Last week, I was chatting with a colleague who's riding a serious growth wave. We joked about how, unless they can replicate it next month, their success might just be down to dumb luck rather than strategic genius. But it looks like they're going to prove their point---bravo!
This conversation got me thinking about the challenge of growing any business, particularly in the co-working industry. How do you turn luck into sustainable growth?
Every business model has a shelf life. The shift from traditional office spaces to flex spaces is a prime example of how crucial it is to seize change. Flex spaces capitalised on the demand for more adaptable work environments, aligning with the needs of a new generation of workers and businesses. This disruption didn't happen overnight---the embryonic idea had to go through multiple iterations, business modelling, and testing before it became the thriving industry we see today.
Yet, across industries and eras, many companies have missed the boat, stifling growth or even collapsing entirely when they fail to adapt. The margin for error is razor-thin, and operators need to navigate these complexities daily:
- Optimise efficiency while delivering an outstanding member experience.
- Commercialise trends and opportunities quickly to stay competitive.
- Make bold moves that will define the future of the business.
The Three Horizons Model
The "Three Horizons" model is a favourite of mine, providing a framework for managing this juggling act.
- Horizon 1: Focuses on current operations, ensuring smooth daily business while 'saving' for future investments. This typically relates to the current fiscal year, with KPIs centred on revenue and profitability. Deep operational expertise is crucial here. The challenge? Keeping the lights on while making room for forward-thinking.
- Horizon 2: Anticipates market shifts and positions the business for future success. KPIs include market share growth and the adoption of new offerings. Here, strategic foresight and agile decision-making are essential. The challenge? Rapid commercialisation, balancing today's needs with tomorrow's vision.
- Horizon 3: Envisions long-term transformative initiatives that will shape the future. KPIs focus on long-term potential rather than immediate profitability, such as market positioning and innovation milestones. Visionary thinking is needed, but it often clashes with a culture focused on the present.
These horizons don't unfold sequentially---they must all be managed simultaneously, with each delivering results on different timescales. However, in the real world, most resources are focused on delivering Horizon 1 because without it, the doors stay closed. With slim margins and limited resources, there's often no dedicated team for Horizons 2 and 3. This leaves a few key players juggling all three horizons, forcing them into a split personality role---delivering immediate results while also trying to plan for the future.
Strategies for Success
How do you ensure that Horizon 2 and 3 initiatives aren't neglected when your primary focus is on keeping the business running today? Here are some practical strategies:
- Set Clear Objectives for Each Horizon: Apply the same laser focus to each. Horizon 1: Focus on operational efficiency and immediate needs. Discuss KPIs like revenue, profitability, and customer satisfaction. Horizon 2: Address market shifts and future positioning. Focus on emerging customer needs, new technologies, and market share growth. Horizon 3: Emphasise long-term vision and transformative strategies. Prioritise innovation milestones and market positioning.
- Dedicate Time for Each Horizon: Schedule time for each horizon and stick to it. Don't cancel these meetings---even when times are tight.
- Cross-Functional Collaboration: Even if the same team manages all horizons, ensure diverse skills and perspectives are leveraged. This ensures a holistic approach to balancing immediate needs with future aspirations.
- Celebrate Successes in Each Horizon: Highlight successes in each horizon. If it's not talked about, it gets deprioritised.
- Resist Cutting Corners in Tight Times: When resources are scarce, resist the urge to cut Horizon 2 and 3 activities. Doing so stifles innovation and leaves the business vulnerable. Keep investing in the future.
- Leverage Technology: Time and resources are tight, so don't waste them on mundane tasks. Automate where possible and invest in technology that adds real value, freeing up time for strategic initiatives.
- Work 'ON' the Business, Not 'IN' It: Physically remove yourself from the day-to-day grind to focus on big-picture strategy. Stepping back allows you to gain perspective and align your actions with long-term goals. Consider unplugging from the daily hustle to recharge and rethink.
Reflection Questions
Before concluding, challenge yourself to assess your business across each Horizon. Reflect on the following questions:
Horizon 1: Optimising the Core
- Are your core flex spaces generating consistent and sufficient revenue?
- Is your cost structure optimised compared to industry benchmarks?
- Has your day-to-day performance been stable, with minimal disruptions?
Horizon 2: Developing New Growth Areas
- Have you identified new business lines with potential for significant economic value?
- Are these new initiatives gaining traction in the market?
- Are you prepared to invest in these new growth areas?
Horizon 3: Innovating for the Future
- Does your leadership team regularly explore future growth opportunities
- Have you developed a diverse and robust portfolio of innovation ideas?
- Are you effectively turning these ideas into actionable plans?
When Horizon 1 is the only focus, you might keep the business running today, but without attention to Horizons 2 and 3, you risk running out of steam in the future. Conversely, overemphasising Horizons 2 and 3 while neglecting Horizon 1 can lead to running out of cash, as immediate operational needs are not met.
Success by Design
The flex industry is a testament to the power of embracing change, but the journey doesn't stop there. To stay ahead, co-working operators must continue to balance today's demands with tomorrow's opportunities.
Here's to all the co-working operators out there: May your spaces be full, your team dynamic, and your strategy a perfect blend of Horizon 1 efficiency, Horizon 2 foresight, and Horizon 3 innovation---turning growth from a happy accident into a well-orchestrated success.