• July 25, 2021

The Zconomy Is Here: A Conversation with Jason Dorsey and Denise Villa, PhD

 The Zconomy Is Here: A Conversation with Jason Dorsey and Denise Villa, PhD

Every time a new generation arises, the established generations start to chatter: What are these young people going to be like as workers, as consumers, as members of society? What are their unique traits? And what about them annoys the heck out of us? Right now, these newcomers are Generation Z, born roughly between 1997 and 2015.

What’s often missing from conversations about any generation is robust research and data. Enter Jason Dorsey and Dr. Denise Villa, whose new book, Zconomy: How Gen Z Will Change the Future of Business―and What to Do About It, was released in September. In its pages, Dorsey and Villa, who lead The Center for Generational Kinetics, based in Austin, draw upon more than 60 generational studies they have led, plus their hands-on work with over 500 organizations around the globe. Their findings reveal exactly what business leaders need to know as they hire, sell to, and develop Gen Z.

In this conversation, Denise and Jason spoke to us about some of the most interesting findings reported in the book, including a few that may surprise you. You may feel like you just figured out Millennials, but it’s already time to start learning about the mindset, outlook, and preferences of the next generation.

We do think business is going to be done differently going forward.

Texas CEO Magazine: Let’s start with one thing that might surprise Gen X or Boomer readers about Gen Z. What don’t these older generations normally think about?

Jason: The first thing is an experience Gen Z didn’t have, which is living through the September 11th attacks. The oldest Gen Zer would’ve been only a few years old then. That’s a huge, huge difference between Gen Z and Millennials. For Millennials, 9/11 was a key event. For Gen Z, it’s history — they learned about it in school or saw it on YouTube. In the United States particularly, the memory of 9/11 is a primary delineation between Millennials and Gen Z.

Another thing about Gen Z is that they’ve always known smartphones. Much of their engagement with entertainment, news, money, banking, dating, and education has always been through a handheld device. They’ve always had social media, too, and we’ve seen how that can be positive and negative. With social media, Gen Z has new sources of information, the ability to find like-minded people, to stay in touch with family and friends, and even to create whole new businesses as influencers. But also, certain dangers come with it.

Texas CEO Magazine: There certainly is a whole set of technology-related concerns that comes with raising Gen Z.

Jason: Yes. One thing that’s less obvious about Gen Z is who their parents are. Their parents are Generation X, not Baby Boomers. That’s a big deal because parenting is often the greatest driver of generational characteristics. In line with that, we see that Gen X is raising their kids differently than Baby Boomers did. In fact, in the book, we talk about how Gen X tells us, “We don’t want our kids to end up like Millennials.” I love that.

For five years now, Denise and I have been doing our State of Gen Z national study. Another surprising thing we’ve seen is that Gen Z is much more practical with their money than Millennials. They tend to seek out more value for their money, whether that’s through discounts or coupons or shopping at thrift stores. Many of them also have emergency savings accounts. In one study we did, the number-two perk Gen Zers wanted from an employer was benefits—retirement-plan matching and so forth. That’s really shocking, given how young they are.

In some ways, Gen Z almost looks like a throwback generation. Many of their characteristics look more like Baby Boomers’ than Millennials’. And many of them tell us they don’t want to end up like Millennials. In the book, we talk about the potential for Gen Z to leapfrog some Millennials in terms of long-term success because they are predisposed to some of these behaviors, like saving and seeking out value when they spend.

Texas CEO Magazine: Not wanting to get in as much debt does sound a lot like a Baby Boomer attitude. Very few Boomers had debt after college, but with Millennials there was an explosion of college debt.

Jason: Yeah, we’re seeing some real conflict between Millennials and Gen Zers there. COVID-19 has only accelerated it. In our latest studies, Gen Z says they want to graduate college with as little debt as possible. They’re trying to be much more cost-efficient in getting their education, which is a completely different mindset from Millennials like myself, who were told to get into the best college you can and worry about the debt later. Obviously, that didn’t work out too well for Millennials. Gen Z has the benefit of learning from that.

With COVID, we’re also seeing Gen Z worry about overpaying for virtual or hybrid college — they don’t want to pay full price without getting the full experience. I think we’ll see more pricing pressures come into play there. At the same time, Gen Zers are also taking more classes online, at community college and elsewhere, so they can start college with more credits and reduce the debt they have to get into.

It’s a fascinating time — you have a generation that is trying to get more value for their money at the same time that college costs continue to rise. It’s why we’ve seen so much conflict play out over the past several months between students and colleges. Gen Z is very conscious of the cost, so they want rebates, discounts, and other concessions because COVID has disrupted the typical college experience.

Texas CEO Magazine: This pandemic has been one of the most significant events in anyone’s lifetime, but how is having that experience as young people going to affect Gen Z culturally and economically?  

Denise: This is going to be a huge generational marker for Gen Z, especially for older members of Gen Z, ages 18 to 24. They’re going to be graduating into a workforce that has the biggest explosion of unemployment we’ve seen since the Great Depression. They’re likely going to be hit a lot harder than the younger part of the generation, who are still young children right now.

Because of the pandemic, the older set of Gen Z isn’t going to have the high school and college experience they set out to have — no memories of a typical senior prom and graduation ceremony. And in Texas, of course, things like homecoming games are going to be very different. Having those experiences taken away will impact how they view coming-of-age milestones, think about traveling the world, manage their finances, and consider career options.

Jason: That’s right. What’s not talked about in the news is that the impact of COVID on Gen Z varies by the age of the Gen Zer. The closer you are to those key life transitions — high school to college, college to workforce, and so forth — the more immediate and negative impact the pandemic will have. Gen Zers making that transition now are entering a tough situation; we predict they’ll have potentially five to 10 years of diminished earnings ahead. They’re often not getting the jobs they wanted, and they’re not able to network as effectively. In fact, in our most recent study, Gen Z was the leading generation to lose their job or have their earnings reduced.

On the flip side, to Denise’s point, younger members of Gen Z stand to gain tremendous unexpected benefits from this, such as well-developed online learning and online collaboration. My daughter is nine, and she just turned in her final report using Google Classroom. She built it in Google Slides, included a video, and submitted it without even telling us. She’s nine! Kids her age are learning these new skills, and they have plenty of runway before those key transitions into higher education and the workforce.

But for Gen Zers of all ages, there’s also the social and emotional impact of COVID-19. This pandemic has created tremendous vulnerability for the generation, much in the way that 9/11 impacted Millennials. But in some ways, the effects of COVID-19 are even broader and more extreme. Every day they’re hearing about mortality rates and death counts. That’s an experience young adults haven’t had since mortality counts were posted on TV during Vietnam. Gen Z is seeing celebrities die, people they know die, and hearing daily about hospital occupancy and testing positivity. These things play out in a very public way, amplified by social media and political polarization.

Denise: Generation-defining moments like this change what is normal very quickly. If you’re 18 years old now, it might already start to feel normal to not be able to go see friends, not go on dates, not get a summer job, miss college orientation, or not get an internship. The uncertainty of when those experiences will come back only heightens the impact. There is no clear end date.

Gen Z will always carry the experience of this pandemic with them. It will inform everything from their money habits to home buying to marriage to whether and when they decide to have kids. For the generation after Gen Z, who are two, three, four years old right now, they don’t know what’s going on with COVID. This will be, to them, much like 9/11 is for Gen Z.

The Center for Generational Kinetics President Jason Dorsey speaks during The Financial Brand Forum keynote inside The Chelsea at The Cosmopolitan of Las Vegas Wednesday, May 9, 2018 (Photo by David Becker).

Texas CEO Magazine: Millennials obviously had kids later, got married later, settled down later. Do you think Gen Z will continue that tradition?

Jason: We do, though we’ll still need to wait and see. In general, in our research studies, Gen Z tells us they still want to get married, have kids, and buy a house. Part of the reason Millennials delayed those things is that they were much more risk-averse than Gen X and Boomers and felt they had more time to figure things out. We expect the same from Gen Z. I think the wild card will be in 5 to 10 years, as Gen Z looks at where Millennials are. Will they decide they too want to wait to have children and buy a home, or will they swing back the other way? We’ve already seen them change course when it comes to saving and finances. But we’re unsure if they will diverge when it comes to settling down. That will be important to watch.

Texas CEO Magazine: Gen Z is already growing as a percentage of the workforce. If I’m trying to hire a Gen Zer, what should I know?

Jason: When we talk about Gen Z entering the workforce, we like to think about the employee lifecycle. First comes recruiting. If you want to recruit Gen Z, you’re going to want to allow them to apply for the job on a mobile device. The easier you make it for them to complete the application and initial steps on a mobile device, the more applicants from Gen Z you’ll get. Beyond that, Gen Zers have very specific things they’re looking for when they apply for a job — in particular job stability, scheduling flexibility, and, as I mentioned earlier, good benefits. Many Gen Zers also tell us they would prefer to work for a larger company because they perceive those jobs and companies to be more stable. I don’t know whether those jobs are truly more stable, but that’s certainly Gen Z’s perception.

Next, the onboarding process is incredibly important — for Gen Z, it’s got to be more mobile-driven. One company offering this type of solution is Enboarder, which has its US headquarters in Austin. They do all your onboarding by text messaging — it’s really, really interesting. That experience allows the new hire to feel engaged and welcomed, and it doesn’t cost the employer much. Gen Z also wants to see what your organization’s mission is beyond money and what social causes you support that align with their priorities. They want to see people who look like them in the makeup of your company, and they want to access videos that show what it’s really like to work there.

In terms of training, you see similar things to onboarding. Gen Z expects training that’s on-demand, interactive, video-driven, and accessible on a mobile device. Several companies are offering great solutions on this, including another one based in Austin called Schoox. These solutions are especially important as we move to a deskless workforce, with employees moving around a lot. That’s many of the jobs Gen Z is working in right now, from retail to hospitality to even healthcare. Enabling them to get the training they need in a consistent, trackable, measurable way is critical. And all this stuff is very inexpensive to implement right now.

Gen Z also tells us consistently that they want talent development. Now, interestingly, we’re not talking about the traditional Gen X or Baby Boomer concept of “certification.” What Gen Z means by “talent development” is skills like problem-solving, interpersonal communication, and so on.

Moving to the last stage of the lifecycle, what do Gen Zers want in terms of engagement and retention? For one, we find that Gen Z needs frequent communication. It doesn’t have to be anything elaborate — it could be a text message or Slack. Even more than Millennials, they need what we call “quick-hit feedback,” something that regularly lets them know you value them as part of the team. Particularly with remote work, younger employees tell us that if they’re not getting communication from their boss, they worry that their job is on the line. We’re not just talking about praise or trophies — we’re talking about meaningful communication around alignment.

That ties into something else Gen Zers require for continued engagement, which is understanding how their role fits within the greater organization. This is often undervalued. When you’re an entry-level Gen Z employee, you may not have a big title, but what you do is still incredibly important. In fact, you may have more interactions with customers or clients than older workers of different generations. Showing Gen Zers how they fit in the organization is incredibly, incredibly important.

By the way, everything I just listed, the things Gen Z wants across the employee lifecycle, helps move a company forward. None of this is just coddling a new generation for its own sake. Each of those things helps deliver bottom-line results. And when other generations are exposed to these things, they often want the same things — they just didn’t realize it. In fact, we have some companies tell us that they love Gen Z employees because of everything they bring. In many ways, this generation is going to be a huge asset to the American workforce, particularly as we seek to rebound long-term from the pandemic.

Dr. Denise Villa

Texas CEO Magazine: Do you think that remote work is here to stay, and that work travel is over? With Gen Z being so accustomed to smartphones and other technology, will in-person interaction matter less?

Denise: We do think that business is going to be done differently going forward. Business travel, for one, has likely changed forever. For years, people have found different ways to communicate with the people they are selling to, and COVID-19 has only accelerated that. While there will always be some need and unique value for in-person meetings, for having that one-on-one chat time, it’s probably going to be further along in the sales and relationship-building cycle. Online platforms have largely done away with the need for that initial “Let me fly out and meet you” scenario, especially if companies are not willing to let non-employees have access to their workplace to meet in-person. We expect this will continue throughout the pandemic and potentially afterward for some time. What will be most interesting to watch is whether or not standard internal meetings, such as quarterly meetings or annual events, come back. As a professional speaker at meetings, I sure hope they do!

Jason: Many companies have gotten really good at having effective internal meetings using technology. But like Denise was saying, for external meetings, we do hear from people that they want some level of in-person interaction with potential vendors, prospects, and customers. People have adapted sales and marketing, doing more webinars, virtual conferences, and so forth. However, we continually hear that they still want some face-to-face interaction when it’s safe and meaningful. We do think there’s going to be less pressure to bring back in-person internal meetings or to require people to work back at an office full-time for knowledge-based jobs. We think it’s likely that hybrid work solutions are here to stay, with a mix of in-person and remote, along with better technology integration.

Texas CEO Magazine: If I run a business that wants to sell to Gen Z, what’s the difference compared to selling to Millennials?

Jason: Two or three things jump out to me. In our latest studies, friends and family are still the number-one influence on Gen Z buyers. Still, digital media is number two — in particular social media, and specifically platforms like TikTok, Snapchat, Instagram, and YouTube. Many brands are still trying to figure out how to work with those platforms. We do see the role of influencers becoming even more important with Gen Z — much more important than even with Millennials. Gen Z has always known influencers; they don’t have a negative conception of them because they’re so used to them. In fact, many in Gen Z tell us that they would love to become influencers!

We also see a big push from Gen Z consumers to see a company’s commitment to social causes. For the last few years, the most important social cause we heard about from Gen Z was climate change — they wanted to know the companies they bought from were doing something about it. The second most important issue we heard about was social justice. Those two have flip-flopped this year, but both of them are very important for companies to keep in mind.

The final thing to remember is that, again, Gen Z is very practical with their money. Many companies are wise to message about products or services that are a good buy or that are going to last. For a long time, people said that young people want experiences over things. That was certainly the case with Millennials, but one surprising finding of our most recent study is that Gen Z actually prefers products over experiences. It’s the first time we’ve had a generation say, “No, no, I actually think that physical products last longer than experiences. You might have five Instagram photos from your trip, but I still have that item I bought.”

Denise: We’ve also seen that Gen Z is looking for honesty from brands. The Millennial generation demanded honesty, but now Gen Z even more so expects full transparency in how the company acts and what causes it supports. The other thing that’s really important to Gen Z is diversity and inclusion. That includes not only diversity in ethnicity and race but also representation in terms of gender identification. Overall, Gen Z looks for companies that can speak credibly to every single one of them. When they interact with a company, they want to feel the company is talking just to them, one on one.

Jason: Related to that, one interesting thing we found in our recent study with WP Engine is that Gen Z was the most willing of any generation to give their personal data in exchange for a better digital experience.

Gen Z was the most willing of any generation to give their personal data in exchange for a better digital experience.

Texas CEO Magazine: What else should Texas CEOs know about Gen Z?

Jason: First, that Gen Z is actually the most similar generation of any around the world right now, and that’s primarily due to cheap mobile technology. That’s different from older generations, where there were significant differences across countries, states, and regions. For companies trying to grow outside of Texas, Gen Z is a great way to get a foothold into other markets around the world. Because they are the most similar, you can use similar but geographically appropriate messages and tactics to appeal to them.

The second thing is something I alluded to before: For the first time ever, trends, particularly technology trends, are starting with the youngest generation and rippling up to the oldest generation. If you want to understand what Millennials, Gen X, and Boomers are going to do in the future, look at what Gen Z is doing right now. We’ve seen that play out so many times. Younger generations moved many older people from Facebook to Instagram, and now you have adults joining TikTok. That’s different from the past, when trends often started with the older and more affluent generations and then were driven down to the youngest. So, as companies position for long-term growth, they need to understand what Gen Z thinks is normal so they can ride out that wave as it travels across generations.

Third and finally, I would say that Gen Z over-indexes in terms of its online influence with other consumers. If you can win them as fans and advocates, they have a much broader impact online than other generations, thanks to the frequency and velocity of digital engagement. Gen Z can help so many brands, both legacy and new, grow faster as the brand aligns with their predispositions.

Denise: Right. And related to that, many brands still don’t take online reviews as seriously as they should. That’s a mistake, because Gen Z, more so than any other generation, really depends on the Internet as a tool to make purchases. Seeing a few positive remarks about a brand isn’t enough for them; they actually go and dig for a diverse set of ratings and reviews for products and services, especially for first-time purchases. In one study, we found that when a Gen Zer makes a major purchase, they look at more than 15 reviews, positive and negative, before buying. So, I would encourage brands of all types to pay even more attention than usual to what’s being said about them online. Gen Z really uses that as a tool for deciding what to buy and what not to buy at this critical time when they’re forming their brand loyalty.

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