In order to customize shortcuts in SU 2016 click on “Sketchup” on the top menu bar, select “Preferences”, then “Shortcuts” and enter the customized shortcut in the box at the bottom center. This is all the same as previous versions of Sketchup.
Now the key is in 2016 DO NOT HIT ENTER OR ESCAPE or your customized shortcut will not take and you get an error message saying the “Key cannot be used as shortcut.” But if you simply close the dialog box using the red button at top left then it will take. The newly defined customized shortcut will be there to use and you will see it the next time you open the shortcuts dialog box under Preferences.
This is not intuitive.
Credit @yogesh at Basecamp 2016 for this solution.