One of my favorite business quotes is from the late Andy Grove, founder and former CEO of Intel. Andy helped to transform Intel into the world's largest manufacturer of semiconductors, thus giving rise to the IT revolution. Andy once said, "Success breeds complacency. Complacency breeds failure. Only the paranoid survive."
I often think about this quote when I talk to my friends in Senior Housing. I’m surprised by how few of them take the “paranoid” approach to their business. My usual questions: Who is the “faceless disruptor” that we’re not seeing today? or... What are you doing to hedge your bets against the big disruption in the future? Their answers are always generally the same, very little. Frankly, it’s difficult to tell if this is simply showmanship or ignorance. Look, I entirely get that leaders have to remain steadfast and resolute, however, I would also say that it is important to anticipate those seismic shifts that will disrupt the market within 5-10 years.
Consider this very simple statistic: In 2006, Microsoft was the only IT business on the list of top 10 global market capitalization companies. Now in 2017, the top 5 spots belong to IT. This includes Apple, Alphabet (Google), Microsoft, Amazon and Facebook, that’s insane!
Market cap is just one indicator. The second and more alarming factor, is to consider the evolution of these monster IT companies. They are quickly expanding to become your next generation retail and automotive giants. That’s right, this long-standing complacent, head in the sand mentality is now rapidly and radically changing industries. If you don’t believe me, just check out some of the recent headlines: Warren Buffett just confirmed the death of retail as we know it , or Ford ousts CEO as auto industry faces biggest transformation ever.
So what am I suggesting?
Will the next senior care provider be Google or Apple? Perhaps. I think the more likely scenario is that technology will become a far more pervasive influence that will likely reshape the existing senior housing landscape thus giving older adults new alternatives to age in place.
Here are just a few ways that technology could change senior housing:
Services: We always say that change typically occurs when consumers realize cost-savings and convenience with a new alternative. While no single service (.e.g. home care) will disrupt senior housing, we believe the confluence of multiple services certainly will. It won’t be long before online meals, telehealth, and, autonomous cars will become the conventional way. If this is true, how does it impact some of your key departments, like wellness and culinary?
Staffing: While I don’t believe an actual robot will or should ever take the place of the human connection, machine learning will certainly transform many of the existing processes resulting in a reduction of headcount. Not possible, just ask a Radiologist. I wrote a blog back in March that referenced a PwC study suggesting 38 percent of U.S. jobs could be lost to automation within the next 15 years. If this proves to be true, how do you need to recalibrate your labor pool to remain competitive?
Social: Social networks like Facebook have only begun to scratch the surface in ways that we will become more socially connected. Virtual/Augmented Reality will offer an entirely new paradigm to engage individuals in a much different way. Consider virtual vacations where two people can be physically apart, yet share an experience together. The example, sitting beside one another and enjoying a sunset on a Hawaiian beach. That’s crazy, but will soon be a reality… pun intended. So, does this beat Friday Night Bingo?
Now, let’s be clear, I am not suggesting Senior Housing needs to a complete overhaul. Instead, I think a healthy dose of skepticism along with an innovation program to help mitigate any potential risks in the future. Check out my blog in May that provides the key constructs for a successful innovation framework.
So, what is your take? Am I too paranoid? ;).