companies, and people define the new future. By building trust with your employees; embracing diversity of goals and motivations; empowering success, and building a committed team, human-centric leaders are ready for success now and in the future.

Copyright Jennifer Vessels. All rights reserved.

Power of Collaboration

As President John F. Kennedy once said, “Change is part of life—those who look only to the past or present are certain to miss the future.”

In today’s world of rapidly increasing customer expectations, global competition, and technology acceleration, leaders’ ability to deal with change can be the difference between future growth and disruption.

Future-readiness requires new approaches to leadership, innovation, and customer engagement to minimize disruption. However, many corporate leaders continue looking to traditional methods to innovate, address competition, transform culture, and gain customer loyalty.

These include:

  1. Gaining knowledge and skills that could help deal with the future:
    Through investment in leadership development programs or enrolling in executive education university courses, some companies anticipate their managers will “learn how to innovate.” While one can gain knowledge and case examples from academia, real future-readiness requires experience and application of the knowledge to real-world challenges.
  2. Hearing about the future:
    Many executives attend conferences to gain information and connections to share experiences as they grapple with concerns about the future. While this can provide a broad perspective of what’s possible, over 95% of the benefit is lost within one day of the conference as attendees return to work.
  3. Outsourcing the future:
    By engagement, a management consulting company defines an “innovation strategy.” Or to build new digital solutions, some leaders believe they have a “safe solution” to future needs. However, after a significant investment in time and money, they are often left with data, statistics, and guidance of what they should do, but are often lacking understanding and experience in how to move forward.
  4. Delegation of the future:
    Many leaders see recruitment of a Chief Digital Officer, Innovation Leader, or other executive to drive change and digitalization as the solution. While having a change leader and champion for innovation can be valuable, real future-readiness starts with the executive team and must be embraced throughout the organization, not via a single department.

Each of these approaches can provide knowledge, skills, tools, and momentum to support the company’s success in the “unknown future.” However, 70%of innovation initiatives still fail. This is often due to leadership, people, or execution flaws.

There is another way. The Executive Growth Alliance accelerates future readiness for Fortune 500 companies, leaders, and communities by addressing complex global challenges across ecosystems (Transportation, Environment, Health, Industry, Consumer) through peer collaboration.

Forward-thinking leaders in Global 500 companies join the Executive Growth Alliance to enhance and extend the benefits of leadership development, conference participation, strategy development, and digital team investments.

By collaborating with peers from other multinational corporations on common challenges related to innovation, transformation, and future-ready leadership approaches, members such as Schneider Electric, Merck, Nordic Choice, BCW, and FMC have achieved tangible results, including co-development of digital solutions: design to launch < than 9 months; corporate to SME joint venture collaboration; increased innovation team productivity; enhanced productivity of innovation team; streamlined customer data access; and future ready distribution value network.

By collaborating with peer business leaders who bring diverse perspectives on specific real world innovation and leadership challenges, Executive Growth Alliance members and their organizations achieve true Future-Readiness. Participation in the Executive Growth Alliance is by invitation only for business leaders who share a commitment to future readiness, achieving tangible results, and making a difference in the world.

Copyright Jennifer Vessels. All rights reserved.

By Ignoring Gen-Z the Property Industry Risks Missing the Fastest Growing Customer Segment

As a Millennial born in the 80’s, I recall the feeling of running my fingers through the stiff cardboard catalogue at my elementary school library to find the books I needed to complete my homework. By the time I was a teenager, when I was meant to be studying for my final exams, I could usually be found furiously typing away in chatrooms with ‘friends’ in far-off places. The ways to access and share information changed dramatically during the period of my schooling and I embraced it. Not only could I access the collective global knowledge through this new world wide web but I could also contribute to conversations in chatrooms and forums. It gave me a breadth of reach, knowing I could digitally transcend geography.

This transition, from living in an analogue world and having to adapt to the new reality created by the internet, means that I am a digital immigrant. The generation after me, Gen-Z (born 1995-2010), didn’t experience this. They have been nicknamed the iGeneration as they are digital natives having never known the analogue world that the rest of us grew up with. The iGeneration have endless knowledge at their fingertips. They can learn languages on demand through apps or learn to build cars through videos on YouTube. The way and the pace in which they consume information is vastly different. For them the digital world isn’t an extension of reality, it is reality.

What does this digital reality mean for realty? It has everything to do with which trends will change the way we inhabit spaces, and which will fade away. In 2019 Gen-Z became the largest population group globally. The values and expectations of this generation, the first digitally-native one, must be front of mind for the property industry as they are soon to be the main consumer of space. By 2030, 75% of the workforce will consist of Millennials and Gen-Z. Already meeting the needs of Millennial talent has been described as a ‘nuclear arms race’ with property firms looking to out-tech, outfit and out-maneuver their competitors by retrofitting portfolios and looking to flexible-workplace provider. Brokers meanwhile have leveraged social media through Instagram, podcasts and TV shows for publicity. I imagine it won’t be long until we see brokers on TikTok.

A recent survey found that 55% of Gen-Z spent over 5 hours per day on their phone and have a tendency to use multiple screens simultaneously.

While many values of Gen-Z and Millennials are aligned, Gen-Z has far greater engagement with technology than mine. A recent survey found that 55% of Gen-Z spent over 5 hours per day on their phone and have a tendency to use multiple screens simultaneously. While a caveman is commonly depicted holding a club, our Gen-Z hold tight to their phones. If you have a younger relative, you have likely noticed that they tend to live their lives over the top of their devices. For real estate professionals to not engage with apps, video and smartphone technology, simply won’t reach a Gen-Z audience.

Interestingly, while the internet has become the main way that Gen-Zer’s experience the world, they have also gained an increased appreciation for personal meetings. Dr. Kent Wessinger conducts global research on the behavioral patterns of Millennials. He found that only 2% of Millennials felt that face-to-face meetings were effective, while a recent poll indicated that Gen-Z has a strong preference for face-to-face meetings. As such, we can expect to see platforms such as Zoom or FaceTime playing an increasing role at work, replacing email and instant messaging which had been so lovingly embraced by us Millennials. This will hold especially true for real estate transactions where face-to-face communication is particularly important to establish trust, and you can say goodbye to those in person meetings. Workspaces should be designed to accommodate more video calls and cultivate intimate communication.

In Dr. Wessinger’s research 81% of Millennials indicated that content on podcasts, YouTube, and email were the channels of communication that stimulated their purchasing decisions. Gen-Z also use social media as a way to research important decisions and most review at least three sources before making a purchase decision, most often turning to YouTube for product reviews. “The real estate sector cannot ignore the fact that video dominates communication, more than 80% of internet traffic will be video by 2022. Gen Z seeks ‘learn more’ accessibility and seek frictionless access to information in decision-making” says Marcia Favale, CEO of Blingby, an interactive technology using video.

Facebook is passé, Snapchat is on the downfall, and Instagram is currently the most popular social media platform for Gen-Z according to a recent Business Insider survey. Social media is ingrained into the lives of Gen-Z and propagating their virtual identity is as important as their real person. Their awareness around privacy concerns has them flicking over from features where they can share publish personal content such as Facebook profiles, to sharing Instagram Stories to their closed group of connections that disappear into the abyss after a few hours.

Much like they can purchase a ‘skin’ on popular game Fortnight or purchase players on e-sport games for their virtual team, Gen-Z come from a mindset where they willingly pay for additional add-on features.

Gen-Z is used to having a two-way dialogue and want to be involved in the co-creation of the products they consume with the expectation extending through to real estate. “Having a branded office that customizes your employee capacity and buildout requirements are the new norm, not a ‘nice to have,’” shared Melissa Libner, Knotel’s Head of Marketing – East. Much like they can purchase a ‘skin’ on popular game Fortnight or purchase players on e-sport games for their virtual team, Gen-Z come from a mindset where they willingly pay for additional add-on features. As such, the future workspace might include options to ‘purchase’ the experience of using a luxury designer chair for a day, or a ten-minute massage for a nominal amount or credit. The way that this might be included in a lease agreement through a building’s shared amenity offering is interesting to contemplate. The impact on broker agreements, even more interesting.

While the way that commercial real estate is marketed, designed and delivered has adapted well to the requirements of the Millennial workforce, to engage Gen-Z will take a momentous push. As the digital experience becomes an indisputable expectation, advancements like digital twins is only the tip of the iceberg. The physical environments will be controlled by smart phones and smart technologies. Written communication through apps, emails and text messages will be phased out, with natural forms of communication like speech, hand gestures and facial expressions reintroduced over virtual channels. Interaction between real estate brands and their Gen-Z customers will be a two-way dialogue as Gen-Z want to be more involved in shaping their experience.

Gen-Z’s empathetic outlook and real concern around climate change was epitomized by 2019’s Time Person of the Year and Gen-Z spokesperson Greta Thungberg. Sustainability must be ingrained in both the lifecycle of buildings and a real estate company’s governance. Fifth Wall’s recently announced $200 Million Carbon Impact Fund addresses this need well. Both this generation’s expectations and legislation like The Green New Deal will require buildings to be more ‘woke’ around their ecological impact. Only by taking the time to strategize on how they will meet the expectations of what will be the most influential generation by 2030 will real estate companies be able to reach a growing demographic and not run the risk of isolating an entire generation of customers.

Copyright Nikki Greenberg. All rights reserved.

Nikki Greenberg: A Global Innovator Shaping the Future of Real Estate in Digital Space

Gone are the days of traditional real estate transactions; technology has now taken over the globe, including our houses, land, workplaces, and other properties. PropTech is revolutionizing the way we engage with our properties, whether it’s for transactions, construction, property management, or investing.

Commercial real estate is the largest asset class in the world, with about $9 trillion in assets. In terms of digitalization and technological adoption, real estate has trailed behind most asset types. Given some of the problems of performing real estate transactions and administering properties remotely, as well as the influence the pandemic will have on how real estate is used in the future, the worldwide COVID-19 pandemic is already hastening this upheaval.

Nikki Greenberg is a real estate innovation strategist and thought leader. She works with real estate owners, investors, and developers to create a better future by identifying possibilities at the intersection of real estate and technology. By cultivating and enacting innovation at the executive level, Nikki helps real estate investors connect their assets with the increasingly digital way that people live, work, and interact.

It is while living and working in New York that Nikki honed her approach. At a time when the convergence of real estate and technology was coming into its own, she cemented her place at the center of the thriving PropTech scene, where she has advised both traditional real estate organizations as well as promising startups.

Today, she serves as the Head of Technology Strategy and Digital Management at QIC, an Australian investment management firm with $83 billion in assets under management. At QIC, she leads the digital transformation of the Real Estate group across operations, customer experience, and physical assets. In its path towards greater digitization and with the goal of driving tech-enabled commercial outcomes, Nikki applies her trademark design-thinking approach, enmeshed with her business acumen.

Becoming an Emblem of Excellency
Nikki is now the world’s leading real estate futurist and one of the most in-demand industry trends thought-leaders, delving into the intersection of physical space and cyberspace. She is keen to not only enthuse the property industry about the potential of developing technology and fresh ways of thinking, but also to provide them with advice on how to take advantage of the opportunities technology creates. In other words, Nikki advises businesses on what they should do today to meet tomorrow’s requirements.

Nikki received her Master of Commerce in International Business, Master of Architecture, and Bachelor of Architecture with Honours from the University of New South Wales in Sydney, Australia. She has garnered various awards and honors for her work and is a frequent media presence.

She has held cross-functional leadership positions at Fortune 500 firms with an emphasis on innovation and design. She is a real digital nomad with a worldwide career spanning the US, Asia, Europe, Africa, and Australia. She led the #1 private brokerage, Brown Harris Stevens’ innovation initiatives for new luxury home developments in New York. She conceived and implemented revolutionary mixed-use residential, retail, and masterplan developments in Australia with Lendlease and Koichi Takada Architects.

Nikki leads the industry’s discussion on built world innovation as both the current co-chair of the Urban Land Institute’s New York Real Estate Technology and Innovation Council and the Global Ambassador of Women in PropTech (which she also created).

Her reputation for big-picture thinking and future-forward thought leadership is globally recognized. She was named one of the Top 25 Most Influential Commercial Real Estate Innovators in 2021, a Top 100 Real Estate Professional in 2020, and a finalist in the MIPIM Global PropTech Awards in 2017.

Nikki spreads her thought-provoking, evocative message around the world, providing insights to companies such as Nuveen, Silverstein, IBM, and CBRE.

Challenging the Status Quo
In her professional journey, Nikki is an enthusiastic, life-long learner, always curious, and willing to question the status quo. She is the type of person that consistently goes above and beyond in whatever she does.

“This is a historic and transformative moment for the real estate industry,” she says. “What we have to realize is that the future is now, not some far off fantasy. So the question that I put to executives is: “What will you inspire today that will create a future for the built world that is one of humanity, sustainability, and prosperity.”

Nikki asserts, “Our decisions today need to be more future-focused. We need to be talking less about the current and next financial years and more about the 2030 to 2050 horizon.”

“It is exciting to work in the context of the digital way in which people engage with the world today.” “Imagine what would happen when we truly embrace the possibilities of what it means to have an optimized seamlessness between our built world and devices.”

A Supportive Leader
Nikki is enthusiastic about technology and considers it an honor to be able to empower and lead the real estate industry. When hiring, she looks for candidates that share this passion, and are masters in their domain of expertise. “I build my teams with diverse backgrounds and life experience. That means that we learn from each other, which results in an exponentially exceptional outcome. She continues “I like working with people that are far better than I will ever be in their domain of specialization. They push me to constantly learn and be a better leader.

“We have a great culture in my team.” When referencing team culture, she says that she considers what it would be like to be on a road trip with the candidate. “I look for ways for my team to work together cohesively, to build each other up, and be much stronger together than on their own. I trust my team’s judgment, and I see my role as a leader to remove obstacles that might hold them back from achieving their passion and do their best work”

Nikki sees her role as a leader to define the ‘north star’ that sets out the roadmap for where the team is heading, while providing guidance to ensure that the initiatives that they are working on, and fit cohesively within the big picture strategic framework that she has defined along with senior leaders within the business.

Nikki considers one of her ‘superpowers’ to be her ability to connect with the individual and inspire them. She has a way of pulling the finest and brightest together and inspiring them to achieve something bold and future-forward.

Balancing Work and Personal Life
Nikki is an early riser who gets up at 5 am, and starts her day by meditating. She prefers to keep her life simple and straightforward. “My home is quite minimalist in style, and I try to possess fewer things.” She hardly owns furniture and no longer owns a car adding that “it’s healthier for the environment”.

At the office she is an efficiency machine, keeping meetings to a minimum, “Working on large-scale projects and across multiple time zones I learnt to be highly effective in time management and prioritization of tasks”, she says “as a morning person, I am most productive the mornings and am conscious to keep meetings away from my most productive hours.”

“Honestly, I get the most high-value, deep thinking, strategic work done when I am on a plane. For some reason, being strapped to my seat with no distractions seems to work for me”, she adds with a chuckle.

Nikki is a passionate and avid practitioner of yoga “I prioritize wellness and mental health. With my hectic schedule, yoga is the counterbalance that lets me maintain clarity of thought, and nourishes my mind.”

Working to Bring Change
In 2018, Nikki founded Women in PropTech, the premier worldwide PropTech networking organization. Her main advice to young women, is to be bold, to dream big, and to work hard. She feels it comes down to thinking bigger and not being afraid to do new things above your area of expertise.

“With the pressures that women experience in a male dominated industry, we are constantly tested and often undermined. This leads to a feeling that we need to be perfect, and can under-estimate our own abilities,” she adds, “but sometimes when you simply take a risk and explore new and emerging areas, it’s a fantastic feeling to realize that it’s possible when you nail it.”

“My experience, particularly working in real estate in New York, is that there are brilliant women who are there to back you up.” She goes on to say that cultivating strong professional relationships, finding mentors and sponsors in the industry is important.

“When you bring value to any conversation, open opportunities for others, and share honest advice and professional opportunities with others, you can cultivate an army around you. I believe that ‘paying it forward’ is the most important thing that you can do to grow professionally.”

Create Places Today for the Needs of Tomorrow
Nikki joined QIC as Head of Technology Strategy in 2021, with the goal of driving tech-enabled commercial outcomes for the company’s global real estate business. Nikki’s primary aim for the future is to continue her work as a global innovation evangelist, inspiring action, creativity, and prudent risk-taking.

“The better job we do in the real estate industry the better off our world will be,” she says. Nikki believes that technology facilitates this since innovation opens up so many new possibilities. “We need do this well by questioning the elements that no longer serves the tech-enabled way that people live today. It is by being brave, that our industry will be able to achieve ambition goals.”

“I find it a privilege to inspire business leaders across the world to really drive a better route forward,” she adds.

As to where she sees the future heading, “The Metaverse is an area that I am most excited about. When we embrace the new ways of integrating with technology, the opportunities are endless”

“It’s less that I think it’s novel and cool, and rather than I find it to be quite practical. I’ve created and operated in the Metaverse since my university days. I am excited that it has entered mainstream conversation and the attention it has been receiving of late,” Nikki explains.

Copyright Nikki Greenberg. All rights reserved.