Subscriptions: The Hotel California of Business Transactions

Rita McGrath
4 min readApr 10

As colleague Eric Johnson has pointed out, the decision architecture — how we are brought through the decision process — has a huge impact on the decisions that are ultimately made. But, knowing that, unscrupulous or manipulative choice architects can structure decisions in a way that doesn’t favor you and lines their own pockets.

You can check out any time you like but you can never leave

Human brains are a funny thing, as Kahnemann and Tversky researched years ago. We have what you can think of as two systems going on in our brains — one is fast thinking. That’s our normal default. Thinking quickly makes sense when the choice is routine, the consequences are minimal and the decision is reversible. But for situations where those rules don’t apply, we need what they call System 2 thinking, or slow thinking. These are for situations involving high uncertainty, big commitments and where the results are irreversible. You can see what this means by watching my Friday Fireside Chat with Danish geographer Bent Flyvbjerg.

Here’s the thing — all that slow brainpower is expensive, energy-wise. It leaves us feeling depleted. It can feel as though we’re not making progress. And it requires patience, as well as the willingness to face uncertainties and assumptions honestly. So when we are faced with a decision that seems effortful, we might very well avoid it.

Entities that enjoy rich flows of subscription revenue have figured this out and take advantage of our human unwillingness to make an extra effort to accomplish a goal. In this case, they make it super easy (“Just One Click!) to sign up for a subscription and brutally difficult to cancel it.

How they make it hard

Why this works is that these companies know we’re likely to check something out if it is easy and likely to avoid doing it if it is hard. So they throw obstacles in the way.

Some require you to call a call center to cancel, where staff then try to upsell you (looking at you, most cable companies). Some won’t even answer the phone and have their staff call you at weird unscheduled times (my experience trying to cancel a Microsoft Azure subscription someone else had opened for me). Some don’t even provide a phone…

Rita McGrath

Columbia Business School Professor. Thinkers50 top 10 & #1 in strategy. Bestselling author of The End of Competitive Advantage & Seeing Around Corners.