Will Your Company Still Be Viable Ten Years From Now Or Disrupted By A Forward-Thinking Operator?
In the next 10 years, Independent Living, Assisted Living, Memory Care, Active Adult and CCRC must begin to strategize market CREATING opportunities that don’t currently exist if they stand to remain viable and meet the demands of today’s incredibly tough business environment.
I grew up in small farm town in Ohio. On hot summer days, I would walk the railroad tracks with my boom box propped up on my shoulder, most often listening to Prince, and singing along to When Doves Cry or Let’s Go Crazy. I would walk for hours.
I can’t imagine seeing my son Noah, who is 13 or Paris, who is 16 walk out the door with a small stereo system lodged on their shoulder blasting music! While this was a teenager’s dream when I was a kid, an innovator seized a MARKET CREATING opportunity to TRANSFORM how music was delivered and quickly put an end to the boom box. In fact, it happened more than once.
The music industry has changed drastically over the past 30 years. The various music formats – from vinyl records, to 8-track, to cassette, to CD, and then to digital downloads – transitions many times over the past three decades.
Who would have ever predicted that music would be streamed live, from telephones of all things? Just imagine how music will be delivered in the future!
LOOK AT HOW SENIORS HOUSING HAS EVOLVED OVER THE PAST 40 YEARS
- In the late 1980’s, there was a shift from nursing homes to residential environments with consumer-centered care. I must say that I’m glad this shift occurred. My Grandpa Keeler was strapped to a chair for almost two years in his nursing home; something I’ll never forget.
- In the early 1990’s four types of assisted living emerged to include hybrid, hospitality, housing, and health care; each impacting the evolution of assisted living.
- The early 2000’s brought a period of expansion. Wall Street money came in and along with that, the dilution of standards and emerging quality concerns facilitating a time of regrouping, a slow-down in growth and reexamination of earlier efforts to define and set standards for assisted living.
- Then came the post Great Recession period, ending in 2009. Seniors housing’s financial performance attracted a flood of new investors leading to mass development and increased competition. Independent living became assisted living and assisted living became the nursing homes of yesterday but with focus on hospitality.
- Today, we see a saturated market resulting in profit diminishing price wars. The cost of construction has increased making it difficult to turn a profit. Investors both own and operate communities and many are developed and sold in the span of three years, bringing mass change for residents and employees in what seems is an ever-revolving door of new ownership.
JUST AS THE CASSETTE TAPE AND NURSING HOMES WERE DISRUPTED BY CD’S AND RESIDENTIAL LIVING MODELS, RESIDENTIAL MODELS WILL SOON FACE DISRUPTION TOO
WHAT WILL SENIORS HOUSING LOOK LIKE 2050?
While it seems far away, in reality, it’s right around the corner. Boomers will begin to flood our communities by 2030, not because they want to, but because they must.
How housing and care services will be delivered is the big question. The goal of this executive book club is to help you make the shift from a MARKET COMPETING to a MARKET CREATING ORGANIZATION. Not only is it important to shift as we look to the future but to survive the next ten years as you drift in a sea of competition while awaiting the baby boomer’s arrival!
We find most operators have a ‘me too mentality’ meaning; they focus on keeping up with what their competitors are doing versus looking within to what they SHOULD be doing to be different as an organization based on their own leadership, brand and mission.
“Never has it been more important to be distinct in a crowded marketplace.”
One of the best ways to do this is to start asking prospective customers what it is they want. Make it a point to put iPad in the waiting area to survey boomers and their parents as well as residents about what they want, what they need and what they value in a senior living community. Sadly, we don’t see near enough focus groups in seniors housing and with the drastic shifts happening – that’s dangerous.
So, focus on today while preparing for tomorrow; a multi-faceted approach to understanding the mind of your consumer. This will also help with your blue ocean shift.
Imagine the impact it would have on your Company if this time next year the competition was IRRELEVANT. NO $5,000 paid referral fees, NO discounts to get people to move, WITH minimal marketing spend and a WAIT list of 30 people for an apartment of their own. WITH THE RIGHT MINDSET, STRATEGY AND ACTION…THIS IS POSSIBLE.
IT’S TIME FOR A NEW WAY OF THINKING
To get from where you are today, to this type of blue ocean tomorrow, you must understand HOW to do it and I’m warning you—it won’t be easy. As mentioned, there are two forms of disruption you need to understand to pursue a blue ocean shift:
DISRUPTIVE CREATION: In business theory, disruptive innovation creates a new market and value network. This will eventually disrupt an existing market and value network which will displace the established market-leading firms, products, and alliances. Think Netflix vs Blockbuster!
NON-DISTRUPTIVE CREATION is an alternative path to growth. It highlights the immense potential for creating new markets where none existed before. This is creation without disruption or destruction. All the demand generated by this kind of innovation is new. Think Airbnb, Uber, or Match.com (19% of brides say they met their spouse online, talk about a disruptor to dating).
I personally don’t see seniors housing going away, it’s an incredible business model. Identifying and solving a BRAND-NEW PROBLEM or seizing a brand-new OPPORTUNITY most often gives rise to NON-DISRUPTIVE creation. I believe this is what we will see emerge.
TO CREATE A BLUE OCEAN SHIFT, WHETHER DISRUPTIVE OR NON-DISTRUPTIVE, THERE MUST BE A LEAP IN BUYER VALUE
The key component to creating blue ocean space, where competition is irrelevant, is that it must fundamentally be linked to a leap in buyer value. For Netflix that leap in buyer value came from unburdening renters from the exorbitant late fees traditional brick and mortars like the Blockbuster model. As a result, Netflix completely disrupted the video rental business.
Fun fact – The CEO of Blockbuster was given the opportunity to buy Netflix for a mere $50M but turned it down because he thought it was a JOKE!
Not only was it not a JOKE, it revolutionized the industry…
Airbnb and Uber had elements of both disruptive and non-disruptive creators as they didn’t put hotels and taxis out of business but instead created NEW market space and with it a new market of customers. Imagine if we could do this in the Seniors Housing industry. By looking across the ocean, we could – for all intents and purposes – create a new market of customers. It’s a conversation worth having with all the saturation and growth taking place in the industry, don’t you think?
HOW DO I CREATE BLUE OCEAN SPACE WITHIN MY OWN PORTFOLIO OF SENIORS HOUSING COMMUNITIES?
A great first step that will solve a multitude of problems: How can you open new value cost frontiers that will lead to organizational growth and blue oceans free of competitive pressure?
Research demonstrated that there are three basic ways in which MARKET CREATING STRATEGIES otherwise known as blue ocean shifts are made. You can:
- Offer a breakthrough solution for an industry’s existing problem
- Redefine an industry’s existing problem and solve it
- Identify and solve a brand-new problem or seize a brand-new opportunity
Notice that each of these points to a problem within the industry. What problems are we trying to solve in seniors housing? It depends on how you look at the problem and from whose perspective?
The CONSUMER PROBLEM lead to the creation of the seniors housing industry:
- Aging people who can no longer perform the activities of daily living as they once did
- Activities can be as simple as no longer being able to mow the lawn to the more life-threatening challenge of not being able to manage their medications
The INDUSTRY PROBLEM that puts our impact at risk:
- Lack of employees who can assist people with the activities of daily living
- Developing communities that are affordable
While there are many more problems, these are the top ones that stand out to me as it relates to both the consumer and the industry.
PROBLEM SOLVING THAT LEADS TO TRANSFORMATION
Baby boomers won’t be as compliant as their parents who were part of the silent generation. Yet like their parents, the realty of aging will set in and they will be unable to care for themselves resulting in the quest for care. The question is, HOW WILL THAT CARE BE DELIVERED?
I challenge you to take one or two hours a week to work ON your business, versus IN it.
Focus on your own blue ocean shift. It’s the executives who think, not just do that will own the future of seniors housing and care. What got us here will not get us there – think about that statement!
FOR SENIORS HOUSING TO THRIVE IN THE NEXT TEN YEARS, WHILE WE WAIT FOR THE BOOMERS TO HIT, WE MUST CREATE BLUE OCEAN SPACE AND FIND A WAY TO PULL IN NEW DEMAND.
Also, we must convert non-customers into customers, or we will continue to see occupancy, revenue and NOI decline and WORSE, apartments sitting empty that otherwise could transform and individual’s life.
This leads me to wonder, just whom might benefit from our seniors housing communities and the services provided beyond care?
- People with disabilities
- Veterans with post-traumatic stress who need time to recover
- Busy professionals who work 60-80 hours per week
- Aging pets who are family to their owners
- People who travel frequently for work and whom seek alternatives to hotels
- Providers such as podiatrist, ophthalmologist and Otologist who wish to have space inside our communities
It’s odd to even ponder these questions because it’s seniors housing! That is the point of this study, to get you out of your own mind and into alternative possibilities. My goal is to ruffle your feathers, to create a degree of distress because that means you are out of your comfort zone.
Imagine the potential that exist in REDEFINING AND SOLVING THE PROBLEMS WITHIN SENIORS HOUSING:
- More supply than demand
- Workforce crisis
- Residents moving in at 87 versus 77
- Affordability and accessibility
Problem redefinition allows organizations to replace assumptions and reconstruct industry boundaries in new and creative ways. Cirque du Soleil redefined the circus and brought in new buyers to include adults without children and corporate clients. Who would have ever thought that the circus could be re-imagined, and a blue ocean space created?
In the next chapter, we are going to unlock what is possible within seniors housing. We will outline the blue ocean shift mindset that is needed and why because the mental framing needed for this study is not for the lighthearted. The payoff will be well worth it.
If you are an executive that feels deep in your gut it’s time to SHIFT but are not sure where to start, considering having myself or Jennifer Saxman, COO at Bild & Co host an executive retreat for your management team, to take time away from the day to day to work ON rather than IN your business. You can also reserve a day with me in Tampa, Florida to strategize one on one for the future of your business and its growth trajectory within seniors housing and care. Send an email to firstname.lastname@example.org or text me directly at 813.390.3349.
To Your Success