When social psychologist Jonathan Haidt published The Anxious Generation in March 2024, his core proposal—that children should be kept off social media until at least age 16, with tech companies bearing the burden of enforcement—was treated by many as aspirational, even quixotic. The tech industry dismissed it. Libertarian critics called it paternalistic overreach. Skeptics questioned the evidence base.

That was then.

In barely two years, Haidt’s “radical” idea has become something close to a global consensus—a textbook example of what political scientists call the “Overton Window”—one that’s shifted at extraordinary speed.

The Overton Window describes the range of ideas that are considered politically acceptable at any given time, ranging from unthinkable to popular and eventually to policy. Ideas outside the window—no matter how sensible—get dismissed as too extreme, too impractical, or too politically risky to touch. But when conditions change, the window can move, sometimes gradually and sometimes with startling speed, pulling yesterday’s fringe idea into today’s mainstream. That is exactly what has happened with children and social media. Politicians everywhere are now racing to get on the right side of a window that has moved decisively.

The floodgates have opened

Consider what has happened just since late 2025. Australia led the charge, enacting an outright ban on social media for children under 16 that took effect in December 2025, with monetary penalties falling squarely on the platforms—not on parents or kids. France has passed a bill banning social media for children under 15. Denmark secured cross-party support for a similar ban, expected to become law by mid-2026. Spain, Germany, Malaysia, Slovenia, Italy, and Greece are all moving in the same direction.

In the United States, where bipartisan agreement on anything feels miraculous, the Kids Off Social Media Act has attracted co-sponsors from both parties—Sen. Brian Schatz (D-HI) alongside Sen. Ted Cruz (R-TX), and Chris Murphy (D-CT) alongside Katie Britt (R-AL). Virginia enacted a law effective January 2026 limiting under-16 social media use to one hour per day unless parents opt in. Over 45 states have pending legislation.

And in the U.K., a January 2026 government consultation is explicitly considering a social media ban for children, after the House of Lords defeated the government to insert an under-16 ban into the Children’s Wellbeing and Schools Bill.

This is no longer a debate about whether to act. It’s a debate about the details.

Why the window moved so fast

Several forces converged to make this shift possible.

First, mounting evidence. Haidt marshaled data showing that since the early 2010s—precisely when smartphones and social media became ubiquitous among teens—rates of anxiety, depression, self-harm, and suicide among young people have surged across the developed world. The patterns are strikingly consistent across countries and cultures. As Haidt puts it: We “over-protected children in the real world and under-protected them online.”

Second, personal stories that broke through the noise. Australia’s ban originated partly from a mother’s letter to Prime Minister Anthony Albanese about her 12-year-old daughter’s suicide following social media bullying. At the U.N. General Assembly in September 2025, a mother’s speech about her daughter’s “death by bullying, enabled by social media” won support from world leaders across continents. Data persuades policymakers; stories move publics.

Third, the collective action problem became too painful to ignore. Haidt nailed this insight: Individual parents feel powerless against platforms engineered by billions of dollars of design expertise to maximize engagement. No single family can opt out without socially isolating their child. This is precisely why governments need to shift the responsibility to the platforms. When enforcement becomes the tech companies’ problem—not the parents’ problem—the collective action trap breaks.

Fourth, early results from related interventions are encouraging. Arkansas’ phone-free-school pilot program showed a 51% drop in drug-related offenses and a 57% decline in verbal and physical aggression among students within the first year. Results like these give politicians the cover they need to act boldly.

The strategic lesson

For those of us who study how change happens, this is a master class. An idea that seemed politically impossible in early 2024 has become politically inevitable by early 2026. That’s the speed at which Overton Windows can move when lived experience, accumulating evidence, moral urgency, and a clear articulation of the problem all align.

Note, too, where the burden of proof has shifted. Two years ago, advocates for restricting children’s social media access had to justify intervention. Today, it is the tech companies and their defenders who must explain why children should continue to have unrestricted access to platforms designed to be addictive. That reversal—the shift in who must justify what—is the surest signal that an Overton Window has decisively moved. It is further set against the backdrop of the first set of legal challenges to the platform’s business models, arguing that their designers have deliberately designed their products to be harmful to maximize their profits.

What comes next

Haidt, a professor of ethical leadership at New York University, didn’t create this movement alone—millions of anxious parents, grieving families, and alarmed educators did. But he gave it a framework, a language, and a set of actionable proposals. And now, politicians everywhere are scrambling to catch up with what parents already knew in their bones: that we handed our children’s attention, self-worth, and mental health to companies that optimize for engagement, not well-being—and that better guardrails, uniformly enforced, are essential.

The venerable business case study method got its start in 1921 at the Harvard Business School. The method became standard at the school throughout the 1920s, and since then, Harvard has a near-monopoly grip on the business, selling its cases to over 4,000 rival schools.

Cases can be useful and informative, but recognize that they aren’t reality. The companies featured typically require that the case writer submit the case to them for approval. That introduces survivor bias—whoever is still around at the time of publication gets to dictate how the narrative is told. Another issue is that the companies that are selected and held up as exemplars are subject to the halo effect. This is the tendency to believe that because a company was successful, copying its practices will create success elsewhere.

Unfortunately, the iron law of transient advantage is hard to escape. The 1995 Dell case doesn’t hold up so well. A 2002 case about Nokia centered on how the successful phone company was going to deal with the €8 billion ($9.425 billion) in cash piling up in its accounts. And don’t even get me started on the 618 (!) cases that feature the General Electric Co.

Which brings me to the decades of adulation long accorded to Southwest Airlines.

The shortest distance to just another airline

Southwest Airlines ran a Super Bowl ad this year. In it, passengers scramble through a jungle, climbing over each other in a chaotic race to grab seats. The tagline? “That was wild. Assigned seating is here.” The ad was intended (I think) to indulge in gentle mockery of the past. I found it jarring. Herb Kelleher, the airline’s colorful co-founder, would have been horrified, I think. I last met with him (over a Wild Turkey bourbon, of course) at the Strategic Management Society Meetings in 2004 and he was adamant—employees first, deep attention to details, and most importantly, fun!

The many (348!) cases, book chapters, and textbook references to Southwest cite its tightly integrated strategy—where every element reinforced every other, allowing it to be profitable in a notoriously tough business.

Kelleher’s insight was that there was a particular kind of flier, whose other option was driving—so short flights that replaced a four- or five-hour drive were attractive. That meant you didn’t have to offer meals. One aircraft type (Boeing 737s) meant simplified maintenance, training, and scheduling. Open seating enabled 20-minute turnarounds instead of competitors taking 35 minutes. That extra utilization squeezed more flights from every plane. “Bags fly free” meant fewer delays at check-in and faster boarding. Employees came first, and everybody pitched in. Pilots helped clean cabins, and gate agents jumped in wherever needed.

And even with all that, the company’s culture of having fun at work made the operational discipline feel human rather than mechanical. One of my favorite examples is a flight attendant rapping the entire safety briefing to the tune of “Ice, Ice, Baby.” Or this one—safety with a sprinkling of humor.

The takeaway

The big teaching point from the Southwest cases is that competitive advantage isn’t about any single policy. It’s about thefit between policies. Remove one piece, and the whole system weakens. Southwest has now removed all of them.

Assigned seating went into effect on January 27. “Bags fly free” ended in May 2025.The company is adding premium extra-legroom sections and tiered fare bundles.They’ve announced red-eye flights and partnerships with Icelandair. They’ve conducted the first layoffs in their 53-year history. At least they are honest—their COO explained the bag fee reversal with refreshing candor: “We need more revenue to cover our costs.”

Activist investors at Elliott Management got what they wanted. But what exactly has Southwest become? As one former loyalist put it: “There’s simply no reason to fly Southwest anymore.”

Southwest’s leadership cited research showing “8 out of 10 customers prefer assigned seating.” They also acknowledged that after fare and schedule, “bags fly free” was cited as the No. 1 reason customers choose Southwest. The problem is that when you remove that differentiator, you’re now competing on fare and schedule against Delta, United, and American—carriers with better route networks, international reach, premium cabins, and decades more experience operating their models. Like all the other airlines, we are likely to now see pitched battles for overhead space, another blow to a business model built on fast airport turnarounds.

The Super Bowl ad could be a case study in strategic confusion. Southwest is making fun of customers who were passionately loyal to what made Southwest different, while asking those same customers to believe the company’s “legendary hospitality” somehow exists independent of the operational system that enabled it.

Take lessons from case studies with caution

There’s a deeper lesson here. Case studies are snapshots. They capture what worked at a particular moment, under particular boundary conditions. What they don’t speak to is what to do when those conditions shift.

Southwest’s open seating made sense for the short-hop flights taken by their initial core customers. When the alternative was expensive legacy carriers, those customers would have been driving, were it not for Southwest. By 2024, travelers had options that didn’t exist in 1971 . . . or 1991 . . . or even 2011. JetBlue offered assigned seats with personality. Spirit and Frontier offered unbundled ultra-low fares. Delta went upmarket with better service. The white space that Southwest once occupied got crowded.

My friends Zeynep Ton and Frances Frei exchanged concerns for the culture of the airline. Frei, a professor at Harvard Business School, captured this concern: “I sure hope this isn’t a case of activist investors coming in and insisting on a set of decisions that they won’t be around to have to endure. Great organizations get built over time. It doesn’t take very long to ruin an organization.”

I’m not arguing that Southwest should have frozen in amber forever. Markets change. Customer preferences evolve. Even the most elegant strategy eventually needs updating. But there’s a difference between thoughtful evolution and abandoning your model.

Kelleher once said humility and discipline go together: “You can’t really be disciplined in what you do unless you are humble and open-minded.” He built an airline that knew exactly what it was, knew exactly who it served, and had the discipline to say no to opportunities that didn’t fit.

Southwest’s new leadership knows what investors want. Whether they know what Southwest is anymore—that’s less clear.

I recently had a conversation with Jose Marcilla that reminded me why leadership matters more than ever—and why we’re getting it so spectacularly wrong. Jose is an executive director at Novartis, overseeing Latin America and Canada, and author of Unlimited Leadership. Over 25 years leading teams across five countries, and managing through geopolitical crises, he’s distilled his experience into wisdom that starts with a damning statistic.

The Leadership Crisis Hiding in Plain Sight

“When you look at the data that every year is published, only one out of four employees are fully engaged with their companies,” Jose told me. “The amount of human capital that is lost in the organizations is massive.”

Three-quarters of your workforce is checked out—not from laziness, but because we’ve failed to inspire them or create environments where they thrive. “This reflects probably the old kind of leadership style that still exists in many organizations,” Jose said.

We’ve disrupted music, insurance, entire industries. But leadership? We’re still operating with frameworks built for a world that no longer exists.

From Tetris to Minecraft: Understanding the Generational Shift

Jose offered a compelling insight through video games. “Most of us played a game called Tetris. You have seven pieces coming, and the objective was to make a line. It was kind of predictable. When I look at my Violeta, she is now 13, Jose, eight. They haven’t played Tetris, but they play Roblox or Minecraft, and these games are open. You can go whatever you want. You can set up your objective.”

“As leaders, we were trained on a Tetris mindset, whereas the young generations are more in a Roblox kind of space,” Jose said. “Leaders need to change our algorithm.”

Young people aren’t less ambitious—they operate from a different mental model prioritizing purpose over prestige, impact over incremental advancement. The biggest risk Jose sees? “They are not taking enough risks.” Why? Organizations haven’t created frameworks allowing open-ended exploration with developmental support.

The Impossible Balancing Act (That Isn’t)

The schizophrenic demands we place on leaders—be decisive but vulnerable, demanding but empathetic—aren’t actually contradictions.

“I haven’t seen any great leader that does not have a well-balanced personal and professional life,” Jose told me. He follows the “I-We-It” framework: “The It is your job. There are two other important pillars, which is the We, my family and friends, and the I, which is the things that I like.”

“I would invite all of you to analyze in your calendar every week how much time you are spending on the It, your job, on the We, family and friends, and on the I.”

Jose does daily reflections: “A moment of reflection at the end of every day is something that I do in order to analyze what I did well and what I could have done differently.”

When leading through crises, his learning was clear: “Focus on what you can control. There are many things in the world that are outside of our control zone. It’s important for leaders to have clarity, to have a vision, and to really focus the efforts of the organization and their teams in what is within your scope.”

The Power of Breadth Over Depth

Jose attributes much of his effectiveness to breadth rather than depth. “One of the beauties of my career is the breadth, and not always the depth. In this area of machine learning, AI, the value is going to be more on the questions than in the answers, and the ability of leaders to have a breadth across all sectors is going to be key.”

Despite 25 years in pharmaceuticals, Jose spends roughly 25% of his time talking to people in other industries. “I learned a lot, and that helps me to connect the dots.”

This pattern-recognition capability—seeing connections across domains—is increasingly valuable as problems grow more complex and interdisciplinary.

The Mentorship Multiplier

Perhaps the most actionable insight from our conversation involved mentorship. “Young leaders with mentors accelerate five times their careers versus people who don’t,” Jose shared. “I have not only one but two. My invitation to all the young people is, find a mentor.”

And here’s where I added something: “Get a sponsor, you know, get somebody who’s going to talk about you when you’re not in the room. Get somebody who’s going to actively put you forward for opportunities.”

The distinction matters. A mentor provides guidance and wisdom. A sponsor provides access and advocacy. Both are essential, and neither should be left to chance or organizational assignment.

Jose’s purpose in life is to “develop leaders to impact the world.” The book itself is both a distillation of his experience and, touchingly, “a gift for my children to also understand what their dad was doing.”

Moving Forward: What This Means for Your Organization

Several considerations emerge for leaders at all levels:

Audit your leadership algorithms. Are you still operating from Tetris-era assumptions? The world has moved to Minecraft.

Implement the I-We-It framework. Examine your calendar this week. How much time went to your job, to relationships, to personal renewal? If wildly out of balance, you’re modeling unsustainability.

Measure what matters. That one-in-four engagement statistic is a crisis. Track it, connect it to leadership effectiveness, and stop promoting people who deliver results while leaving disengagement in their wake.

Build breadth systematically. Create structures encouraging cross-industry learning and job rotation. The future belongs to leaders who connect disparate dots.

Institutionalize mentorship and sponsorship. Jose’s five-times acceleration statistic isn’t just compelling—it’s actionable evidence this should be strategic priority.

Simplify your strategy. Can everyone articulate where you’re playing and how you’re winning? If not, you have a communication problem.

The case for unlimited leadership is grounded in brutal reality: massive human capital waste, changing generational expectations, and increasing complexity. The old algorithms aren’t working.

As Jose reminded me, “People forget what you will do, but people never forget how you treat them.” That’s not just a leadership principle—it’s a choice we make every day.

References:

• Marcilla, Jose. Unlimited Leadership. Editorial Letra Minúscula, 2025.

• Jose Marcilla LinkedIn Profile

• ESADE Global Leader Talks with Jose Marcilla

Listen to the full Thought Sparks conversation: S6, E8 with Jose Marcilla

Eventually for some product categories, things come to an inflection point. That’s when individuals and groups emerge to weigh in on the “this is not OK” side of things, pressing courts and eventually legislators to take action. We saw it with “Unsafe at Any Speed: The Designed-In Dangers of the American Automobile.” This book put a young Ralph Nader on the map for making the dramatic argument that automakers prioritized style and profits over passenger safety.

As the New York Times notes, “Less than a year after the book was published, a balky Congress created the federal safety agency that became the National Highway Traffic Safety Administration — an agency whose stated mission is to save lives, prevent injuries and reduce crashes.” And despite being far from perfect, implementation of measures we take for granted today – seat belts, air bags, and crash protection features – have made an enormous difference. As the National Safety Council reports, “In 1923, the first year that miles driven was estimated, the motor-vehicle death rate was 18.65 deaths for every 100 million miles driven. Since 1923, the mileage death rate has decreased 93% and now stands at 1.38 deaths per 100 million miles driven.” Even those who were begrudging about the role of government in dictating what private companies could do acknowledge the success represented by these numbers.

So here we are in 2026 at what might well be an “unsafe at any age” moment for social media and technology companies, with the advent of the first major social media addiction trials. More than 1,600 plaintiffs, representing over 350 families and 250 school districts, are alleging social media companies knowingly designed addictive products that expose kids to danger, predatory exploitation, and self-harm. The defendants in the cases are some of the most profitable companies in history. The trial, which has begun in Los Angeles features 24 “bellwether” cases, to exemplify the harms the plaintiffs charge the companies created.

Here’s where this gets interesting. Unlike many previous attempts to rein in technology platforms, this one doesn’t go after the content (which tech companies always argue they can’t be held responsible for under Section 230 of the Communications Decency Act). Instead, the plaintiffs are arguing that the harm done by social media companies is the outcome of defective product design. Moreover, thatexecutives in these companies knew about the harmful features they were propagating and consciously covered up what they knew about the dangers of their products. It’s the same kind of argument that eventually succeeded in taming the worst tendencies of tobacco companies. They went down slugging. Indeed, companies in the tobacco and oil industries used similar techniques and in some cases the exact same scientists to downplay the risks of both smoking and climate change.

This brings us to the fascinating work of my colleague, Eric Johnson, author of a terrific book “The Elements of Choice.” In the book, he assembles a massive amount of research that suggests that how choices are presented to us makes an enormous difference in the decisions we ultimately make. This is the role of choice architecture. Here is his point: whether architected skillfully or not, with intention or not, to achieve an economic outcome or not, all choice situations are architected.

Those who understand the way human brains work and design the choice architecture accordingly can reap disproportionate benefits for themselves. This is why it is super-easy to subscribe to something and an incredible pain to cancel the subscription. Why defaults are set in such a way that they favor the company setting them. Why Google is happy to pay Apple north of $20 billion to be the default search engine on iPhones. You can watch my podcast with Eric that goes into these issues.

This idea, that of known choice architecture, is at the core of this case. The plaintiffs argue that features such as infinite scroll, auto-play videos, frequent notifications and recommendation algorithms are deliberately designed to be addictive, particularly for younger minds. Jonathan Haidt, author of “The Anxious Generation” has made a similar argument based on rising levels of mental distress among young people and has sparked a movement among many schools, families, and in the case of Australia, even governments, to ban smart phones below the age of 16.

This is where the parallels between government regulation of the auto companies and what might come out of these trials is instructive. Even as self-reported “car guys” fought against, complained about and very reluctantly went along with government requirements, the fact that the costs were imposed on all automakers uniformly meant that there was no competitive disadvantage to those who wanted to make safer products. There were also across the board benefits to users who avoided the harmful outcomes that could come from using those products. What the plaintiffs are looking for is not content moderation or a tweak here and there, but a fundamental rethink of how powerful technologies that can hijack our brains are allowed to operate in the world. The outcome will be interesting to observe, indeed.

January Events

Holidays over, and back to the classroom for sessions with a major Asian development bank, the leadership of a huge New York area hospital system and a very high-level group of Chief Supply Chain Officers. The conversations, even with this diversity of participants, all touched on the dissolution of certainty in our old word order, the increased level of unpredictability in their environments and how to remain calm, healthy and centered amidst all the chaos.

We recorded a whole slate of new episodes of the Thought Sparks Podcast, featuring authors, industry leaders, and those who are truly innovating in their fields. New episodes are released every Tuesday at 11 am EST. Episodes releasing this spring include Sylvia Acevedo, former Girl Scouts CEO and literal rocket scientist, Tomas Chamorro-Premuzic, author of Don’t Be Yourself: Why Authenticity Is Overrated (and What to Do Instead); and José Marcilla, President of the Latin America and Canada Region at Novartis.

In the News

How should European fashion leaders position themselves to manage rapidly changing US tariffs policy, and more in Vogue Business.

“Gateway” products solve challenging technical problems and demonstrate what customers are willing to pay for, but are also ripe for disruption, as I explain in Fast Company.

Thought Sparks Podcast

What a great start to the year for the Thought Sparks Podcast! This month, we welcomed Peter Cappelli and Ranya Nehmeh on the ongoing remote/hybrid/in-person work debate, Rob Siegel on systems leadership and the cross pressures leaders face, Cheryl McKissack Daniel on her family’s remarkable 5-generation legacy in the construction industry, and Neri Karra Sillaman, winner of the Thinkers50 2025 Radar Award and expert in what sets immigrant entrepreneurs apart.

Upcoming Events

HBR Strategy Seminar

On February 26, I’ll be giving the kickoff keynote at the HBR Strategy Summit, on how strategy meets the “unbossed” organization. Spots are going quickly for this virtual event – be sure not to miss out!

Columbia Executive Education

How do you drive innovation and growth, amid chaos and disruption? Leading Strategic Growth and Change, my Executive Education course at Columbia Business School, is designed to help executives spot new opportunities early, adapt strategy in real time, and guide their teams through complex transformations.

Join us for weeklong sessions running March 23-27, 2026 and June 15-19, 2026, on-campus in New York. Make sure you save your spot!

SXSW London

I’m thrilled to share that I’ll be joining in the fun at SXSW London in June! With Neri Karra Sillaman, Thinkers50 Radar Award 2025 winner and Mursal Hedayat, CEO of Chatterbox and a Forbes 30 Under 30 Social Entrepreneur, we will be delivering a panel titled Immigration as a Global Innovation Engine: Rethinking Talent, Risk & Reinvention. Stay tuned for more programming surrounding the event in London.

What today’s great leaders really do

Debates about how best to mobilize the resources of large organizations have been going on for decades. No less than management legend Lee Iacocca espoused this leadership philosophy: “I hire people brighter than me and then I get out of their way.” You can think of this as “manager mode.”

But there is an increasing chorus of dissent about whether this approach is fit for purpose in today’s dynamic and unpredictable environments. With the company growing rapidly before the pandemic, Brian Chesky of Airbnb took the well-intentioned advice he was given to adopt “manager mode” behavior, only to see his company fragment. Nothing like a pandemic to create an existential wake up call. That led to his rethinking his approach. Where he landed was not to micromanage, but to become the keeper of first principles—deeply involved in product decisions, design reviews, and strategic direction while giving teams enormous autonomy within that frame.

He sparked a huge conversation with his comments about founder mode (a phrase coined by Y-Combinator’s Paul Graham). He stresses the importance of design sensibility (congratulations, Rhode Island School of Design). Rather than the hands-off style (remember the now fairly discredited idea of management by objectives?), he argues that “Great leaders are in the details. That’s what founder mode is”.

As I was researching the leadership styles companies use to become more adaptive and “permissionless,” I too expected to find manager mode as the dominant form. Technology could do the job of what middle managers used to do, and there would be much more autonomy at the “edges” of the organization. But that model didn’t correspond to what I was seeing in many of the best performing companies. I’mthinking NVIDIA (top 5 things), Microsoft under “hands-on” Satya Nadella (not before that), Tesla, Amazon, Google, Shopify, Apple, JP Morgan Chase, Salesforce and many, many others. Even Walmart under Doug McMillon who “swears by collecting shopping carts.”

What I’ve concluded is that when the key challenge is inventiveness, rather than operations, founder mode seems to bring out the best in people. Consider Novartis, the giant pharmaceutical firm, which is “democratizing transformation.” CEO Vas Narasimhan champions an “unbossed” culture. Narasimhan has been bold about the strategic direction of the company, focusing it on innovative medicines and research. He’s present at committees in which key decisions are made. He’s also incredibly visible throughout the organization (I know very few CEO’s who are so adept at making short, relatable videos). Another effort I’m watching with great interest is Bill Anderson and Michael Lurie’s concept of “dynamic shared ownership” at Bayer, fundamentally changing the company’s operating system.

Founder mode involves creating clarity, bringing energy and establishing focus. It isn’t easy, but it offers the promise of leveraging what truly motivates people, according to Dan Pink. This is autonomy (Novartis’ ‘unbossed’), mastery (which Novartis calls curiosity) and purpose (which Novartis calls inspiration).

The Post-War Consensus Cracks

For decades after World War II, the Bretton Woods System, a remarkable institutional framework, governed the global economy. Organizations like the IMF, World Bank, WTO, and NATO created a stablearchitecture for trade, security, and economic cooperation. This consensus, which started eroding in the 1970’s, is now visibly fracturing.

The symptoms are everywhere: trade wars, resurgent nationalism, the weaponization of economic interdependence, and the emergence of competing blocs. What’s remarkable isn’t that this is happening—Carlota Perez’s theory of technological revolutions would predict exactly this kind of institutional breakdown at the turning point between paradigms—but that we seem to have no united group of leaders to help us think through the design of what comes next. And Perez would argue that to usher in a potential Golden Age we need a proactive state to guide decisions made by government and by business leaders.

In the 1940s, a visionary group called the Committee for Economic Development brought together business leaders, academics and government policymakers to grapple with the question of what the post-war economy should look like. The immediate and pressing problem they saw was that as World War II ended, so too would the war contracts that provided many companies with stable demand that allowed them to make capital commitments to production. What, its architects wondered, could provide demand after war production ended?

The answer turned out to be bets on the creation of a stable middle class and housing (basically creating the suburbs through innovations like the 30-year mortgage). This drove second-order demand for things like automobiles and appliances. The other big thing was investment in science and scientific institutions to help the US stay ahead of Russia in the Cold War. The CED helped shape the institutional framework that served us for decades. It still exists, now as part of the Conference Board.

The question is whether the sense of urgency and consensus the original CED was able to summon will create the framework suitable for our current moment.

According to Perez, we are at a turning point comparable to the 1930s—the installation phase of the ICT revolution is over, we have massive income inequality and a glut of bad jobs, financial bubbles are bursting, and all the problems have emerged: inequality, regional devastation, populist leaders channeling the resentment of creative destruction’s victims. Indeed the Brookings Institute found that 44% of the American people work in jobs in which the median pay is $17,950 (that’s 53 million people). Stunning.

What comes next could be a sustainable global golden age that does for the world what the post-war boom did for Western democracies. As Perez argues, a golden age is “a positive sum game between business and society, orchestrated by government.” But it isn’t inevitable.

The choice is ours. But we need forums for serious people to think through what institutional frameworks will enable broadly shared prosperity in a digital, green, and increasingly multipolar world. That’s definitely on my agenda for 2026.

The End of Employment As We’ve Known It

While we’re on the subject of making a living, something fundamental is shifting in how people relate to work. Gen Z workers are increasingly turning down promotions out of a sophisticated calculation that the traditional bargain no longer makes sense. The additional stress, time commitments, and political navigation required for management roles simply don’t compensate for marginal increases in pay or status.

Companies have done a terrific job of teaching their people that there is no such thing as loyalty, and now employees are returning the favor.

The digital paradigm enables entirely different arrangements. Gig work, once seen as marginal, is increasingly mainstream. The “one-person unicorn“ is no longer science fiction—individuals leveraging digital tools and AI can create value that once required entire organizations. Markets are emerging where skills are traded, projects are assembled, and traditional employment is just one option among many.Deborah Perry Piscione and Josh Dean, in their book “Employment is Dead” go so far as to argue that work will be completely reorganized.

For leaders, this means rethinking what it means to build an organization. The most effective companies will be those that can orchestrate talent across traditional boundaries—full-time employees, contractors, gig workers, AI agents—around shared purposes rather than hierarchical control. The organizational challenge of the next decade is invention of new models entirely.

America Cedes Ground in Green Technology

While debates rage over climate policy, a quieter but consequential shift is underway in green technology leadership. The United States, which once dominated clean energy innovation, is systematically dismantling its competitive position just as the market reaches an inflection point.

The numbers tell the story. China invested close to $680 billion in clean tech manufacturing in 2024—almost as much as the United States and EU combined. Chinese companies control the supply chains for critical materials: three-quarters of the world’s cobalt refining, 91 percent of graphite processing, and 92 percent of rare earth elements. Between March 2023 and March 2024, China installed more solar capacity than it had in the previous three years combined—and more than the rest of the world combined for 2023.

Meanwhile, the European Union has pledged to mobilize at least €1 trillion in sustainable investments to finance the European Green Deal. European policy is systematically creating the conditions for clean tech manufacturing to thrive, with coordinated investments, regulatory frameworks, and private capital mobilization.

Europe may surprise us all by leaping ahead. While America debates whether climate change is real, Europeans are building the industrial base of the 21st century economy. Economics and physics suggest it’s no longer a matter of whether the energy transition will happen. The question is who will lead it, who will follow, and who will be left behind.

The Global South Breaks Out

In 2004, my friend and mentor C. K. Prahalad published a book called “The Fortune at the Bottom of the Pyramid,” which makes the point that, approached in the right way, even people of few means can become customers, alleviating poverty along the way. It was based on an earlier article written together with Stuart Hart. He offered many examples of how smart companies achieve this, and today we’reseeing many more.

Consider the story of Zeno. Founded by an ex-Tesla employee, Michael Spencer, it is now commercializing electric scooters designed specifically for developing markets—vehicles built to carry multiple people over rough terrain, at price points that don’t require a subsidy and make sense for emerging middle classes. It is truly disruptive – making what was once complex (fueling a motorcycle) easy (swap out the battery) and what was once expensive affordable. By treating ownership of the battery separately from ownership of the vehicle, Zeno’s customers can spread the battery cost over time, opening up entirely new possibilities.

This pattern will repeat across sectors. The developing world represents enormous unmet demand. Healthcare, financial services, education, agriculture, transportation—in each of these domains, the Global South presents both the need and increasingly the capability for breakthrough innovation.

This could create enormous demand, reduce migration pressures, reduce greenhouse gas emissions and create jobs in the advanced world through trade and investment.

The opportunities for disruption are immense, and Zeno is a great example.

The Strategic Imperative

The leaders who thrive in 2026 won’t be those who predict the future correctly. They’ll be those who build the capability to sense these shifts early, experiment rapidly, and adapt as conditions evolve.

What are you watching in 2026? Let’s keep the conversation going.

According to Perez, we are living through the fifth great technological revolution, following the ages of steam, railways, steel and electricity, and mass production. Each revolution follows a remarkably consistent pattern: an “installation” phase driven by financial speculation, followed by a major crash, then—if things go well—a “golden age” of broad-based prosperity. The 1990s and 2000s were our installation period as we moved from the world of cheap energy and mass production to a world of digital goods and personalized experiences. The speculative frenzy, the financial engineering, the growing inequality—all of it was textbook Perez.

Here’s the optimistic case: we are now at the turning point. The problems have surfaced—inequality, regional climate-related devastation; and populist leaders channeling the resentment of those left behind by creative destruction. This ugliness is not unprecedented. It is, in fact, the pattern. And what follows the turning point, historically, has been extraordinary: a golden age like the one the advanced world experienced in the 1950s and 1960s, when prosperity reached broadly across society and lifted workers into middle-income lives. With the wonders of AI, we have the technological capacity to extend that kind of transformation globally, and sustainably, to everyone.

Now the pessimistic case: golden ages don’t happen automatically. They require direction. After World War II, it wasn’t mass production alone that created widespread prosperity—manufacturing tripled in value but increased its workforce by only 30%. The jobs came from services, healthcare, construction, and government. The direction came from deliberate choices: suburbanization, the invention of the 30-year mortgage, the Cold War, and policies that channeled demand. Business learned during the war that mass production requires mass consumption, and government policy made that consumption possible. Businesspeople joined the Committee on Economic Development, a who’s who of thinking at the time, to outline the policies that would make a true middle class prosperous. Would that we had a body like that when the economy went into deep recession in 2008, which Perez describes as a missed opportunity to correct the excesses of the casino economy and align capital with the needs of production. We could be living in a golden age right now!

We have figured out how to navigate through the fraught, unequal, confusing and often violent period of the turning point before. In the Gilded Age, the equivalent of today’s tech billionaires controlled unfathomable wealth even as many of their workers struggled in abject poverty. Finance was decoupled from production and inequality was rampant. The original Gilded Age ended gradually, giving way to the Progressive era(c. 1890s-1920s) due to a combination of severe economic crises like the Panic of 1893, growing public outcry against corruption and inequality, and the rise of muckraking journalists, leading to demands for government intervention and reforms that curbed corporate power, improved labor conditions, and increased social welfare, with World War I solidifying the shift.

Whether we tip toward golden age or prolonged crisis depends on choices we make now. That’s what I’ll be exploring in this newsletter as we head into 2026. I’ll be looking at the early warnings, the bright shoots and the new developments that are signposted along the way, because I am by nature an optimist.

2025 Events

Reinvention Summit

April brought the Reinvention Summit in Dublin, created by Aidan McCullen, Nadya Zhexembayeva and the good people at nineyards. There were incredible insights: exclusive meetings with leaders from New Zealand, Ireland and Norway about the unique innovation opportunities that small countries have, sessions with senior leaders unpacking innovation success stories at Microsoft, and connecting with business leaders at the University College of Dublin about inflection points.

Novartis C-LAB

How do you build an “inspired, curious, unbossed” culture? This is the goal that Novartis CEO Vas Narasimhan set when he moved into the role in 2018. Over the past few years, I have been honored to be part of the Novartis’ Culture Leadership Advisory Board, or C-LAB, which brings together very senior people at Novartis, and experts in innovation, strategy, and organizational behavior. This year, we convened in Basel, Switzerland, and got these great lab coats!

Concordia

I joined the Concordia Summit for a panel on private-public partnerships discussing how building accountability and trust between the public and private sector is part of the strategic puzzle of societal issues like climate change, geopolitical instability, and the digital revolution.

Fast Company Innovation Festival

At Fast Company’s Innovation Festival, I spoke on the future of mobility featuring Sherry Sanger, the EVP of Strategy and Marketing at Penske Transportation Solutions and Heather Lane, VP of Supply Chain Strategy and Systems at Ulta Beauty. We talked about the power of AI to help customers and employees -- especially with lessons from the COVID-19 pandemic about how supply chains can wear thin.

Thinkers50

November brought the whole Rita McGrath Group team to London for Thinkers50. This year’s theme was “regeneration”, asking the question: what does it mean to build regenerative organizations, leadership structures, and growth? It was a wonderful gathering of some of the best and brightest in thought leadership, and I’m honored to have been ranked #6 in this year’s ranking of management thinkers!

The Global Peter Drucker Forum

The Global Peter Drucker Forum, an annual event dedicated to continuing the thinking of the late management thinker. We discussed what next generation leadership ought to look like: going beyond traditional control-oriented structures to unleash human energy and creativity, speed things up, and free people to pursue good ideas.

Be Woman

It’s always exciting to cross a new destination off the list: this year, one such destination was Almaty, Kazakhstan. I gave a keynote on transient competitive advantage – the need for organizations to seize new opportunities, exploit them, and turn to new opportunities – for Be Woman, the largest platform for women’s leadership and development in Central Asia. It was fascinating to learn of the reinvention and innovation happening in that region!

LSGC

A highlight of the year were my Executive Education programs at Columbia Business School, including my course Leading Strategic Growth and Change. Through 4 weeklong installments, 7 guest speakers, and 100+participants, we got insight in the strategic challenges senior leaders face, and worked to develop actionable solutions.

New Book in the Works

And through all this, in hotel rooms, on planes, trains, and automobiles, I’ve been writing a new book! It’s centered around the idea of permissionless organizations. The case studies pull from across sectors and countries from Swiss pharmaceutical giant Novartis to South Korean finance app Toss andonline platform Shopify.

Stay tuned for more insights as I refine the manuscript and on book launch events later this year!

In the news

What a year for press features, from shedding strategic light on US tariffs and the TikTok ban, to contextualizing generational differences in the workplace and highlighting fading business models. The thing is that without some kind of framework to view what’s going on, it can all seem like total chaos. It’simportant to take a systems view and look at second and third order effects. For instance, as the government pushes universities to eliminate considerations of gender in admissions, they may wipe away what is effectively affirmative action for male applications – quite unintentionally hurting white men in the attempt to eliminate DEI programs.

When US tariffs policy shift every week, fashion mergers & acquisitions look to focus on complementary brands.

I started a new article series for Fast Company: the rise of dynamic pricing, how “good enough” products disrupt their premium counterparts, and what the release of AI “actor” Tilly Norwood can teach us about spotting weak signals.

Is the billable hour still a viable business model? When AI can increasingly do the basic work of a professional services firm in minutes, how do we value the human contribution?

64% of Gen Z workers think they could be laid off in the next year, and the impact of a new generation entering the workforce.

Living companies don’t just exist to make money, and more on how Boeing, Kodak, and GE lost their way.

How do you spot inflection points, whether in your work or your personal life? I joined Hidden Brain to discuss.

Thought Sparks

Thought Sparks Podcast

What a year for the Thought Sparks Podcast! Born out of Fireside Chats which we started during the pandemic as means of connecting when we were stuck at home, the Thought Sparks Podcast has expanded to create share insightful actions, strategic ideas, actionable suggestions and innovative approaches that help organizations and leaders master the future with less fear and more confidence. New episodes are published every Tuesday at 11 am EST.

Thank you to all our guests this year for sharing their expertise across fields, asking thought-provoking questions, and broadening our horizons.

Thought Sparks Articles

Here were the 5 trends I predicted for 2025, at this time last year, including dematerialization, deglobalization, and critical demographic shifts.

The party’s over at retail giant Party City – here’s how Build-A-Bear has remained dominant despite the retail apocalypse.

Is AI coming for your job? From Microsoft to Klarna, that remains to be seen. But what we can see are signs that the AI bubble might burst, like the Internet before it.

Writing a book is no longer the guarantee of success and credibility it once was. Have we reached peak book?

Why mergers fail: everything from CEO overconfidence to taking assumptions as fact.

From Adam Smith’s time on, we’ve had the same definition of productivity. How does AI change that, and change what economic activities we find most valuable?

Amid a global pandemic, geopolitical instability, and a recession, it’s no wonder Gen Z is struggling to find their footing.

The clean energy market is reaching a historic inflection point, but the US’s historically dominant position is vulnerable.

Find Thought Sparks on LinkedIn, Substack, Medium, and the Rita McGrath Group website.\

Thought Sparks Action Points

A new addition to the Thought Sparks suite are our Thought Sparks Action Points. These are bite-size insights from my conversations with thinkers and leaders on the Thought Sparks Podcast.

Here are Action Points from some past Thought Sparks guests we saw this fall at Thinkers50:

• Dorie Clark on career reinvention and long-term thinking.

• Herminia Ibarra on leadership transitions and the shift from “know-it-all” to “learn-it-all” cultures.

• Martin Reeves on how innovation works - not through heroic inventors but through serendipitous, collective processes involving forgotten contributors.

• Morra Aarons-Mele on the productive and destructive sides of anxiety, especially in modern work and leadership.

• Scott Anthony & Paul Cobban on how DBS Bank transformed from “damn bloody slow” to an innovation powerhouse by embedding innovation behaviors throughout the organization.

• Terence Mauri on transforming disruption into opportunity.

• Tomas Chamorro-Premuzic on how organizations prioritize confidence, charisma, and narcissism over competence, humility, and integrity - traits that predict effective leadership.

Tools - Team Effectiveness Survey

Team effectiveness is the key to unlocking profit and productivity, but too often, how you achieve effectiveness eludes leaders and team members alike. (Although I’m sure anyone could identify when their team has been INeffective). In my research, I’ve found that you can gauge a team’s capability based on evidence of 5 factors.

Roles: People with the right skills and capabilities, in the right roles.

Trust: Confidence and trust in one another.

Information: Fluid and dynamic information flows.

Commitment: Mutual commitment to the team’s goals .

Psychological Safety: Comfort in speaking up.

Take this quick survey to understand our approach to Team Effectiveness. If you’re interested in team effectiveness solutions for your organization, be in touch with seth@ritamcgrath.com

Upcoming Events

Columbia Executive Education

How do you drive innovation and growth? Leading Strategic Growth and Change, my Executive Education course at Columbia Business School, is designed to help executives spot new opportunities early, adapt strategy in real time, and guide their teams through complex transformations.

Join us for weeklong sessions running March 23-27, 2026 and June 15-19, 2026, on-campus in New York. Make sure you save your spot!

Thought Sparks Podcast

2026 is shaping up to be a great year for the Thought Sparks Podcast! In the new year, look for episodes featuring Thinkers50 Radar Award winner Neri Karra Sillaman, former Girl Scouts CEO and literal rocket scientist Sylvia Acevedo, and Stanford’s Rob Siegel. Find Thought Sparks anywhere you get your podcasts!

A choice selection of remarks follows.

The hour is a poor surrogate for value

From my colleague Jean-Pierre Colin (from LinkedIn): “I was in a meeting with dozens of lawyers charging thousands by the hour for advice on a mining property title in a dictatorship far away in another part of the galaxy. The client was annoyed at the mounting hourly fees. Over 6 hours without any successful outcome. It was obvious that only the dictator could grant any proper title, so we called in Jean Chrétien (former prime minister of Canada who now works in this law firm). He only had 5 minutes so we asked him to please get the dictator on the phone to see how far we could get to. Jean obliged, instantly reached former President of the USA, Bill Clinton, his friend, asked Bill to contact the dictator which Bill did in 10 minutes, and we then got title right away. Jean was in the room for less than 5 minutes. What should Chrétien’s hourly fee be? How much would Ai charge?”

My response:

Wow, what an amazing story Jean-Pierre Colin! It reminds me of the story of Charles Proteus Steinmetz, the so-called “Wizard of Schenectady.” As recounted in Smithsonian Magazine, “Jack B. Scott wrote in to tell of his father’s encounter with the Wizard of Schenectady at Henry Ford’s River Rouge plant in Dearborn, Michigan. Ford, whose electrical engineers couldn’t solve some problems they were having with a gigantic generator, called Steinmetz in to the plant. Upon arriving, Steinmetz rejected all assistance and asked only for a notebook, pencil and cot. According to Scott, Steinmetz listened to the generator and scribbled computations on the notepad for two straight days and nights. On the second night, he asked for a ladder, climbed up the generator and made a chalk mark on its side. Then he told Ford’s skeptical engineers to remove a plate at the mark and replace sixteen windings from the field coil. They did, and the generator performed to perfection.

Henry Ford was thrilled until he got an invoice from General Electric in the amount of $10,000. Ford acknowledged Steinmetz’s success but balked at the figure. He asked for an itemized bill. Steinmetz, Scott wrote, responded personally to Ford’s request with the following:

Making chalk mark on generator $1.

Knowing where to make mark $9,999.

Ford paid the bill.

Good riddance to the billable hour

From a correspondent: “I never liked the billable hour. I used to joke that the legal profession was the only business that got paid for inefficiency. I gave a number of talks over the years attacking the billable hour and would joke that the only two professions I knew of that got paid for their time were lawyers and taxi cab drivers. Anyway, it looks like AI may achieve what I and others were not able to. That’s a good thing and I hope you keep your eye on it.”

Joe Tiano and Nancy Rapaport have written a number of articles on the slow demise of the billable hour, quite recently one entitled “Fighting the Hypothetical: Why Law Firms Should Rethink the Billable Hour in the Generative AI Era.” Theirs is not a counsel of despair, however. They suggest that those firms that hone in on what clients really want and cleverly deploy AI to get to those results more quickly have a fantastic opportunity. Rather than being threatened by AI, law firms should reimagine work that is currently siloed. You can read their recommendations in the paper at this link.

Making space for new employment formats and models

From Tamar Cohen, another LinkedIn connection.

“Love this, and agree 100%. What’s interesting with this is that it aligns with the idea that overall Organizational Design is moving towards a program-based employment model that can include AI agents, fractional or skill based consultants and full time employees. Timing and billable hours doesn’t work in this more blended model, as you point out, and rethinking work is absolutely necessary from organizations, to agencies and consulting companies.”

Trapped by the procurement system!

From Peter Whealy, a LinkedIn contact.

“Perfect timing to raise this topic Rita McGrath. After 11 years at a big 4, I completely agree that their model is fundamentally flawed. Since becoming independent, I have moved to outcome / value based payments, but many companies are slow to accept this because ironically, their PO and approval systems rely on certainty! It’s time for everything to change...”

Have we reached peak lawyer?

This is actually a topic I’ve written about before – namely that it is easy to see how the legal profession might be disrupted. I wrote this after several thankless years spent trying to teach a program on strategy to law firm leaders. Thankless because many partners didn’t see the need for strategy at all. If they did, they wanted it made by committees of senior partners in such a way that nobody’s turf was invaded. It’s impossible to make tough tradeoffs in that context! Law firm structures are also changing, in response to disruption.

The Billable Hour isn’t going anywhere and you are an idiot. AI is more likely to replace you than me!

From a correspondent: “The end of the billable hour is nowhere near upon us and AI is extremely far from reaching correct legal or accounting conclusions, even the programs currently designed with those specific uses in mind. It’s unfortunate that readers see articles such as this one because it leads to false impressions that many of us are fighting to combat with clients.

Hopefully you are not planning to rely on AI for legal or accounting advice, and hopefully the professionals you trust with these responsibilities are not either. However, if you are or know others who are, I would like you to save my contact information because it’s highly likely you’ll require the assistance of a tax litigator in the future and I would love to be of service.

My response: As a professional services provider myself, I certainly don’t think AI is a substitute for expertise.  The large language models are also not the only game in town – there are small language models that can provide traceability to where their conclusions came from (such as those being developed by Professor Jha at Princeton).  At any rate, I appreciate your providing your contact details which I shall preserve in case of future need.

From another correspondent:

“There are two obvious holes in your reasoning, Rita:

1. AI Is No Better than One’s Form Files: AI is not very reliable as a drafting mechanism; I’ve seen it and tried it, and it doesn’t “tailor” to the needs of the client. To the extent that it saves any time, a good form, such as most lawyers and law firms have for documents they regularly draft, performs the same function. There are many legitimate complaints against the hourly rate system, and certainly against training associates on the client’s nickel. But the advent of AI isn’t one of them. If a lawyer were wholly unfamiliar with a type of contract, then AI might give him a useful starting point – but someone unfamiliar with a contract shouldn’t be drafting it in the first place!

2. Payment for Closed Deals Provides a Perverse Incentive: Sometimes the best advice is not to take a deal, but what lawyer will want to give that advice if it means he won’t be paid?

You would do the public a service by raising these issues as a counterpoint, at the very least.

From me: Consider it done.

From another correspondent: Rita your column on AI and its premise are jejune. Have you ever been on the inside of a complex civil litigation matter and in the courtroom for a multi day or multi week trial, have you ever been on the inside of a complex labour law or other administrative proceeding for multiple hearing days - do you think AI will be doing that? Have you ever watched a AI narrated YouTube or other video? Would you want that representing you in a significant matter in your life? Will you be going to an AI doctor or having your taxes done by an AI accountant? I can only assume you are glomming on to a popular theory without having thought about it much. Were you under a deadline crunch?

In my experience, no journalist has ever responded to an email like this. You will likely continue the string. There’s a much greater likelihood that AI will replace you than me.

This was my response: “Let me first say that I was absolutely delighted that you used the word “jejune” in an email. I don’t think the entire population of Gen Z folks would even know that that word means.

Since I’m not a lawyer, I haven’t been in any of the complex and demanding situations you describe. Since I am an advisor to major companies making big strategic decisions, I have been in tense situations with boards and “C” suite leaders making decisions involving sometimes billions of dollars around M&A activities, investments in technology, big innovation bets, and competitive countermoves. I’ve never been paid by the hour for any of that activity, which suggests that there are alternatives.

In no way did I suggest that AI is going to substitute for wisdom, expert judgment, or human insight. I’m hopeful that will continue to be the case. What I did argue is that AI is going to make what a lot of companies charge for in terms of time irrelevant. Clients are paying attention.

I’m so sorry that your comments to journalists have been met with stony silence. Perhaps this note will break the pattern.

Well, maybe you aren’t an idiot but you are badly misinformed

From another correspondent: I jumped to my computer the second I saw your piece come through on the end of the billable hour. Perhaps I’m just hoping to protect my livelihood, but as a practicing attorney, I believe AI will likely make lawyers more expensive, not less. Here is why:

1. The Regulatory Straitjacket (The “Subscription” Myth) You mentioned business model innovation, but the Bar Rules in many states explicitly fight this. We must tie flat fees to specific, descriptive tasks and milestones. If a client pays a monthly fee but I don’t perform a specific “task” that month, the fee is unearned.

2. Brandolini’s law. AI has reduced the friction of creating legal documents to near zero. We are already seeing pro se litigants prompting LLMs to write 100-page complaints (always remembering to throw in Intentional Infliction of Emotional Distress!) regardless of the facts. It takes 10 seconds to generate a hallucinated motion, but it takes hours to read, research, and refute it. The LLM takes a kernel of truth and spins it into a “plausible” but legally baseless claim. No rational attorney will take a defense case on a flat fee when the opposing counsel is an unhinged AI with infinite stamina.

We are moving toward a world where lawsuits are easier to file but much messier to litigate. In that environment, the billable hour is the only way to manage risk.

This was my response: I enjoyed your response to the article and agree that we are in a brave new world indeed.

It is an issue about which there are passionate opinions on both sides of the “billable hours are dumb and dead” or “billable hours are the only way to control risk” discussion.  I’ve been enjoying the correspondence.

I’m not an expert in the regulations imposed by the state Bar Associations, so thank you for bringing that to my attention.  What I would say is that as the institutional framework changes, regulations often shift – hourly billing was partially prompted by lawsuits striking down earlier state Bar pricing requirements.  When they got started, one could argue that both Uber and Airbnb were criminal enterprises and now we just take them for granted – the regulatory regime adjusted.

As to AI slop increasing the costs of engaging in cases, I totally hear you.  It hits me with all the junk books I get asked to review or endorse – same problem.  I don’t have a great answer for that, but I don’t know how people will pay high fees for an expert to sort through junk documents – eventually that will become unaffordable. 

In any case, an AI inflection point seems likely

Like plastic in the world of cheap energy and plentiful materials that Carlota Perez has described so eloquently, AI is likely to begin creeping into every nook and cranny that it can. It won’t be overnight, for sure. And some of the results will be unexpected – for instance, back in 2023, ChatGPT aced the bar exam, doing as well as some 70% of test-takers who sit for the exam. My analogy to the digital revolution and to AI specifically is that it is a lot like electricity. While electricity was capable of driving enormous and fundamental productivity gains, it took something like 40 years of rewiring factories and equipment to achieve those gains. We’re at the very early stages.

By the way, it isn’t just lawyers. No less than Julie Sweet, the CEO of consulting behemoth Accenture has publicly said that despite the misconception that AI will make consulting obsolete, the field is actually ripe for reinvention…the firms that will thrive are those that deliver tangible results.

Let me know what you think, brilliance, idiocity and everything in between in the comments.

A Canary in the Coal Mine?

After a decade of wrestling with the effects of an ill-considered strategy, which I have written about before, the leadership at Kraft-Heinz has thrown in the towel. The company has announced that it intends to unwind its entanglements, as the Wall Street Journal notes, “one global company would focus on sauces, spreads and seasonings, while another would sell grocery staples in North America. The move aims to create businesses with more focus and less complexity, Kraft Heinz said, and deepens a reversal of the food industry’s yearslong strategy of pursuing deals to build scale.”

The Kraft Heinz breakup may well bode one of the most fundamental shifts in consumer behavior since the rise of the supermarket. Big Food, a model of 20th-century mass production efficiency, is cracking apart because the premise it was built on—that millions of people will want exactly the same thing—is dissolving before our eyes.

When Warren Buffett and 3G Capital orchestrated the 2015 Kraft Heinz merger, they were betting on scale. Bigger factories, longer production runs, more shelf space, cheaper per-unit costs. The industrial logic was impeccable: combine iconic brands under one roof, slash costs, and dominate supermarket aisles with products that could satisfy the least common denominator of taste preferences across America. After all, the company was over a hundred years old, baked into people’s habits and so beloved by some consumers that their brands were tattooed on their bodies.

But here's what I think they missed: the least common denominator is fundamentally changing.

Consumers were shifting away from the kinds of highly processed packaged foods that Kraft sells, like Velveeta cheese and Kool-Aid. It further faced challenges distinguishing its products from cheaper store brands, with Heinz ketchup costing $2.98 versus Walmart's brand at 98 cents. Costco, with its signature Kirkland brand does significantly more in revenue than all of Kraft Heinz’s brands put together. The mass market, as it has come to be known, was going to Costco and other in-store brands. The premium shopper, meanwhile, was shopping in the perimeter of the supermarket, ignoring the packaged and processed foods in the middle.

The Personalization Revolution Hits the Kitchen

We're witnessing the early stages of what I call the Great Personalization—the shift from mass market consumption to individually tailored experiences. And food, surprisingly, is among the first industries feeling the full force of this transformation.

Think about how many people’s relationship with food has changed in the past decade. They're not just buying “2 eggs over easy” any more—they're buying keto-friendly, gluten-free, locally-sourced, organic, or plant-based breakfast that aligns with specific dietary philosophy, health goals, and ethical framework. The rise of meal kit services, specialty diet plans, and even personalized nutrition based on genetic testing all point to the same trend: consumers increasingly expect their food to be as unique as they are.

Kraft Heinz executives acknowledged that "the complexity of our business has impacted that ability to realize the full strength of our brands and operations" across "56 different product categories," while facing "budget-conscious shoppers buying more store-brand packaged foods" and people "willing to spend extra often reaching for fresher alternatives to processed products."

This is another reflection of what I call the “hourglass” effect where income inequality has hollowed out the middle bands of consumption. At the low end, customers are fair game for mass consumption. At the higher end, consumers are becoming pickier, expecting more tailored experiences and prepared to pay for them. The same demographic shift that doomed much of J. C. Penney’s is now showing up in the grocery aisles.

Local Food as the North Star

If you want to see where this is headed, look at the explosive growth of local food cultivation and distribution. Farmers markets, community-supported agriculture (CSA), urban farming, and "farm-to-table" restaurants aren't just trendy lifestyle choices—they're early indicators of a fundamental reorientation toward personalized, locally-adapted food systems.

Local food represents everything mass market food is not: seasonal rather than standardized, regionally-specific rather than universal, relationship-based rather than brand-driven, and inherently limited in scale. When someone buys tomatoes from their local farmer, they're not just purchasing produce—they're buying into a completely different value system that prioritizes freshness, sustainability, community connection, and individual choice over efficiency and scale.

As Carlota Perez has long pointed out, these are lifestyle choices that represent aspirational conditions for the elite right now, but that are likely to shift the culture in their direction as the meaning of a good life gets redefined.

The Technology Accelerant

What makes this shift different from past food movements is the underlying technology infrastructure that can now support mass personalization. The same digital platforms that enable Uber to match you with the right driver at the right time can connect you with local producers, customize meal plans based on your preferences and restrictions, or even enable vertical farms to grow precisely the varieties you want in your neighborhood.

We're moving toward a world where "local" doesn't mean "small-scale" in terms of impact—it means "personally relevant" at unprecedented scale. Imagine a network of urban farms using AI to optimize crop selection based on hyper-local demand patterns, or meal services that adjust recipes in real-time based on individual health data and taste preferences.

The same forces driving food personalization are rippling through retail (mass merchants losing to specialty and direct-to-consumer brands), media (network television fragmenting into streaming niches), and even transportation (private car ownership giving way to on-demand mobility services). The pattern is consistent: mass market solutions optimized for the average customer are losing to personalized solutions optimized for individual needs.

The Strategic Imperative

As Kraft Heinz executives noted, the "complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas." This isn't just a problem for Kraft Heinz—it's the central challenge facing every organization built for the mass market era.

The companies that will thrive in the next decade won't be those that can serve everyone adequately, but those that can serve specific someones exceptionally well. They'll need to develop what I call "personalization at scale"—the ability to deliver customized experiences while maintaining the economic benefits of efficient operations.

The great unraveling of Big Food isn't an ending—it's a beginning. It's the start of a food system that treats you not as a demographic segment, but as an individual with unique needs, preferences, and values. And if that transformation can happen to something as established as Heinz ketchup and Kraft Mac & Cheese, it can happen to anything.

The question isn't whether your industry will experience its own version of the Kraft Heinz breakup. The question is whether you'll be ready when it does.

Green tech is high tech, too

Business leaders in Europe often bemoan how “behind” it is in the global tech race. At the same time, Americans have taken their leadership in technology for granted, to the point at which we treat the founders and investors in tech companies like demi-gods, even as life for many ordinary people has gotten worse.

But if history teaches us anything, it is that being a leader at one point is not a guarantee of being one after a major inflection point. Indeed, those who ignore the patterns of bubbles and golden ages, as Carlota Perez has described, do so at their peril. Which brings me to the concern that the US could be leaving itself dangerously vulnerable to being overtaken in green technologies, even as other countries are making generation-defining investments.

The numbers tell a stark story

China invested close to $680 billion in clean tech manufacturing in 2024, according to the International Energy Agency (IEA). That's almost as much as the United States and the E.U. combined. It continues to lead the world in wind and solar, as one analysis found, “Between March 2023 and March 2024, China installed more solar than it had in the previous three years combined, and more than the rest of the world combined for 2023.”

America’s politics have led to a retreat from what the International Energy Agency calls a $3.3 trillion global market. The green technology and sustainability market size was valued at USD 22.66 Billion in 2023 and is poised to grow from USD 29.3 Billion in 2024 to USD 228.96 Billion by 2032, growing at a CAGR of 29.3% during the forecast period (2025-2032).

Europe's coordinated advance

The EU is quietly executing a masterclass in strategic industrial policy. The European Commission has pledged to mobilize at least €1 trillion in sustainable investments to finance the European Green Deal. Remarkably, this is a systematic approach combining public investment, regulatory frameworks, and private capital mobilization.

The European strategy demonstrates sophisticated thinking about competitive advantage. The European Union spends more than USD 10 on clean energy for every USD 1 invested in fossil fuels. More importantly, the 2024 European Innovation Fund calls drew 373 project proposals for net-zero tech and EV battery manufacturing, showing strong EU industry commitment to climate goals. Up to €3.4 billion in funding will support Europe's clean, competitive, and resilient future.

China's overwhelming dominance

China's position is even more formidable. The country is rewriting the rules of industrial competition. Installed solar and wind power capacity climbed 45.2% and 18%, respectively, in 2024, while between March 2023 and March 2024, China installed more solar than it had in the previous three years combined, and more than the rest of the world combined for 2023.

But China's true advantage lies in supply chain control. Last year China refined three-quarters of the world's cobalt and 91 percent of its graphite. It also produced 92 percent of all processed rare earth elements, the hard-to-extract metals used widely in high-tech manufacturing. This could lead to it exercising strategic control over the raw materials that power the clean energy revolution.

The economic implications are staggering. Clean-energy sectors drove a quarter of the country's gross domestic product (GDP) growth in 2024 and have overtaken real-estate sales in value. While other nations debate climate policy, China is building the industrial foundation of the 21st century economy.

In the past few months, companies have canceled, delayed, or scaled back at least nine US clean energy supply chain developments or operations...representing some $8 billion in public and private investments, and more than 9,000 jobs.

Perhaps most damaging, tens of millions of dollars in NSF grants have been slashed, and scientists fear the US is about to lose a generation of climate researchers. Such losses have a long tail – you can’t just wave a magic wand and restore the depth of scientific knowledge we have, once it is lost.

A strategic inflection point

A strategic inflection point emerges when changes in the external environment shift the realm of what’s possible, opening the door to previously inconceivable business models and activities. The leading indicators of the coming change are economic, technological and geopolitical, creating the potential for perfect storm. Over three quarters of new renewable energy capacity added in 2024 was cheaper than fossil fuels, making clean energy not just environmentally necessary but economically inevitable. The integration of AI, advanced manufacturing, and energy systems is creating new possibilities for those who maintain R&D leadership while penalizing those who retreat.

America's withdrawal creates opportunities for its global competitors. The IEA has estimated that China's clean tech exports will be worth more than $340 billion by 2035 — about the same as the oil export revenue of Saudi Arabia and the United Arab Emirates combined in 2024.

Meanwhile, Europe is positioning itself as the innovation and regulatory leader. The EU can become a clean tech manufacturing powerhouse – especially as the US rolls back green subsidies and cedes ground to China. If we know anything at all about strategic inflection points, it’s that it is no fun being on the wrong side of one.

Toward a green Golden Age

The window for American leadership isn't closed, but it's narrowing rapidly. This isn't about ideology—it's about economic competitiveness in one of the fastest-growing sectors of the global economy. It is also likely to be a powerhouse for job creation, as millions of workers will be needed to retrofit old infrastructure, design the new food and supply chains of the future and otherwise accompany the digital transformation with a more green “golden age.”

American companies and states that maintain green technology investments despite federal policy reversals will be positioned to benefit. And there are many examples of companies and regions that have maintained or even increased their commitments. But the longer America cedes leadership in manufacturing, research, and deployment, the harder it becomes to regain competitive position in a sector where first-mover advantages compound rapidly.

The question isn't whether the clean energy transition will happen—that's already determined by economics and physics. The question is whether America will lead it, follow it, or be left behind by it.

Generation Z – born between 1997 and 2012 – are preparing for college, entering the workforce, and are at the beginning of their professional and educational careers. Throw in a global pandemic, geopolitical instability, and a recession and it’s no wonder Gen Z is struggling to find their footing.

Recession anxiety on the rise

I’m not the first to report this, but concerns of recession are becoming more real by the day and Gen Z faces unprecedented financial pressures that amplify recession fear. Economic growth contracted at a rate of 0.3% in the first quarter of 2025, while consumer spending declined by nearly $30 billion in May, nearly $30 billion less in May than in April, creating tangible economic uncertainty. J.P. Morgan now sees a 40% probability that the U.S./global economy will enter a recession by the end of 2025, down from earlier 60% estimates but there is still a significant risk.

Gen Z’s unique financial situation makes a recession all the more concerning. According to a Talker poll, Gen Z carries the highest average personal debt, at $94,101—far above millennials ($59,181) and Gen X ($53,255). Student debt is a major factor: Over a third (36%) of older Gen Zers had student debt as of June 2022, compared to 31% of millennials at the same age. Housing costs add another layer of pressure, with the average proportion of a person's income that goes to rent increasing from 25% in 2000 to 40% now.

Both Gen Zers and younger millennials were hit by a nasty one-two punch — the Covid-19 pandemic and then the worst inflation in decades — at critical points in their financial journeys. As a result, almost half of those aged 18-29 currently live with their parents, marking the highest level observed since the Great Depression era.

For Gen Z specifically, this economic anxiety is amplified by their unique position in the workforce. The unemployment rate for 20-to-24-year-olds was 8.3%, more than double overall U.S. joblessness. They're experiencing what economists call a "low hiring, low firing" economy - while layoffs aren't unusually high, new hiring has slowed dramatically, making it particularly difficult for young people trying to enter or advance in their careers.

Policy uncertainty is also weighing heavily on sentiment about a looming recession. The administration's purportedly desired policies would impose, each in their own way, a significant contraction on different sectors of the economy, with concerns about tariff impacts and government spending cuts creating additional market volatility. And the recent passage of Trump’s “Big Beautiful Bill” will largely benefit the already wealthy while cutting benefits, such as food assistance, to those without means.

Getting the job is not keeping the job

The layoff anxiety among Gen Z reflects both real workplace dynamics and generational differences in job security expectations. Six in 10 employers say they have already sacked some of the Gen Z workers they hired fresh out of college in recent months, with employers citing lack of motivation or initiative, being unprofessional, unorganized, and having poor communication skills as primary reasons. However, this higher termination rate appears linked to broader structural issues.

Around six in ten companies included in the survey reported firing a recent university graduate they hired this year, suggesting systematic challenges in onboarding and workplace integration rather than purely individual performance issues. Entry-level employee optimism reached a record low in March, reflecting how this generation is experiencing both actual job insecurity and psychological pressure from economic uncertainty. Further, what I call a “tour of duty” job environment means that neither companies nor their employees have much expectation of loyalty and those people with short tenures and limited skills (hello, Gen Z) are most likely to face the consequences.

When it comes to mass layoffs, technology continues to be the most affected sector. The data supports these concerns: In 2024, there were 150,000 job layoffs across 549 tech companies, and between January and April 2025 alone, more than 105,000 tech workers were laid off.

Major companies like Siemens slashed 5,600 positions in March and Hewlett Packard Enterprise (HPE) laid off 2,500 of its employees in the same month. Microsoft just had its largest layoff since 2023, cutting over 15,000 people in several waves. Younger workers are disproportionately represented in the most vulnerable sectors. The technology industry, which has seen the most significant layoffs, traditionally employs a high percentage of younger workers, particularly in entry-level and mid-level positions.

Yes, Gen Z is expected to account for more than a quarter of the U.S. workforce by the end of 2025, but they're concentrated in sectors experiencing the most volatility. Additionally, nearly 4 in 5 U.S. job seekers (79%) reported feeling anxious about the current job market, with Generation Z facing unprecedented frustration in their job search.

Gen Z's spending slowdown

Gen Z is spending considerably less than previous generations. As Gen Z enters the workforce and steps out of their parents' homes, many are hitting a wall of economic reality - hard. This generation, raised on subsidized services, cheap direct-to-consumer (DTC) convenience, and life’s little luxuries (don’t even get me started on the family cell phone plan), is suddenly facing sticker shock - and it’s reshaping their spending, fast. This is going to deeply affect a number of sectors - retail, tech and more. Venture capital has dried up, pulling the plug on the subsidies that kept Uber rides, mattress deliveries, and gourmet meal kits artificially affordable. The DTC boom has collapsed, crushed by rising ad costs and shipping inflation. And the job market for younger workers is softening, leaving many struggling with uncertain income, rising debt, and record-high rent.

Arenas, not industries

Firms looking to appeal to Gen Z in this economic climate need to think in terms of arenas, not industries. In conventional strategy analysis, industry is destiny. If you’re Whirlpool, you duke it out with other companies making washing machines. If you’re Ford, the enemy is General Motors, and so on. Well, the recent plight of Gen Z who have now discovered that life after mom and dad is expensive is illustrating just how misleading this way of thinking can be. With tight budgets, hefty student loans and massive uncertainty about getting and keeping a job, young American’s shopping spree is over, as the Wall Street Journal bemusedly intoned. The result? They are weighing very carefully what to spend their precious resources on - with the result that at-home pizza parties are competing with eyebrow tinting, fancy cocktails are competing with used dresses and coffee shops are competing with retailers that let young people linger for free. So much for your industry – you have to start paying attention to what else is capturing the customer’s share of wallet.

Consider weddings, a key aspect of social life for much of Gen Z. Attending a wedding is an enormous financial burden – it's a new outfit, a hotel stay, airfare and gas money, a gift – and forget it if you’re in the wedding party. Think beyond industries. Here, any financial goals (saving for a down payment or a security deposit) for Gen Z are in direct competition with the financial burden of attending weddings.

Higher education and the value of a college degree

In another pull-the-rug-out-from-under-us moment for Gen Z, many were told not to get into “creative” jobs that require soft skills, but instead to go for sure bets, like coding and engineering. Well, guess what? In the age of AI, writing code can increasingly be delegated to the machines. What can’t is ... wait for it ... soft skills! In fact, there is some evidence that suggests while STEM (science, technology, engineering and math) degrees do indeed get people into jobs, after about 10 years, the advantage of STEM training erodes and the human side of things, represented by the liberal arts, starts to be more desirable.

With over 4 million Gen Z-ers not working or in school, there are growing questions about whether college degrees are actually preparing students with the right skills for real-world jobs. It’s not that universities are deliberately misleading students, but their incentive systems often aren’t aligned with students’ career outcomes. Instead of expecting everyone to have a desk job, universities could start investing in clear, supported career pathways.

Many university course offerings are unaligned with what their students would like to pursue. We see this keenly in the STEM fields. Consider Stanford. At one point, the university was grappling with a major imbalance – something like 65% of its course offerings were in the liberal arts, while 35% were in so-called STEM fields (science, technology, engineering and math). Yet student demand was almost the polar opposite – leading the university to do some tricky rebalancing over the years.

There is strong evidence that while STEM graduates tend to do well in their first few jobs, that over time the liberal arts types catch up and then surpass them. Why? The skills many employers demand are things like critical thinking, influence, problem-solving and the like. The dilemma for STEM students is that unless they are super diligent about staying up to date, rapid changes in technologies can render them obsolete, while the things that allow people to interact positively with other human beings are unlikely to go out of vogue.

Educational institutions might also re-examine the career pathways they present students with. An exemplary program that is an example of a bright future for its participants is the Pathways In Technology (PTECH) program, set up by a consortium of companies, that begins working with students in high school. After 6 years, they receive both a high school degree and an Associates degree (a 2 year degree) and many do go on to 4 year colleges. The program provides, structure, support and a community clearly focused on careers, outside the bounds of a traditional 4-year degree that has left so much of Gen Z floundering.

On the bright side for Gen Z, it is clear that as we make the transition from an economy based on petrochemicals, suburbs and mass markets to one based on digital goods, those who are digital natives have attributes that can give them significant advantages. They’ll just need to see where the openings are to apply their talents.

From pins to AI, the missing role of ingenuity in our understanding of productivity

All the way back in 1776, Adam Smith in The Wealth of Nations established many of the assumptions we simply take for granted in economic logic. Among his more exciting arguments was that through the mechanism of the “invisible hand,” participants in capitalist systems can generate benefits for others by acting in their own self-interest. He also offers an interesting distinction between productive and unproductive labor. Productivity expert Scott Young notes that “Productive labor, according to Smith, was any work which fixed itself in a tangible object. Unproductive labor, was any work where the value was consumed as soon as it was created. Smith contrasted the role of laborers in a manufacturing plant (productive work) with the tasks of a servant (unproductive work).

The magic of increasing productivity, further, was in the division of labor, in which people could specialize on tasks and learn to do them better, permitting the whole system to create greater output for the same or even fewer inputs, the textbook definition of greater productivity.

With greater productivity comes the potential for producing more than is needed for basic human sustenance. That in turn creates the potential for a market, in which one set of people can trade the surplus with others, creating greater incentives to further increase productivity, and so on. And by focusing on their part of the system, learning practices lead to improvement, discoveries and innovation. This is why free trade, by opening up larger markets, is often seen as beneficial to all participants.

There is, however, a part of Smith’s writing that to me has been rather overlooked. This is his emphasis, as James R. Otteson of Yeshiva University explains, on the role of human ingenuity. Those societies that gave people the scope to use their ingenuity and entrepreneurial inclinations to improve what they were working on flourished. Those that did not languished.

Are our most important jobs the most unproductive?

Ironically, by Smith’s own definition, many of the most important jobs in any society – teaching, providing healthcare, looking after children – are unproductive. They are also subject to increasing costs due to something called the “Baumol effect” after the late economist William Baumol. He found that even though doctors, professors, and symphony artists were no more “productive” over time (it still takes 4 musicians 40 minutes to play Mozart, for instance), that their wages nonetheless went up. This happens because rising wages in high-productivity parts of the economy lead to those in less productive parts earning more as well, lest those essential jobs remain vacant. Baumol thought of this as a “cost disease,” that dragged down productivity across the economy, and contributing to the growth of those low productivity sectors over time.

Because of the way we look at productivity, we've created a peculiar blind spot: the things that make life truly worth living are precisely the things we struggle to make more productive. Art galleries, symphony halls, literature, museums, experiential learning, cultural festivals—these represent the flowering of human civilization, yet they remain stubbornly resistant to our understanding of economic value.

This creates what I call the "cultural productivity paradox." The arts and cultural sector contributed $1.17 trillion to the U.S. economy in 2023, representing 4.2% of GDP, yet we continue to view cultural activities as economic afterthoughts rather than fundamental drivers of human flourishing. We've become extraordinarily adept at measuring the efficiency of manufacturing widgets while remaining mystified by how to quantify the value of a child's first encounter with Shakespeare or the ripple effects of a community music program.

The Golden Age Vision

Economist Carlota Perez offers a compelling framework for understanding this paradox through her concept of technological revolutions and golden ages. Perez traces five boom-and-bust cycles of technological innovation spanning the past three centuries, each following a similar pattern of installation, crisis, and eventual golden age deployment. The Victorian boom, the Belle Époque, and the post-war golden age all shared a common characteristic: they weren't just periods of economic growth, but eras when societies found ways to deploy their technological capabilities in service of broader human flourishing.

According to Perez's theory, we're currently about 45 years into a technological surge that began in the early 1970s—potentially the longest such cycle we've seen. The information and communications technology revolution has installed vast productive capacity, but we're still struggling to deploy it in ways that create broadly shared prosperity and human enrichment.

Where we are at the moment in the transition away from the economic and technological system that every person alive today has come to take for granted is potentially re-thinking productivity itself. In a world that leaves “mass” markets behind, where products are replaced by services and in which a logic of experiences replaces a logic of extraction, consumption and obsolescence, the role of services will be critical and central. We need new ways of understanding what value looks like in that world.

The AI Opportunity

Here's where artificial intelligence presents a fascinating possibility. Unlike previous technological revolutions that primarily automated physical labor, AI has the potential to automate cognitive functions across service sectors, potentially freeing human capacity for precisely the kinds of activities we struggle to measure.

Recent analysis shows that revenue growth in AI-exposed industries has nearly quadrupled since 2022, with wages rising twice as quickly in those industries most exposed to AI compared to those least exposed. This suggests we're beginning to see the productivity gains that could enable a boom, even in the very sectors in which observers have been highly skeptical.

Consider the possibilities: AI-assisted administrative functions could free teachers to focus on mentoring and inspiration, a philosophy about education that is core to Ben Nelson’s vision at the Minerva Project. This is already leading some to completely re-imagine learning, as in the two hour school day. Automated data analysis could give healthcare workers more time for patient interaction and care coordination, as Paul LeBlanc has argued. Intelligent systems could handle routine legal research, allowing lawyers to concentrate on advocacy and justice. Smart logistics could optimize resource distribution, creating abundance that enables broader cultural participation.

The services sector—encompassing everything from education and healthcare to hospitality and cultural production—has historically shown lower measured productivity growth than manufacturing. But this may reflect our measurement limitations rather than genuine inefficiency. Research shows generative AI could improve productivity in customer service by 14% per hour while reducing time spent handling issues by 9%, suggesting significant potential for enhancement in human-centered work. The key insight is that AI's impact on services may not be about replacing human judgment and creativity but augmenting human capacity for the very activities that create meaning and connection. Rather than seeing cultural activities as drains on economic productivity, we might begin to understand them as the ultimate output of a truly productive society.

The Inflection Point

As Perez notes, "the sociopolitical form we give to technology will define whether we enter a golden age". The choice isn't predetermined. We could use AI to create a hyper-quantified society where every human interaction is optimized for measurable outcomes. Or we could deploy it to create the abundance and efficiency that enables a flourishing of precisely those unmeasurable aspects of human experience that make life worth living.

The signs of possibility are already emerging. The arts economy represented a new high-water mark of 4.4% of GDP in 2021, demonstrating resilience and growth even through disruption. Virtual reality is creating new forms of cultural experience. AI is enabling personalized learning at scale. Digital platforms are democratizing access to cultural creation and consumption.

Toward a golden age?

For leaders navigating this transition, the challenge is learning to hold two seemingly contradictory truths: we must continue to drive measurable productivity improvements while simultaneously creating space for the immeasurable aspects of human flourishing that define golden ages. This means rethinking success metrics to include cultural vitality, community engagement, educational depth, and creative output alongside traditional economic indicators. It means investing in the infrastructure of human development—not just broadband and data centers, but concert halls and maker spaces, libraries and community gardens.

Most importantly, it means recognizing that the ultimate test of any technological revolution isn't whether it makes our processes more efficient, but whether it makes our lives more fully human. The great productivity paradox may turn out to be no paradox at all, but rather a reminder that true productivity includes producing the kind of society we actually want to live in. The question isn't whether AI will boost productivity—the evidence suggests it will. The question is whether we'll use that productivity to create more widgets or more wonder, more optimization or more opportunity for human flourishing.

We have the potential to create a society in which the ingenuity Adam Smith spoke about can be put to work creating a world that works better for more of us.

A front row seat to the revolution

Max Boisot was a brilliant scholar and theorist who was among the first to recognize that the advent of the digital revolution was not just about another whizzy technology but a fundamental shift in the logic of value creation. He argued that the industrial revolution involved harnessing non-renewable energy sources to produce industrial goods. The Information Revolution, whose outlines were only becoming dimly understood in the late 90’s, involves substituting information for energy to produce knowledge-intensive goods.

He opened his class with this brain teaser:

In 1978 a student at Oxford University decided to improve his chances of academic success by borrowing a copy of his final examination questions. Not content with punishing him for cheating, the university prosecuted him for theft. The judge threw the charges out. The university, he pointed out, still had the questions. The student had not kept the piece of paper on which they were written. He had merely copied it. Because deprivation is the essence of theft, the student had not stolen anything.

(Source: The Economist, May 4^th, 1991. p.21)

As the class discussion proceeded, what participants began to explore was exactly in what ways information goods were different than physical ones, with significant implications for the creation, growth and eventual loss of competitive advantages. Among Max’s most important arguments was that simply possessing information was insufficient to develop an advantage – what matters more is how it moves throughout your organization. As competitive advantages become shorter, the pace at which a company can move to build new advantages becomes a competitive differentiator, and yet very few firms have a strategically consistent way of understanding knowledge flows.

He would then offer the class a challenge: Imagine that they were using one of those old-fashioned international telephones with scratchy sound that required a physical operator. Which of the following figures would be easier to explain to the person on the other end so that they could replicate it, say in another country (no snapping pictures on your smartphone allowed!

Choice “B”, of course would be a lot easier to convey then the random pattern represented by Choice A. And this gets to a fundamental element of information goods – they need to be given structure in order to convey meaning and all information goods exist to do is convey some kind of meaning.

The “I-Space” or information space

Max Boisot's Information Space (I-Space) Framework offers a powerful lens for understanding how organizations can architect information flows. The framework maps information along three critical dimensions: codification (how structured the information is), abstraction (how conceptual versus concrete), and diffusion (how widely shared). Together, these create a three-dimensional space where different types of knowledge live and move.

Consider for instance, the difference between the knowledge possessed by a Buddhist monk and a bond trader, one of Max’s favorite comparisons. The monk might well spend years studying, learning and deeply embodying the traditions of his group. The knowledge he possessed would be idiosyncratic to that specific time and place. Bond traders, on the other hand, operate with highly codified knowledge about, say, prices, that travels around the world in an instant. Everyone who knows bond trading has access to exactly the same information at all times.

Here's the issue, however. The information possessed by the Buddhist monk is full of richness and deep meaning. The information the bond trader uses is very abstract – it has been extremely well codified and everybody knows what the codes mean, but it has been stripped of nuance and meaning. That’s what codification entails. Codification also enables diffusion to take place. When a piece of information is only in a person’s head, other people don’t have it. When it’s codified – by say, writing this newsletter – now it can be widely shared and even those who aren’t present or didn’t personally know the author can share the information.

Organizations that can take uncodified, undiffused information and give it shape and meaning by fast learning can outpace slower competitors by the way knowledge is architected. Consider why Tesla maintained its electric vehicle lead for so long. It wasn't just superior battery technology. Tesla excelled at moving knowledge through the I-Space more effectively than traditional automakers. They rapidly codified manufacturing innovations, abstracted lessons across product lines, and diffused insights throughout the organization. Meanwhile, legacy automakers had knowledge trapped in silos, poorly codified, and moving through bureaucratic layers at glacial speed.

The Four Strategic Zones

The I-Space is a conceptual model with four distinct zones where knowledge operates, each with different strategic implications.

Zone 1: Tacit Knowledge (Low codification, high abstraction, low diffusion) This is where breakthrough innovations often begin—in the minds of individuals or small teams. Strategic implication: You need different management approaches here. Traditional project management kills innovation in this zone. Instead, create protected spaces. There needs to be time to tinker. Funding should be allocated on a funding basis, not a budget basis. A great resource for understanding knowledge of this kind is Safi Bahcall’s wonderful book Loonshots.

Zone 2: Proprietary Knowledge (High codification, moderate abstraction, low diffusion) This is historically where many knowledge-intensive companies built protections and barriers that kept others out of their territory. Patents on pharmaceuticals, trade secrets, and the like limit others’ ability to copy what you can do. It’s knowledge that's structured, but not widely shared. Here’s the problem: Back in the day when such knowledge was combined with physical assets, say a Nylon plant for DuPont or a razor factory for Gillette, there were entry barriers that could keep others out of the space. With digital products, the physical “moat” goes away, making this zone much harder to defend.

Zone 3: Public Knowledge (High codification, high abstraction, high diffusion) This becomes commoditized quickly. You’re not going to create a strategy that is differentiated in this zone because everyone has access to the same information. Information that was once tacit, moreover, as competition and imitation kick in often ends up in this space. One of the major impacts of the current generation of artificial intelligence platforms is potentially to turn what was once hard-to-create proprietary knowledge, such as how to code, into public knowledge with the aid of AI. We are already seeing fascinating stories of how this is playing out, with uncertain consequences for those who spent years in some cases building up once-scarce, now common, expertise.

Zone 4: Common Practice (High codification, low abstraction, high diffusion) These are industry standards and best practices. This kind of knowledge is just table stakes for you to participate in a sector - You must excel here to play, but excellence here won't differentiate you.

The Movement Imperative

The real strategic insight behind all this is that knowledge doesn't sit still in the I-Space. It moves. And the companies that master this movement outperform those that don't.

Amazon's AWS success illustrates this. The company took tacit knowledge about managing massive computing infrastructure, including the need to completely refactor their systems which few other companies had ever done (Zone 1). After having codified the knowledge behind AWS for their own use, they had the idea that other companies might benefit from this secure, cloud-based, flexible information architecture. They created reusable services (Zone 2). Then, they selectively diffused it to customers while keeping core architectural insights proprietary. They orchestrated knowledge movement to create a platform that competitors struggle to replicate.

The Execution Challenge

The I-Space Framework isn't just analytical—it's actionable. But execution requires rethinking how you manage knowledge flows. Most organizations optimize for knowledge sharing (diffusion) without considering the strategic implications of what they're sharing and when. Further, in many typical bureaucracies what Max called “blockers” are often allowed to run rampant – political interests, incentives and other personal motivations can get in the way of the free flow of knowledge development that forms the center of information goods.

Smart companies create "knowledge portfolios" where different types of information are managed according to their I-Space position. They accelerate movement when it creates advantage and slow it when it protects advantage.

The Competitive Reality

In an era where information moves faster than ever, understanding how knowledge flows are moving across your organization isn't optional—it's essential for strategic survival. Companies that treat all knowledge the same way, or that optimize for transparency without considering competitive implications, will find their advantages eroding faster than they can build new ones. The question isn't whether your knowledge will move through the I-Space. It will. The question is whether you'll orchestrate that movement strategically or let it happen to you.

The Persistent Paradox of M&A Failure

Here's a puzzle that should keep every boardroom awake at night: Between 70% and 90% of mergers and acquisitions fail to deliver their promised value, yet in 2024 alone companies spent over $2.6 trillion annually chasing the merger mirage. This isn't just a statistic—it reveals the same kind of breakdowns in planning for big things that we also see in the systemic failures of mega projects and in my own work on major corporate innovations that went terribly, terribly, wrong, landing them in my “flops file.”

The big weakness? Taking untested assumptions as facts. Making a big decision all at once without the opportunity to course-correct. Taking too long to reach a result with the effect that the time for risks to emerge expands broadly. And often, leaders personally associated with the strategy that led to the decision, opening the window for all kinds of cognitive and social biases, including the famous “escalation of commitment to a failing course of action.”

The Latest Chapter: Dick's and Foot Locker Dance the Acquisition Tango

Consider an example unfolding before our eyes: Dick's Sporting Goods' $2.4 billion acquisition of Foot Locker, announced in May 2025. On paper, it reads like a strategy consultant's dream—two complementary retail giants combining forces to dominate the athletic footwear landscape. Dick's serves affluent, suburban, older customers with its “house of sports” strategy while Foot Locker targets urban, younger, lower-to-middle income sneaker enthusiasts. Foot Locker brings the prospect of international markets, greater leverage with manufacturers and access to the sneaker culture that once made Foot Locker iconic.

The executive rhetoric is predictably optimistic. Dick's CEO Lauren Hobart speaks of creating "a new global platform" serving "ever-evolving needs through iconic concepts consumers know and love.” Some observers are enthusiastic, gushing that “Dick’s is buying itself a passport to the world.” Others are not so sanguine. The market's immediate reaction tells a different story: while Foot Locker's shares surged 85%, Dick's stock fell 14%—a classic sign that investors see the deal as more beneficial to the acquired company than the acquirer.

More tellingly, analyst John Kernan from TD Cowen called the deal a "strategic mistake," arguing that Dick's will need to increase investments to scale and fix Foot Locker. This isn't just skepticism—it's pattern recognition from someone who's seen this movie before. Fortune’s Phil Wahba is even more negative – saying that “no matter how talented an executive is, the turnaround of a damaged brand is difficult, distracting and offers no guarantees.” The Fortune article concludes “Wall Street says don’t do it, Dick’s.”

The Integration Trap: Where Good Intentions Go to Die

What makes the Dick's-Foot Locker deal particularly illuminating is how it embodies a classic M&A failure pattern. Foot Locker operates about 2,400 stores across 20 countries but has closed hundreds of stores since 2023, struggling with the decline of mall-based retail. Their well-regarded CEO, Mary Dillon, was very successful in her previous role, putting Ulta Beauty at the top of its category, but she has struggled to right the ship at Foot Locker. Dick's isn't just buying a business—it’s inheriting a transformation challenge.

The standard explanation for failed M&A deals points to integration as the problem, but this is particularly severe when acquiring "complementary" businesses that the acquirer thinks they understand well. History suggests such assumptions can be quite dangerous. Dick's leadership believes it understands retail, but Foot Locker's business model, customer base, and cultural DNA are fundamentally different. As analyst David Swartz noted, "Foot Locker was designed as a mall-based retailer when malls were the dominant place that people went to shop... And that has changed. And part of the reason why that has changed is Dick's Sporting Goods".

This is the integration trap in action: confidence bred from superficial similarities masking deep operational and cultural differences. I sincerely hope it works out for them – if everything goes according to plan, it could refresh a flailing retailer and ignite new growth for a slowing franchise.

The Synergy Seduction: When 1 + 1 Equals Less Than 2

The language around mergers has become a masterclass in strategic wishful thinking. The usage frequency of "synergy" in corporate merger announcements tripled between the 2000s and 2010s. But synergies aren't mathematical certainties—they're bets on behavioral change across two (or more) complex organizational systems.

Research shows that 83% of merger deals failed to boost shareholder returns, often due to mismanagement of brands, risk, price, strategy, cultures, or management capacity. The Dick's-Foot Locker combination promises cost synergies and enhanced negotiating power with suppliers like Nike, but these benefits assume seamless integration of operations, systems, and cultures—assumptions that history suggests are rarely met.

Learning from the Wreckage: Recent Cautionary Tales

The landscape is littered with recent reminders of M&A hubris. Microsoft's acquisition of Nokia's mobile division for $7.2 billion in 2014 is considered one of the worst acquisitions of all time, resulting in massive layoffs and the failure to integrate Nokia's hardware with Microsoft's software ecosystem effectively.

The AOL-Time Warner merger of 2000, valued at $165 billion, promised transformation but delivered cultural integration disasters. More recently, the acquisition of Time Warner by AT&T failed despite seeming promising on paper, with AT&T struggling to merge distribution networks with content creation.

Even successful companies aren't immune. Google's acquisition of Motorola for $12.5 billion in 2011 failed to establish a significant foothold in hardware, leading to its sale to Lenovo for $2.9 billion just three years later.

The CEO Confidence Conundrum

Why do smart leaders keep making the same mistakes? The research points to overconfident CEOs and boards who, despite substantial evidence to the contrary, imagine that a transformational acquisition can pull a company's profitability and stock performance out of the doldrums.

This suggests that acquisitions appear in many cases to be tenure insurance for CEOs—a way to demonstrate bold action and vision, regardless of actual value creation. The pressure to show growth, combined with the seductive narrative of "strategic transformation," creates a powerful cognitive bias toward deal-making. It’s also worth remembering that CEO’s are often affected by their own power – the point of forgetting that success in one set of circumstances doesn’t guarantee it in another.

A Different Path Forward: The Uncertainty-Informed Approach

The persistent failure rate of M&A suggests we need a fundamentally different approach—one that embraces rather than denies uncertainty. Instead of betting on synergy projections, leaders should:

Start with optionality over integration. Rather than immediate full integration, structure deals to preserve the ability to learn and adapt. The most successful acquisitions often maintain separate operations initially, allowing for gradual integration based on actual rather than projected synergies.

Price for probable failure. If 70-90% of deals fail, pricing should reflect this reality. Pay prices that make sense even if synergies don't materialize, rather than justifying premiums based on overly optimistic scenarios.

Focus on capability acquisition, not market consolidation. The most successful recent tech acquisitions—think Google's purchase of YouTube or Facebook's acquisition of Instagram—focused on acquiring unique capabilities and allowing them to flourish within a larger ecosystem.

Build integration competence before you need it. Companies like Cisco have completed over 200 acquisitions successfully, crediting much of their success to recognizing that human capital is crucial and maintaining 87% retention of key employees from acquired companies for more than two years.

The Bottom Line

Mergers don’t fail because the leaders are incompetent, but because they're operating under the illusion that complex organizational change can be engineered through financial engineering. The real question isn't whether the Dick’s-Foot Locker deal will succeed—the odds say it won't. The question is when leaders will stop being seduced by the merger mirage and start building the patient, incremental capabilities that create lasting competitive advantage.

Incentives matter too, of course. CEO pay is highly correlated with company size. And sometimes mergers are prompted by a desire to keep a competitor from making a similar move. But in a world of genuine uncertainty, the most strategic move might be to resist the siren call of transformational deals altogether. Sometimes the boldest strategy is the one that doesn't make headlines.

Of bubbles and golden ages

When looked at through one lens, things look pretty grim out there. Tariffs are once again on the policy menu, the assumptions of economic order that have been in place since the end of the Second World War have been shaken up and organizations are facing multiple existential threats. But, economist Carlota Perez reminds us, we have been here before. In roughly 60-year cycles, capitalist economies reinvent themselves with a new technological regime that goes through a fairly regular pattern – first an eruption of new possibilities, followed by a bubble, then a crash and then eventually a deployment phase where the new discoveries are in widespread use, investment capital lines up with production capital and we have the potential of achieving a new “golden age.”

We are in the messy middle, where the old regime (think mass production, petroleum, appliances, suburbs and highways) is still clinging on, and the new regime (information and communication technologies, the Internet, now AI) hasn’t yet been completely installed. It’s a period of political upheaval, competition among nations for primacy, experimentation with new business models and the discovery of entirely new ways of working and living. And our current “installation” period has lingered for longer than one might expect, as inexpensive global labor markets and the capture of financial markets by the ‘casino’ economy prop up the productivity of the previous technological regime.

So there is much talk of “bringing back” good manufacturing jobs to the United States as a way of once again bolstering the lifestyles of the middle class. Here is where Perez’s work intersects interestingly with that of MIT’s Zeynep Ton. In her recent article in the Harvard Business Review, Ton points out that while manufacturing jobs are indeed critical to national security, innovation and resilience, there are unlikely to be enough of them to rebuild the middle class in the United States. Instead, she suggests, why not focus on the jobs that are already plentiful here – front line service jobs. Indeed, as she points out, there are more Americans working at Walmart than in all U.S. automotive factories combined.

The new world of work, ‘permissionless’ organizations and future good jobs

We are already seeing the emergence of new kinds of jobs made possible by digital technologies. We can already observe that network-centric organizations operating as networks of competence or ecosystems are taking the place of traditional firms. These organizations behave quite differently from firms designed to deliver value in the mass production paradigm with its linear hierarchies. The digital paradigm favors flexible, interconnected networks of specialized entities. This can dramatically reshape how work is organized and how value is created (there will be a whole conference on this in Lisbon in September). As I have argued, the new technologies can substitute for what management traditionally did, opening the door to “permissionless” forms of organizing.

A second big shift that digital technologies usher in lies in how value is created and consumed. Value shifts from tangible to intangible assets. Back in 1975, as a report published by UCLA finds, intangible assets were just 17% of the assets on publicly traded firm’s balance sheets. Some 50 years later, intangible assets such as software exceed 90% of all assets on a company’s balance sheet. The people creating value from these intangibles, moreover, are in high demand – in many cases in higher demand than the people working with physical assets (as would be the case for workers in a factory). What we can observe in many of these firms is that knowledge, creativity, design, software, relationships, and services become primary sources of value, rather than physical production.

This then brings us to the central challenge articulated by Ton’s work: how to make the non-automatable, non-repetitive work of the front-line worker more rewarding for the workers themselves and better for those receiving their contributions and care? Building on the work of people like Paul LeBlanc and David Autor, I suggested that we could put more people in scaled systems of care that might not save a ton of money (at least in the short run) but which would allow us to achieve far better outcomes.

Might the end of mass standardization be the opening we need?

In the mass production paradigm, the sweet spot was to produce a whole lot of items that were of high quality, affordable, and exactly the same. One toaster would be like the next, one car like the one just coming off the production line, your clock radio exactly like the one your neighbor bought. As the mass market paradigm gives way to a service paradigm, services can come to replace what products used to do. Take listening to music – today, we don’t even buy albums anymore, in fact, we don’t buy music much, rather we rent it. The algorithm, not the music studio, decides what to play and in what order.

With the advent of digital services that are easy to personalize and customize, the competitive advantage of the mass market paradigm fades. This is true even for physical products. Hyundai, for instance, is experimenting with entirely different form factors for what a “car” might be – piloting a so-called “walking car” that could climb steps and create access for people who couldn’t otherwise have access to mobility. Tesla famously is able to guarantee road-worthiness assessment at the level of the individual vehicle, meaning every car off the line can be slightly different. Companies like South Korea’s Toss can create bundles of financial products that are specifically customized for individual user needs.

This all opens up a new growth vector in the experience economy and relationship-based work on the front lines. We can anticipate growth in work centered on human relationships and experiences. Healthcare, education, entertainment, and personal services are becoming dominant employment sectors. A premium on emotional intelligence, creativity, and interpersonal skills is emerging. And the rising importance of meaning and purpose in work is now part of employee’s expectations. We’re already seeing, for instance, that Gen Z’s interest in taking a traditional promotion is waning as few members of that generation see climbing a corporate ladder as the path to a rewarding career or life.

Ton’s outline for what constitutes good jobs, based on her many years of research and experience with the Good Jobs institute makes an excellent blueprint for considering what a re-imagined service economy that creates broad prosperity might look like.

Good jobs today, good jobs tomorrow

What Ton describes is a systemic approach to job design that regards workers not as a cost to be minimized but as drivers of profitability and growth. Good pay, investment in the form of continuous education and development, the ability to create a career track from a front-line job to one with greater authority and redesign of systems to reduce unnecessary complexity and give people all the tools they need to do their jobs well are all elements of her proposal. We see evidence that this can work at the level of a corporation. Companies like Costco, Enterprise Car rental and Quick Trip would all be examples.

These companies operate mainly with employees. But we’re seeing a whole lot of other kinds of service jobs emerging that are not based on a permanent relationship to an employer, but rather on value-exchanging transactions, potentially between individuals and teams and customers. Interestingly, these firms – Airbnb and Uber come to mind – create the equivalent of mini-markets through their platforms.

Historically, a hierarchy, or complex organization was thought to be required when the costs of transactions were high, the risk of misbehavior high and the complexity of the work itself leading to some kind of outcome was hard to describe, or depended on firm-specific knowledge or intangible assets. As I have argued elsewhere, more and more activities can now be conducted through market-like transactions. We now see the widespread growth of platform-based business models, demonstrating that activities we used to think needed to be organized by companies can be handled by forms of marketplace contracting. Indeed, a recent study found that more than 150 million workers in North America and Western Europe are some kind of “gig” arrangement. In the US, 36% of workers have some kind of gig arrangement.

In what may be a terrific path forward, one could conceive of new economic designs in which gig workers can create their own good jobs. Pay can reflect the value created (with regulation as needed to make sure large platforms don’t become abusive). Value can grow as people’s skill and mastery grows. People would take the time and slack they need to develop their skills. In partnership with platform operators, tasks could be simplified and streamlined, and teams could have API-like interactions with other teams, eliminating a lot of the needless noise and complexity introduced by organizational dependencies and cross-functional collaboration. And of course one of the main attractions of gig work is that when properly designed it can provide people with agency, the chance to develop mastery, and the opportunity to pursue a purpose they believe in, factors that Dan Pink argues are the fundamental building blocks of motivation to begin with.

Golden Ages are not guaranteed

While the AI revolution, which will almost certainly destroy any number of existing jobs, will also come new ones, many that we probably haven’t even thought of yet. There could be sustainability-focused occupations, such as energy efficiency specialists, urban farmers, repair technicians for products not designed to go obsolete and building retrofitters who take existing stock and make it “green.”

We can begin to see what good jobs might look like in a future in which networks and ecosystems of value-creating teams and individuals are alternatives to or even replacements for the mass market production machines of yore. But, as Perez warns us, golden ages require smart design and a commitment to making life better for the majority of people – they don’t appear automatically just because a new technology is around. We are going to need better designs for employment models beyond the traditional employer-employee relationship. We will need some kind of safety net that accommodates intermittent or portfolio employment. We’ll need to recognize and appropriately compensate for previously undervalued forms of work, such as work in the care professions. As Ton says, the term “unskilled labor” should be summarily retired.

Rather than clinging to manufacturing nostalgia or assuming service jobs must be low-quality, this integrated perspective offers a vision where the deployment phase of the digital revolution delivers on its promise of broadly shared prosperity—through transformed service work that values human capabilities and provides dignity alongside economic security.

In 1993, the New Yorker published a cartoon by Peter Steiner that went viral. It depicted a conversation between two dogs, one with a paw sitting on a computer keyboard. The caption? “On the Internet, nobody knows you’re a dog.” It rapidly became one of the most reprinted pieces in the magazine, and was so popular that in 2023, a buyer who had reportedly been trying to acquire it for 30 years, ended up paying the highest price on record for a single panel cartoon.

The anonymity our friendly pooch was celebrating is the world we now live in. We've crossed into dangerous new territory where artificial influence is becoming a strategic weapon. Bot farms—coordinated networks of automated accounts that simulate human behavior—have evolved into sophisticated operations that can distort market perceptions, manipulate consumer behavior, and provide artificial audiences for posted material on demand.

Did a real person really “like” this post or was it a bot?

A Fast Company investigation published last week reveals a troubling reality: large-scale bot operations have industrialized, with some farms employing thousands of people operating tens of thousands of fake accounts. These operations aren't just posting content—they're creating entirely fictional personas with believable histories, consistent behaviors, and fabricated social connections.

The TikTok phenomenon exemplifies this problem acutely. As one of the fastest-growing platforms with over 1.5 billion users worldwide, TikTok's algorithm-driven content discovery makes it particularly vulnerable to manipulation. Bot operations can rapidly amplify content, creating false viral sensations that influence real users' perceptions. The platform's opacity about its content moderation and amplification systems further compounds the issue—we're making business decisions based on trends that may be entirely manufactured.

As the Fast Company article also points out, when identical posts were posted on TikTok and Instagram, the TikTok posts were far more likely to get likes, re-posts and comments, suggesting that the Chinese government or other actors such as the Russian government are able to utilize that platform more readily then the US-based platform. This lends credence to the argument that at some level TikTok’s ownership represents a security risk for the United States.

This evolution creates several strategic inflection points that have consequences for the way we interact with social media.

1. Information markets are increasingly manipulable. When a significant portion of online sentiment can be manufactured, traditional indicators of brand health become unreliable. Your company might be experiencing a genuine crisis, or simply be the target of coordinated artificial negativity. What’s worse, the bots are getting so good at mimicking humans that it’s very hard to know which is which.

2. Competitive intelligence is being corrupted. How can you trust market signals when they might represent orchestrated campaigns rather than genuine consumer sentiment? The very data that informs your strategic decisions may be systematically distorted.

3. The economics of deception are brutally unfair. It costs very little to utilize a for-rent bot attack service but it costs a great deal to defend against them. This asymmetric cost structure means even small players can distort markets.

4. Social media platforms have conflicting incentives. Platforms benefit from engagement metrics regardless of authenticity. They're incentivized to allow a certain level of artificial activity as long as it drives user engagement and advertising revenue. This creates an environment where platforms themselves cannot be trusted as objective sources of market information. As one disgruntled observer noted, “TikTok is turning into an AI dump.”

5. Our very identities are not in our control. In one of the more brazen uses of social media manipulation that I’ve run across lately is the fascinating (if slightly terrifying) case of Martin Wolf of the Financial Times. He describes how a shadowy operation made fraudulent avatars appearing to be himself, used to peddle everything from investment advice to stock tips. Further, that despite reports to Meta, the owner of platforms hosting the advertisements, they faked “Martin’s” continue to proliferate.

Inflection points in regulation and identity

We're rapidly approaching a regulatory inflection point regarding artificial sentiment. The EU's Digital Services Act and similar legislation emerging globally are early attempts to address these issues, but they're just the beginning.

Perhaps the most controversial yet potentially transformative solution is the concept of universal digital identity verification. The anonymity that once defined the internet has become a strategic liability in an era of industrialized deception. A system where each online participant has a verified, unique digital identity would fundamentally change the economics of manipulation.

This isn't about eliminating privacy or pseudonymity—both remain critical for legitimate purposes. Rather, it's about cryptographically certifying that behind each account exists exactly one real human being. Platforms could implement tiered verification systems where users maintain anonymity while still proving their humanity.

The business implications would be profound. Marketing dollars would target verified audiences. Customer feedback would carry the weight of authentic experience. Strategic intelligence would be based on genuine market signals rather than manufactured ones.

Whither opportunities?

While the rise of industrialized bot farms presents clear dangers, it also creates opportunities for organizations that are prepared.

We've reached a point where social media platforms cannot be trusted as reliable sources of news or market intelligence. When TikTok trends, Twitter sentiment, or Instagram engagement can be purchased rather than earned, these signals lose their strategic value. There could well be an advantage for companies that develop their own trusted information ecosystems—networks of verified customers, partners, and observers whose inputs can be authenticated.

This information integrity crisis creates several openings. Authentication as a service could become increasingly valuable. Companies that can verify real customers, real sentiment, and real market signals will command premium relationships with partners and consumers. Trust becomes a competitive differentiator. Organizations that build reputations for authenticity and transparency will create stronger relationships with customers increasingly wary of digital manipulation. Platform-independent customer communities will provide more reliable intelligence than public social media. Companies that build direct relationships with authenticated customers will have access to genuine sentiment that competitors relying on public platforms cannot match.

The Digital Trust Horizon

Looking ahead, I anticipate a fundamental restructuring of how organizations gather and validate market intelligence. The public social media environments we've relied on for the past decade—Twitter, Facebook, TikTok, and others—will increasingly be viewed as compromised sources of strategic information.

In their place, we'll see the rise of verified information ecosystems—communities where participants' humanity is authenticated, even if their identities remain pseudonymous. These may emerge from existing platforms implementing stronger verification, or as entirely new environments built with authentication as a core principle.

This transition will be neither simple nor swift. Legitimate privacy concerns must be balanced with the need for reliable information. Cultural differences in attitudes toward identity verification will create uneven adoption. But the strategic imperative is clear: organizations need reliable intelligence to make sound decisions.

An interesting parallel example to the unique digital identification challenge for social platforms is the launch, in India, of a unique personal identification number for every person in the country. Called an Aadhaar number, it uses biometric data to verify the existence of a real human being. It’s credited with bringing greater ease of accessing government and other services to vast numbers of the Indian population, and, ten years after widespread adoption is generally regarded as a success. Perhaps on the horizon, companies will be required to validate accounts with such a distinctive personal identification number, hampering the ability of bot farm fraudsters to create hundreds of fake identities, in countries where phones and labor is cheap and plentiful.

And that might restore some trust in the sentiments we see reflected on social media.

In Search of Excellence Has a Lot to Answer For

1982. That’s when Tom Peters and Robert H. Waterman’s manifesto, In Search of Excellence: Lessons from America’s Best Run Companies was published. It’s important to remember the reasons the book made such a splash. American companies were reeling from the first waves of globalization – sending many business models into free fall as global competition from countries like Japan began to dig into American companies’ market share. Articles with titles such as “Managing Our Way to Economic Decline” were in vogue. OPEC had discovered its power. The US spent the 70’s grappling with stagflation, interest rates were sky high and a general mood of pessimism about America’s perch on the global stage was widespread.

But this book! It made the case that many US companies had not only escaped this gloomy scenario but succeeded tremendously in so doing. Moreover, that the 8 attributes of excellent companies could be learned and applied anywhere. And that it wasn’t mysterious – there were things you could specifically do with the ideas – adopt a bias for action, for instance. Practice management by walking around. And more. There was a lot of subsequent carping about Peters and Waterman’s methodology. There was even the somewhat astonishing revelation from Peters himself that the data weren’t what they seemed. As he said in a 20-year retrospective, “This is pretty small beer, but for what it’s worth, okay, I confess: We faked the data.”

Whatever the merits of “Excellence,” one conclusion is absolutely inescapable – in a world hungry to understand changes that felt deeply unsettling, a booming market opened up for those who claimed to have answers. Before it was published, the very notion of a business best-seller, with the possible exception of books by Peter Drucker would have been laughable.

The guru business, in which lucrative speaking engagements, book deals, and consulting flowed from having a well-regarded, ideally best-selling book began at that point. Creating a best-seller was so valuable that when Michael Treacy and Fred Wiersema, at the time a couple of ambitious young consultants, published their book The Discipline of Market Leaders, they invested over $250,000 in buying over 10,000 copies of their own book. As a later Bloomberg investigation of the matter reported, “Treacy seems to have learned three valuable lessons: To ensure best-seller status, the massive book purchases had to be spread nationwide among the right bookstores; they had to be carefully spaced so as to not alert the Times' computers; and the purchases could not be traced to the authors or the firm.” Job accomplished, the book successfully catapulted the two into the upper tiers of speaking, consulting and of course, more generous book deals.

You’ve got to have a book

5 or more figure speaking fees. Lots of pricing power on the advisory front. Getting access to fancy conferences. Being recognized as an authority. Being on TV. Getting moderately famous. All these things at one point were very much associated, for business authors anyway, with having a successful book. The lifestyle associated with all this came to be known as “thought leadership” in which authors shaped the conversation that others were having, became well known and were much sought after.

Best sellers still have the power to increase an author’s profile and put them on the map. But for just about everybody else, a book has become a great big business card. And that has created its own problems. Many business books (and I read a LOT of them) are a single idea, padded with anecdotes and examples. Others simply package already well understood ideas in dramatic language. Others are retellings of why some company or other was successful – those tend to have titles like “The [insert company name here] Way.

We’re now at a stage where having a book has gone from being a differentiator to having a book being simply expected for anyone to have a chance on the speaking-advising-guru circuit. Once that happens, the ideas in many books become commodities. With reportedly 12,000 business books being published each year, how likely is it that all of them contain world-changing ideas?

No more blurbs, no more paperbacks … early warnings of a business book inflection?

The book business itself is changing in interesting ways as readers consume content on other platforms and through other media. It could be a real shift in the thought leadership industrial complex.

Providing book “blurbs” is set to go the way of the dodo, at least if Simon & Schuster has anything to say about it. As humorist Christopher Buckley puts it, “The End of the Blurb. Thank God.” Sean Manning, in a “gripping” “stunning” essay explains why he will no longer require authors to beg blurbs from their circles of friends and acquaintances. As he puts it, “It takes a lot of time to produce great books, and trying to get blurbs is not a good use of anyone’s time. Instead, authors who are soliciting them could be writing their next book; agents could be trying to find new books; editors could be improving books through revisions; and the solicited authors could be reading books they actually want to read that will benefit their work—rather than reading books they feel they have to read as a courtesy to their editor, their agent, a writer friend or a former student. What’s worse, this kind of favor trading creates an incestuous and unmeritocratic literary ecosystem that often rewards connections over talent.”

We’ll see if the decision sticks across the industry – as someone who gets a lot of requests, it certainly would be a relief. But it signals something more to me, namely that the package of ideas represented by a book may well be getting replaced by other mechanisms for spreading thought leadership.

Publishers seem to be picking up this shift. The Wall Street Journal reported that the traditional publishing arc – a non-fiction author publishes a lovely new book that comes out in hardback and then 9 months or a year later the book gets a second chance at being noticed when the paperback version comes out. As they note, ““If retailers aren’t ordering the books at a high-enough volume to ensure some financial return, publishers won’t bother printing the paperbacks,” said Dan Conaway, a senior literary agent with Writers House. For authors, it is a blow. “It’s profoundly demoralizing that a book that might have taken four years to write and was published with such promise is done after five months,” Conaway said.”

So what’s a thought leader to do?

If having an impact on the world and getting ideas out there is the measure of effective and authentic thought leadership, I think we are already living in the reality that it’s not just books. Thought leaders are increasingly creating short, timely, easily consumable nuggets of ideas that shape ongoing conversations.

Podcasts are huge. Author and marketing phenomenon Scott Galloway talks about “the podcast election” and suggests that podcasts, as opposed to traditional media, television or even books, are now pivotal. As he suggests, “New forms of media periodically reshape our culture and politics. FDR mastered radio, JFK leveraged TV, and Reagan nailed cable news. Obama energized young voters via the internet. Trump hijacked the world’s attention on Twitter. This year it was podcasting. The three biggest media events of this fall were the debate and Harris and Trump’s respective appearances on Call Her Daddy and The Joe Rogan Experience.” Adam Grant, who has had several best-selling books, also has a podcast that has been downloaded 85 million times – I would venture to say an order of magnitude greater than the sales of books.

I also find that many people like audio formats – either books on audio or podcasts on different topics. And when you consider that Joe Rogan has 17.3 million subscribers to his podcast on YouTube alone, the numbers are staggering.

Video has also become a mainstream vehicle for communicating ideas. This can take the form of filmed TED style talks, highly produced videos and many other ways in which video shows up on platforms like YouTube, Instagram and of course TikTok (for a great send-up of the thought leadership racket have a look at this video).

Then of course we have social media which proclaims to offer news and other vital information. Over half of U.S. adults say they get at least some of their news from social media, according to Pew Research. Social reach is measured by followers, reposts, uptakes and all sorts of digital interactions to the point at which a friend said, “everybody has two jobs now – one is doing the job, and the other is relentlessly promoting it.” Regular newsletters, some even that have massive paid subscriptions, have become widely adopted.

Are books no longer the gold standard?

As someone who has been trying to wrestle a book to the ground for longer than I care to think about, I certainly hope not. But as a living mechanism for influencing ideas, books have their limitations. Had I written the one I’m working on (on permissionless organizations) on my original schedule, it would have been obsolete before it ever appeared between two covers.

Books are delightful for longer explorations of phenomena than can be managed in a short blog post. They are great for forcing you to slow down and take some time and energy on something. And sometimes they really do change the world – Jonathan Haidt’s wonderful book about the effect of cell phones on young people, The Anxious Generation is a case in point.

In a fragmented, attention-scarce context, books are likely to remain an important vehicle for communicating ideas. But the undisputed conveyor of guru status? More of a question.

Have we reached “peak book”?

One of my favorite although little recognized, movies is a 2015 release called “The Intern” in which the normal ages and levels of experience undergo a switcheroo. A trendy, hip, and definitely on-line fashion startup called “About the Fit”, helmed by the young Jules Ostin (played by Anne Hathaway) offers a “senior” internship to 70-year-old Ben Whittaker (played by Robert DeNiro). The widower, languishing in retirement, jumps at the chance. His wisdom, experience (he used to be a manager in the once-industrial location now occupied by the buzzy startup) and genuine admiration for what Jules has created end up enriching both of their lives and the company as well.

This is the premise of internships – exchanges of experience and insight on multiple fronts that can lead to the discovery and invention of new things. Just as Garry’s quote above suggests, the original “interns” were junior members of tribes of hunter-gatherers, and their original mentors were the more senior tribe members seeking to pass along vital knowledge essential to the tribe thriving over the long run. As humans began to cultivate farms and engage in trade, the junior roles became occupied by apprentices who would be taken on by a master craftsman or a sea captain and taught the secrets of those trades, typically for room, board and sometimes small stipends. There weren’t a lot of options – interns might be stuck in the role for seven years or more! You couldn’t marry – and in some cases, your family would pay the person you worked for in the hopes that you would eventually become a journeyman or guild member which would pay well and signify admission to a more privileged class.

The widespread use of the word “intern” came to represent someone who had a degree in medicine, but not yet the license to practice in the years following World War I. Businesses created something like an apprenticeship program during the so-called “cooperative education movement.” These consisted of programs that formally combined classroom instruction with paid practical experience, in the belief that both the understanding and the application would benefit from one another. After World War II, the introduction of public support for education such as the GI Bill created new connections between universities and employers and internships became more common across a wide range of industries. As a general rule, these were paid positions that provided an entrée to people who believed they wanted to make a career out of the field they were interning in.

Internships become weaponized

As more and more companies began to realize the value of having bright young talent, willing to work hard and do just about anything to gain exposure and learn the ropes of professions, a darker side to internships emerged. In glamorous fields such as media, fashion and the arts, unpaid internships became a taken for granted route to entry – shutting out people who couldn’t afford to work for free. Even less glamorous fields caught on to the idea that young people might be willing to do real jobs without getting paid, just to get their foot in the door. As the job market for educated young people became more and more competitive through the 70’s and 80’s, internships became almost a resume necessity, with those without the means shut out of many potential opportunities.

Taking an unpaid internship, however, was not necessarily the solution to getting a solid lead on a rewarding career. This leads to some people ending up against the “intern glass ceiling” in which one internship follows another, never leading to the offer of an actual j.o.b. As a friend of mine from a different generation observed, “it’s as though we dangled a career ladder in front of them, but knocked out the bottom 5 rungs!” Indeed, the National Association of Colleges and Employers (NACE) found that “paid interns averaged 1.61 job offers, while unpaid interns averaged 0.94 offers, and students with no internship experience just 0.77 offers. Not only do paid interns garner more job offers on average, but they are also offered higher starting pay. According to the same 2022 Student Survey, paid interns earned a median starting salary of $62,500 compared to unpaid interns who reported earning a median starting salary of $42,500.”

Today, while unpaid internships still represent a sizeable chunk of the interning population (39.2%), the majority are paid (60.8%). The outcomes for both interns and employers are better when the job is compensated. Companies with structured, paid programs convert 70% of interns to full-time employees, compared to just 30% for unpaid programs. Organizations save approximately $6,200 in recruitment costs for each position filled by a former intern. New hires with previous internship experience at the same company show 29% higher two-year retention rates than external hires. And, near and dear to my heart, 64% of managers report that interns brought fresh perspectives that influenced product or process improvements.

As with any other process in business, internships are more likely to be successful if there is a clearly defined benefit to both sides. The interns need to understand what skills, experiences and mentorship they’ll get. The hiring leader needs to make sure they are taking a long-term perspective on strategic talent development. Someone needs to make sure the interns are well mentored and managed. Done right, paid internships represent that rare business opportunity: a genuine win-win where ethical practices align perfectly with strategic advantage. Organizations that fail to capitalize on this alignment aren't just missing an opportunity—they're ceding competitive advantage in the talent marketplace.

And as a recent study based on LinkedIn data found, “internships are really, really worth it!”

We love our interns!

In our case, here at the Rita McGrath Group and Valize, we have had wonderful success with our interns! Our very first, Helena Trentino, came to us in the midst of the pandemic, working remotely from Italy. She moved on to a role with Deloitte. That led to our hiring her incredibly talented sister, Flaminia Trentino, who is a full-time employee with us to this day. Jacora Kiser started with us after finishing up an internship with someone else, on the recommendation of her good friend who was doing a sort of internship – a contract position – with Columbia as we sorted ourselves out post-pandemic. And Eliza Staples started as an intern from Barnard College and is now our digital outreach coordinator, also a full-time role.

All preamble to the fact that I was very pleased to be connected to StandOut Connect, a program that connects high school students all over the world to innovative companies. They sent us several candidates that were prospective matches. We are thrilled to welcome Arjun Rabinowitz and Nish Brahmbhatt for the early-spring internship.

They are bringing digital smarts, social media savvy and a whole dash of energy to us. They just got started and we’re already seeing major progress on upgrading rather neglected digital and video assets and I’ve already gotten a few “why do you do it that way?” questions, which is a sure sign that some of our processes could use a rethink.

In their own words,

Hello, my name is Arjun Rabinowitz, and I am excited to be interning with the Rita McGrath Group! I’m from Moorestown, New Jersey, just outside of Philadelphia, and I’m currently a junior at Moorestown High School. I have a strong interest in finance and financial analytics and a passion for politics and exploring how economic policies and differing party viewpoints contribute to political polarization. In my free time, I’m an avid tennis player with ten years of experience, and also enjoy playing the violin, a hobby I’ve pursued for the past decade.

Hi, my name is Nish Brahmbhatt. I'm currently an 11th grader at Bridgewater Raritan High School. Some of my favorite subjects include Math, Accounting, and English. One of my favorite books that I have read recently is Crying in H Mart because of its deep themes on identity and family. Outside of academics, I'm actively involved in competitive swimming, volleyball, and finance-related clubs and competitions. Additionally, I serve as the Secretary of the Somerset County Youth Council and work on community initiatives, including fundraising and sustainability projects. In my free time, I love to stay active, listen to music, learn about business and investing, and explore new ways to make an impact.

I don’t know about you all, but I certainly was not mastering all those skills while still in high school!

If you’d like to learn more or get to know anyone on the team, do connect – we're always glad to welcome people into our world.

Oh, and yes, we are paying them.

Kings, Czars, Sultans and Imperial CEO’s: Patrimonial systems

Our good friends over at Wikipedia provide a wonderful summary: “Patrimonialism is a form of governance in which all power flows directly from the ruler. There is no distinction between the public and private domains. These regimes are autocratic and exclude the lower, middle and upper classes from power. The leaders of these countries typically enjoy absolute personal power.”

The ruler and the ruler’s family exert enormous dominance over politics, the economy and even social life. Rulers treat the countries they dominate as their own personal family business. They make decisions that benefit themselves and their allies.

In patrimonies, consistent sets of rules and established procedures are viewed with suspicion. The rule that might have been beneficial today may prove a bothersome hindrance in the future, so why set it up in the first place? Far better to make decisions on the fly and keep potential opponents guessing.

As Jonathan Rauch, writing in the Atlantic observes, “People with expertise, experience, and distinguished résumés are suspect because they bring independent standing and authority. So patrimonialism stocks the government with nonentities and hacks, or, when possible, it bypasses bureaucratic procedures altogether.” A result is that a huge weakness of patrimonial systems is that they suffer from basic incompetence. Talented people leave or never join, and those whose opinions differ from those in power quickly find themselves shut out.

Lest we think that patrimony is a relic of a bygone age, it is worthwhile to recall that they feature prominently in the modern world. As far back as 2007, observers were already noting that Russia’s Vladimir Putin was in the midst of orchestrating a patrimonial system, one that continues to this day. By 2024, this “modern day tsar” was sworn in for a fifth term.

Corruption and incompetence: The vulnerabilities of patrimonial systems

The Achilles heel of patrimonial systems is that they are by definition, corrupt and incompetent. The very reason such a system exists is to exploit the organization for personal, political and economic gain. Eventually, these factors can lead to their collapse.

On December 17, 2010, a young Tunisian, Mohamed Bouazizi set himself on fire to protest police corruption and harassment. He died on January 4, 2011, but not before his gesture went viral, sparking protests against the cost of living and the country’s authoritarian President Zine El Abidine Ben Ali. Ben Ali’s rule (which has lasted for 23 years) ended 10 days later when he fled to Saudi Arabia. The protests spread to other countries with similarly patrimonial systems in an uprising that came to be known as the “Arab Spring,” reshaping that region, unfortunately with mixed results.

Patrimonial management of corporations was also the dominant structure through the late 1800’s. The concept of ‘management’ as we think of it today, didn’t exist. Merchant capitalists who owned one or more ships managed their organizations themselves and made all the decisions, perhaps with the involvement of family members. Manufacturing as it existed at the time was dominated by artisans who were helped by apprentices, making small-scale products. Some sectors, such as textiles and shoes, used a so-called “putting out system” in which home-based workers would be contracted by an agent, draw supplies from a central source and deliver finished goods to a warehouse. Even big organizations of the time, such as iron foundries and shipyards, rarely employed more than 50 workers.

The ability to manage ever-more complex companies that were beginning to take advantage of innovations around mass production and cheap energy strained the limits of the patrimonial system. By the Gilded age (roughly 1870-1900) patrimonially run firms created the vast income inequality that came to represent that era. By 1890, America’s, 4,000 millionaires held 20% of the nation’s wealth. With that affluence also came “colossal” political corruption.

Protected from foreign competition by high tariffs, American industrialists created monopolies and trusts. Public anger at the power and influence wielded by corporations eventually led to the election of William McKinley, a supporter of anti-trust reforms. When he was assassinated, Theodore Roosevelt came into the presidency. Roosevelt believed that society should be more fair and equitable. The Progressive Movement that would bring an end to the Gilded Age began then.

The context was fertile for a new way of thinking about management.

Enter positive bureaucracy

Max Weber, the famed sociologist, proposed bureaucracy as a framework that would bring science and systems into the large organization (see also Frederick Winslow Taylor). It had many advantages. As Peter Brodie notes, writing in Forbes, “If precision, speed, unambiguity, knowledge, continuity, unity and reduction of friction and of material and personnel costs are important to your company, these are all optimized in a bureaucratic organization, and adopting this structure should be considered as the most viable, and perhaps the favored, option.”

Weber and his compatriots sought to modernize how organizations operated. In much of the west, we were starting to see the formalization of laws, the emergence of mass markets, regulations favoring the modern corporate form, the beginnings of modern financial systems and a strong interest in “rationalization.” Rather than depending on a powerful leader, the idea was to create systems that were based on rationality. Bureaucratic systems were organized to enhance and scale the benefits of the increased technological knowledge of the time.

Bureaucratic organization embedded the following features:

1. Division of labor with clearly defined roles, in specialized functions

2. Hierarchical management structure with clear lines of authority

3. Documentation that specifies required decisions and actions

4. Specialized training and meritocratic selection for each role

5. Full-time managers appointed to operate the organization

6. Static, depersonalized rules that exhaustively guide management

Bureaucracy was considered a great complement to modernization and forward progress. Bureaucratic organizations could develop deep technical competence, maintain continuity and offer stability. People working in bureaucracies can manage far more complicated organizations than those that depend on a single leader and his or her allies. Bureaucratic systems will in almost all cases outperform those based on personal power. From a strategic perspective, the most valuable attribute of bureaucracies is that they tend toward stability.

The next era of management

However, like patrimonial systems, bureaucratic systems also have their limitations. The need to obtain permissions and manage interdependencies with other units can be soul-destroying. Decision-making can be slow. And most importantly, bureaucratic systems don’t necessarily take advantage of the new capabilities that information technology gives us.

Bill Anderson, who became CEO of the challenged multinational corporation Bayer in 2023, blamed excessive bureaucracy and complicated rules for much of what ailed the troubled company. As he described it in an article in Fortune, the company’s internal rules for employees covered 1,362 pages! Twelve layers of interacting hierarchy put tremendous distance between the front lines of the company and those with resource ownership and strategic control.

As he puts it, “There was a time for hierarchical, command-and-control organizations–the 19^th century, to be exact, when many workers were illiterate, information traveled at a snail’s pace, and strict adherence to rules offered the competitive advantage of reliability. Today, the opposite is true. Our workforce is highly skilled and educated. Communication happens at the speed of light. And today, the most reliable companies are the most dynamic. A company’s value stems from its ability to innovate.”

This is behind my argument that we are moving beyond bureaucratic organizational forms to permissionless ones. Watch this space for new developments!

Well, the five-year strategic forecasts of yore are probably not particularly useful. At the same time, having no point of view about the future and simply reacting to the headlines is not likely to be helpful, either.

As I mention in a recent Thought Spark article, there are proactive ways of dealing with what seems like a more unpredictable world than ever. This suggests the need for creating uncertainty capabilities, namely;

1. Building organizations that can rapidly reconfigure themselves as assumptions change.

2. Developing early warning systems for non-obvious threats and opportunities.

3. Creating portfolios of strategic options rather than rigid plans.

4. Fostering cultures that see uncertainty as a source of opportunity rather than threat by adopting an entrepreneurial mindset.

The companies that will win in this environment won’t be those that correctly predict the future — they’ll be those that build the capability to adapt to whatever future emerges. Fast learning, great teamwork, effectively managing intelligent failures and absorbing uncertainty for your people will all be skills effective organizations will build.

Events – In Case You Missed It

At Columbia, we kicked off the teaching year with a great custom executive education program for the Development Bank of Japan. I always appreciate connecting with practitioners who are in the thick of strategic challenges, and our participants say they appreciate the time away from their day-to-day to sort through those challenges.

I began hosting regular Friday Fireside Chats live during the early days of the pandemic as a way to create connections between my audience and authors, entrepreneurs, and leaders during a time when a lot of us were stuck in one place. The conversations were recorded live and then reposted to YouTube and other channels. Now that we’ve moved on from those pandemic days, I’ve decided to change the format to be live-to-tape so that we have a little more flexibility about editing and the release. It’s all going to go under the Rita McGrath Media brand, as Thought Sparks. Stay tuned for the release of conversations with Terence Mauri of MIT, Anupam B Jena of Harvard Medical School, Stephan Meier of Columbia and Dean Carignan and JoAnn Garbin of Microsoft. Stay tuned for the release of these conversations on my Thought Sparks podcast – on YouTube, Spotify, and Apple Podcasts.

In the News

TikTok’s future in the United States remains unclear. I spoke with Kat Tenbarge at NBC about the early leanings of the Supreme Court. Also of note are the knock-on effects that small businesses could face, who otherwise rely on TikTok and in-app features like TikTok Shop as a stream of revenue. a larger ban on small businesses. (I even took to the app itself to discuss it!)

If you’d like a refresher on some of the classics of management theory, I have been featured in a series by Business.com. Check out these primers on Contingent Management Theory, as well as the management theories of Peter Drucker, Joseph Juran, and Stephen Covey.

Thought Sparks

Here are five business trends that I’m watching as we bear down on the uncertainty that 2025 is sure to bring.

The “retail apocalypse” has come for Party City after falling into the trap of emphasizing financial engineering rather than business reinvention. In contrast, Build-A-Bear Workshop pulled off a remarkable strategic transformation, led by CEO Sharon Price John.

It’s not just you – disruption really has increased by 200% in the last 5 years. Here’s how the Reinvention Summit, running April 29-30, will equip leaders with the tools and strategies to navigate this.

Tools – Valize Advisory

About that disruption and uncertainty mentioned above – is your organization strategically equipped to handle this kind of change? Over at Valize, we’ve recently reinvigorated our Advisory offerings to help navigate this kind of constant uncertainty. Between Early Warnings Systems that set up the infrastructure to help you see around corners, and Scenario Exploration Labs that foster complex problem-solving, there’s a solution for you. Get in touch with our Advisory team to learn more.

Upcoming Events

If you’re looking to get back in the classroom, I’ll be teaching two sessions of Leading Strategic Growth and Change from March 17-21 and June 23-27 at Columbia Business School. Leaders will gain the skills to drive real organizational transformation amid the uncertainty that 2025 is sure to bring -- be sure to save your spot in the course!

From April 29-30, I’ll be in Dublin, Ireland for the Reinvention Summit. I'm giving a keynote and will be joined by Aidan McCullen, Nadya Zhexembayeva, Alex Osterwalder, Seth Godin, and other leaders in innovation and strategy. We’ll have keynotes, hands-on workshops, 1:1 networking opportunities, and more. Early bird tickets are available now – I hope to see you there!

The debate about artificial intelligence's impact on employment has taken an interesting turn with payments startup Klarna CEO Sebastian Siemiatkowski's recent statements. Not only has he been vocal about how many workers his company has already been able to do without, he is predicting that soon the machines will be so competent that they can replace most human jobs, including his own!

Ask most executives to publicly articulate what they think the effect of AI on jobs will be and you get pretty vague answers. Most CEO statements about AI and jobs follow a predictable pattern: reassurance about job creation while quietly implementing automation.

Reid Hoffman, for example, doesn’t think the tech will take your job, just necessitate changes in how you work. IBM’s CEO Arvind Krishna, writing in Fortune, reassuringly says “Today, A.I. solutions are being deployed across companies to help tackle the kind of tasks most people find repetitive, which frees up employees to take on higher-value work.” He then goes on to note that one of his HR functions has gone from 700 people to 50! Microsoft CEO Satya Nadella is also optimistic, saying that workers will get fatter paychecks once AI is embedded. As he put it: “I think of the AI era as expertise at your fingertips so you can take somebody who’s in the front line, whether it’s in retail or whether it is in healthcare. It perhaps will even improve the wages because they are now able to give more expert health advice or more expert work is being done by nonexperts.”

A Different Take

Siemiatkowski argues that AI won't simply eliminate or create jobs - it will fundamentally reshape work itself. In a shot over the bow for anybody involved in media or creative work, the Chief Marketing Officer for Klarna claims that the company has saved around $10 million annually by not relying on human artists to create images, human lawyers to review contract language, people to monitor press coverage and the work of 700 customer service agents.

In a fascinating podcast, Siemiatkowski pulls no punches on how much he expects AI to make some career trajectories obsolete. “People say, ‘Oh, don’t worry, there’s going to be new jobs,’” he said on a podcast last summer, before citing the thousands of professional translators whom A.I. is rapidly making superfluous. “I don’t think it’s easy to say to a 55-year-old translator, ‘Don’t worry, you’re going to become a YouTube influencer.’” And he is quite aware that the world he foresees (or that is perhaps already here) is not to everyone’s liking. As he said, ““We did a tweet later on about the marketing things we are doing about A.I., where we have less need for photographers,” he said in the podcast interview. “That had a violent reaction online.”

So why risk the backlash?

Well, it turns out that Klarna had a rough time going through a pandemic boom and post-pandemic crash when investors, spooked by high interest rates and wondering how scalable the company would be, pulled back. At it’s peak in 2021, Klarna’s valuation was $45.6 billion and it even took out a Superbowl ad in the 2021 game (have a look – it’s kind of fun!). By 2022, investors enthusiasm put the company’s value at $6.7 billion.

Ouch.

Job cuts and a battle with an internal union ensued. He eventually acceded to a collective bargaining agreement, but noted that unionized companies were not necessarily what his investors were after!

Amidst all this, recognizing the potentially transformative power of AI, he reached out to OpenAI Sam Altman (whose calendar must have been pretty full during this time), and began encouraging employees to play around with the new tools as much as possible. “My understanding is that you told Sam and OpenAI that you wanted to be their guinea pig,” an interviewer asked him on another podcast. His response? “I want to be their favorite guinea pig.”

The AI story seems to have burnished the company’s standing in the eyes of the investing community, with some observers anticipating that its upcoming IPO is one of the most anticipated of the year.

But nobody is talking about the coming inflection point

Being blunt about the capabilities of AI may well be working for Klarna, but few other leaders or tech industry sages are willing to be so graphic. With the advent of agentic AI (software programs that can actually complete many specific tasks on behalf of a person), the prospect that whole swaths of low and middle skilled office work might simply evaporate. Some people are suggesting that such agents can write code and interact with other agents, becoming like virtual employees (and potentially reducing the demand for people who do those jobs now).

If AI spending feels a lot to you like the late 90’s Internet bubble, you are not alone. No less an authority than David Cahn of Sequoia ominously observed: “In September 2023, I published AI’s $200B Question. The goal of the piece was to ask the question: “Where is all the revenue?” At that time, I noticed a big gap between the revenue expectations implied by the AI infrastructure build-out, and actual revenue growth in the AI ecosystem, which is also a proxy for end-user value. I described this as a “$125B hole that needs to be filled for each year of CapEx at today’s levels.” He actually points out problems with getting a return on investment in AI that are eerily consistent with Carlota Perez’s analysis of how technology shifts almost always create bubbles.

This has every indication of creating a strategic inflection point – a shift in the environment that changes what is possible by a factor of 10. Often, the winners and losers are not clear at the outset, but if history teaches us any lessons, the rise of a technology like this creates a bubble. When the bubble bursts, many investors will rue the day but their investment creates the infrastructure on which the next technological revolution will be built.

The issues are:

1. Lack of pricing power / low barriers to entry for the new technologies;

2. Speculative over-investment;

3. Depreciation;

4. Benefits to the larger society; punishing losses for investors.

Putting this all in context

As Perez finds, economic bubbles unleashed by promising new technologies occur when investment capital is drawn into what she calls the “casino economy.” This is very normal in the transition between one technology regime and other, in our case between the mass production, petroleum-based, suburbs and highways-oriented model many countries in the West enjoy and the digitally based, potentially greener economy we’re moving into.

My guess is that the “Nothing to see here” party line most CEO’s have taken understates the long term impact it will have. It’s likely to be another illustration of Amara’s law: that we tend to overestimate the effect of a technology in the short term, and underestimate it in the long term.

Meanwhile, we’re figuring out what AI means for the traditional work done by consulting firms and designing the Reinvention Summit in Dublin in April. Be in touch if this sounds interesting!