Best of LinkedIn: Strategy & Consulting CW 32/ 33

00:00:00: Provided by Thomas Elguyer and Frenis, based on the most relevant LinkedIn posts about strategy in consulting in calendar weeks thirty-two and thirty three.

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00:00:33: What happens when a twenty-five year old junior analyst and a thirty five year old managing partner, you know suddenly find out that their core skill sets are being replaced by literally the exact same piece of software?

00:00:44: It's a bit terrifying honestly.

00:00:46: Yeah

00:00:46: it really is.

00:00:47: we're looking at this this simultaneous ground-up rewriting of global strategy right now.

00:00:53: Everything from the extinction of the corporate middle manager to the twenty four trillion dollar price tag, just trying to untangle global supply chains and it's all happening at one

00:01:02: time

00:01:02: exactly.

00:01:03: so The mission for this deep dive is to synthesize the signals that are defining This shift.

00:01:08: we're pulling raw data directly From the leaders the economists the partners advising the world's largest firms over the past two weeks.

00:01:14: So calendar week thirty three

00:01:16: Yeah, and the central mechanism that's really forcing this structural rewrite.

00:01:22: It's the graduation of artificial intelligence.

00:01:24: Like it is no longer just a localized IT pilot program, it is a systemic execution engine.

00:01:30: now we're seeing this really definitive shift from generative AI which you know simply creates text or code based on a prompt

00:01:38: Right like a chatbot

00:01:39: Exactly!

00:01:40: But now shifting to agentic systems they autonomously trigger actions across software platforms.

00:01:47: They evaluate their own outputs and course correct without waiting for a human to hit enter.

00:01:52: Which is wild, and the sheer financial scale of that shift is hitting.

00:02:03: So if token cost concerns are spiking by six hundred percent at the chief executive level, it means companies aren't just letting employees play with chatbots anymore.

00:02:28: No absolutely not!

00:02:29: They're running continuous massive scale automated workflows.

00:02:33: that is burning through compute power twenty four hours a day

00:02:37: Yeah.

00:02:37: and volume of token consumption requires an entirely different class enterprise infrastructure which why?

00:02:44: advisory firms are executing these really aggressive M&A and Alliance strategies right now, they want to capture that execution layer.

00:02:53: Yeah

00:02:53: saw that

00:02:54: Right like Rob Hornby in David Garfield They pointed out Alex partner's acquisition of Artyom.

00:02:59: Oh right yeah.

00:03:00: And they didn't just acquire a firm That makes slide shows about AI.

00:03:04: They acquired a firm that builds production grade agentic systems Like the architecture thats currently running inside eBay and The Mayo Clinic

00:03:12: oh wow!

00:03:12: The Mayo clinic.

00:03:14: It's basically a structural admission that advising the client on strategy is completely insufficient if you can't actually build and deploy the autonomous engine to execute it.

00:03:23: You have to build machine now, And you see the exact same ecosystem land grab with Deloitte.

00:03:30: Xiao Gang Mike Deng highlighted their new teaming agreement with Ivalua And this is to embed agentic AI directly into the source-to-pay procurement life cycle.

00:03:40: Procurement, yeah that's a huge area

00:03:43: It's massive.

00:03:44: Procurament is like the vascular system of a massive enterprise you know and an agentic system in that environment.

00:03:49: it doesn't just say flag a discrepancy In a supplier invoice.

00:03:53: Oh goes further way.

00:03:54: further it autonomously cross references The master service agreement identifies the contract breach halts the payment routing and issues a remediation notice To the vendor all on its own.

00:04:04: Without anyone touching a keyboard?

00:04:06: Exactly, so if you're embedding autonomous agents at that level your basically taking control of the client's core operations.

00:04:12: Well yeah because the larger strategic play here is productization.

00:04:16: cognitive tasks like advisory firms are building proprietary assets to permanently replace manual judgment work.

00:04:26: Runjit Bawa, Jim Rowan and David Thog-Martin discussed Deloitte's launch of Control Catalyst AI.

00:04:31: Okay Which is an agentic suite designed specifically for internal audit and risk controls And within that suite they rolled out an assistant credit risk analyst

00:04:41: So a robot credit analyst.

00:04:43: basically yeah because the bottleneck in credit analysis has always been agonizingly slow.

00:04:48: data preparation, right?

00:04:50: Pulling historical

00:04:51: pulling historicals normalizing the forbearance data structuring.

00:04:55: The models the agentic system absorbs that latency entirely and EY is deploying a similar mechanism.

00:05:01: Andre sends an Akash tile detailed the I dot A reimagination engine.

00:05:06: they introduce this concept.

00:05:07: They're calling forward deployed engineering

00:05:09: forward-deployed engineering.

00:05:10: That sounds very militaristic

00:05:12: Right, but it means rather than handing a client a strategic roadmap they are physically embedding engineers deep inside client operations to wire these autonomous models directly into the legacy workflows.

00:05:25: But let me push back on that for second because I really have to challenge The long-term viability of this rush toward vendor supplied intelligence.

00:05:33: Okay how so?

00:05:34: Well if a corporation relies entirely On an external advisory firm's proprietary agentic model and third-party engineering to do its heavy lifting, it actively hollows out its own institutional knowledge.

00:05:47: That's true.

00:05:47: Rich Lesser at BCG issued a warning about this.

00:05:50: he called that the risk of cognitive lock in.

00:05:53: Cognitive lockin?

00:05:54: Yeah He asked really critical question.

00:05:56: you said who owns your enterprise?

00:05:57: Cortex?

00:05:58: Oh!

00:05:58: That is great term

00:05:59: Right The enterprise cortex being the codified understanding of how a company actually operates.

00:06:05: It's specific logic, it's unwritten rules its IP.

00:06:09: if you outsource the reasoning engine to a third-party model what asset do you actually possess at the end of day?

00:06:16: Are we essentially renting high performance engines for our business but just completely forgetting how to steer?

00:06:21: That's a terrifying analogy, but it's spot-on.

00:06:24: You possess the high performance engine But you surrender the ability to understand how it reaches its conclusions exactly.

00:06:31: And the psychological mechanism driving this vulnerability is what Neha Kubra at McKinsey calls The Memory Paradox.

00:06:37: Okay, What's that?

00:06:38: So in a modern workflow AI functions as a context stitching layer.

00:06:42: Context

00:06:42: stitching Yeah

00:06:43: meaning before our human decision maker ever even opens complex customer complaint or structured finance file... ...the AI has already pulled the ten-year history applied to corporate policy resolved conflicting data points and then framed entire problem into neat little summary

00:06:58: which is great for efficiency, but it creates a scenario where the human reasoning muscles begin to just rapidly atrophy.

00:07:06: Yes!

00:07:07: Because if the machine pre-assembles all of facts and curates options... The Human never actually has to investigate history They never wrestle with raw contradictions And they don't build foundational understanding of business mechanics.

00:07:20: You're

00:07:21: just rubber stamping.

00:07:22: Right.

00:07:23: Claudia Ehrens from Deloitte framed this as cognitive offloading And it's the exact same neurological mechanism as relying on a GPS application.

00:07:33: Oh, like when you can't navigate your own city anymore?

00:07:35: Exactly!

00:07:36: The software doesn't just help you navigate the City—it systematically removes your brain's ability to build an independent internal map of the streets.

00:07:44: So if every corporate decision is pre-framed by an agentic system Independent strategic thinking does not become rare.

00:07:50: It becomes structurally impossible.

00:07:53: Here's what happens If the AI is pre-assembling the facts and doing that cognitive heavy lifting, The human brain isn't the only thing that atrophies.

00:08:01: The corporate architecture built around those brains collapses too.

00:08:04: Oh

00:08:04: for sure.

00:08:05: Like we are already seeing the bottom fallout of the traditional professional services pyramid

00:08:11: Let's talk about it.

00:08:12: Yeah, James O'Dowd's quarterly signals data reveals that big four graduate recruitment is currently falling by roughly fifty percent.

00:08:19: Fifty percent?

00:08:20: Fifty-percent.

00:08:21: and simultaneously starting salaries at the bottom of a pyramid have remained entirely flat for three consecutive years.

00:08:28: Wow

00:08:29: But yet at the very top The compensation required to poach a moving partner Is reaching astronomical record breaking highs.

00:08:38: We really need to unpack the mechanics Of why that pyramid is breaking.

00:08:41: Let's do it.

00:08:42: Because for decades, the entire economic engine of consulting was the leverage model

00:08:48: right?

00:08:48: You hire ten junior associates straight out of university pay them a fixed base salary and you build them up to clients at a massive premium.

00:08:56: To do just sequential grunt work.

00:08:58: formatting

00:08:58: data benchmarking

00:09:00: exactly formatting data Benchmarking competitors drafting The initial hundred slides of a deck And that margin difference That's what generated the partners profit.

00:09:09: yeah but If an algorithm now does the benchmarking and slide drafting instantaneously, you cannot ethically bill a client for three weeks of junior analyst time.

00:09:19: No!

00:09:19: The client won't pay for it...

00:09:20: Right so the margin vanishes.

00:09:22: So just stop hiring the twenty-five year

00:09:23: olds.

00:09:24: And this structural impact on collapse extends directly into corporations.

00:09:28: those consultants advise too.

00:09:30: Oh yeah

00:09:30: Michael Briggle at BCG noted that massive German industrial companies are actively flattening their internal hierarchies.

00:09:38: They're moving from ten management layers down to just four.

00:09:40: Ten down the four?

00:09:41: Yeah, they're turning organizational skyscrapers into flat warehouses.

00:09:46: because the historical function of middle-management has always been internal coordination.

00:09:50: Right

00:09:51: passing notes up the chain right.

00:09:52: a manager's job was take data form factory floor package it in report and pass it up to a director who packaged it for a VP.

00:10:01: But agentic AI absorbs that entire vertical coordination chain.

00:10:06: when information flows autonomously from the execution layer directly to the executive suite, those middle six layers serve literally no mechanical

00:10:14: purpose.".

00:10:15: So if you're listening to this right now as a VP or a Director This is the exact layer of operational friction.

00:10:21: these systems are engineered to eliminate The velocity at enterprise changes completely.

00:10:27: Absolutely

00:10:29: Mark Byershooter at Deloitte highlighted that executive decision-making is fundamentally shifting.

00:10:34: it's moving from these sequential weeks long meeting preparations to continuous AI driven adaptive systems

00:10:42: because the data is always live

00:10:43: exactly.

00:10:44: you don't need the finance strategy and operations departments building competing forecasts for a quarterly board meeting when an eGentix system is running real-time market simulations, twenty four hours per day.

00:10:57: It's completely different rhythm.

00:10:59: it is.

00:10:59: oh quick side note before we continue.

00:11:02: if you want to ensure your catching these structural shifts as they happen make sure hit subscribe so that don't miss our future deep dives.

00:11:08: We cover this stuff all the time.

00:11:09: Yes definitely subscribe but going back what were saying If traditional pipeline of entry level analysts and middle managers basically being automated out existence It forces a really critical question about the future of leadership.

00:11:23: Where does the next generation of senior judgment actually come from?

00:11:29: That is The Trillion Dollar Question!

00:11:30: Yeah,

00:11:31: if the leverage model is dying and we stop hiring the twenty-five year olds to do the grunt work how on earth Do We Groom The Thirty Five Year Old Partners?

00:11:39: Is This Basically The End Of The White Collar Apprentice Model?

00:11:43: Well, it changes how value is fundamentally generated.

00:11:46: Daria Petrafki from Deloitte touched on this dynamic at a recent Mannheim Business School panel.

00:11:52: She noted that genitive models can already write perfectly acceptable strategic advice.

00:11:57: The generation of information itself Is rapidly depreciating commodity But machine cannot sign its name to illegally binding outcome And it cannot take accountability for the messy human reality of implementation.

00:12:11: Right, a machine can not sit across the boardroom table from an anxious CEO and say you know trust me I will ensure this merger integrates successfully.

00:12:18: Exactly.

00:12:19: Adam Boothby at PA Consulting argued that competitive advantage in the advisory space is rapidly migrating away from data generation and migrating toward Trust &

00:12:29: Execution.

00:12:31: Clients are insourcing the knowledge work because their own internal AI can calculate market sizing.

00:12:38: What they lack is alignment.

00:12:39: They need someone to navigate corporate politics, manage ambiguity and drive enterprise-wide behavioral change

00:12:46: Which requires an entirely new competency profile at top of the pyramid.

00:12:49: Yep

00:12:50: Anthony Avotiello pointed out that PWC just partnered with Harvard Business School To run a massive rev up program And it's explicitly designed to retrain four thousand of its existing partners.

00:13:01: Four thousand partners?

00:13:02: That is a huge investment!

00:13:04: Right,

00:13:04: and the curriculum isn't about sharper data analysis.

00:13:07: It's about evolving leadership behaviors and culture because if partner built a twenty year career on simply having better spreadsheet than client that value proposition just dead.

00:13:17: The individuals who command premium compensation moving forward they're going be ones sell trust conviction operational resilience.

00:13:25: But here's the catch.

00:13:26: While these firms are tearing down their internal pyramids to become more agile, they're crashing into an external macroeconomic environment that is doing the exact opposite.

00:13:36: It's fracturing.

00:13:37: Fracturing completely!

00:13:38: You can possess the most sophisticated efficient agentic AI architecture on the planet but it cannot autonomously synthesize a semiconductor or rare earth metal out of thin air when a geopolitical border suddenly closes.

00:13:53: No...it definitely cannot.

00:13:55: And the capital expenditure required to navigate this new friction is staggering.

00:13:59: Matt's person released an analysis estimating that twenty-four trillion dollars...

00:14:03: Trillion with a T?

00:14:04: Trillion, yeah!

00:14:05: Twenty four trillion dollars will be needed by twenty fifty simply to decouple the supply chains of the UK US and EU away from China

00:14:13: Which is insane because we are talking about twenty four trillion dollar spent not to create new net value but just to rewire the global economy for defensive resilience rather than pure cost efficiency.

00:14:23: Right, you're essentially just moving the plumbing.

00:14:26: But when you map out the vulnerability of our global nodes... You understand why corporate boards are authorizing that level of defensive spend?

00:14:35: Bob Sternfels at McKinsey highlighted extreme choke points built into modern economy.

00:14:40: Oh

00:14:40: I read this!

00:14:41: Yes so sixty percent of world's global cocoa supply is concentrated in two countries.

00:14:46: Two countries.

00:14:48: and ninety-four percent of rare earth magnets, which are the foundational components for everything from EV motors to advanced defense systems.

00:14:56: Ninety four percent are processed in a single country.

00:14:59: That's terrifying from a risk perspective.

00:15:01: Exactly, A localized geopolitical shock and one specific zip code can instantly paralyze the global manufacturing line.

00:15:08: And what strategy professionals really must internalize right now is that this macro-friction Is no longer just some abstract risks debated in think tanks.

00:15:17: It has formalized mathematical regulatory risks.

00:15:20: Explain them

00:15:21: Well.

00:15:21: Andreas Hanisch at Deloitte highlighted The European Central Bank's twenty twenty six Geopolitical Risk Stress Test Historically bank stress tests, they focused on credit defaults or housing market crashes.

00:15:34: Yes

00:15:34: standard financial metrics.

00:15:36: Standard stuff.

00:15:37: but here the ECB required banks to construct their own severe plausible geopolitical scenarios like say a blockade of a major shipping straight and then they had to calculate the exact hit.

00:15:54: Let's clearly define the mechanics of that for a moment just so we're all on the same page.

00:15:57: A bank's CET-one ratio is essentially its core cash reserve, it's this strictest measure of financial strength.

00:16:04: So central banks are forcing financial institutions to prove exactly how much their core cash would be wiped out by geopolitical events.

00:16:11: Geopolitics is literally dictating legal limits about how much money a bank has allowed into real economy.

00:16:17: Precisely

00:16:18: It's a hard, quantifiable metric now.

00:16:21: And this regulatory pressure is compounding against the backdrop of intense persistent macroeconomic volatility.

00:16:27: Oh

00:16:27: yeah!

00:16:27: The macro environment is incredibly volatile.

00:16:35: But as Gregory Daco at EY and Diane Swank at KPMG observed, the decision was fractured by multiple hawkish descents pushing for a rate hike.

00:16:44: The Fed is basically trapped in cross-current data.

00:16:47: they are looking at cooling labor market beneath surface paired with incredibly stubborn elevated inflation pressures.

00:16:54: And it creates credibility trap where every single monetary adjustment is heavily scrutinized adding another layer of unpredictability to corporate capital planning.

00:17:03: Okay But I have to push back hard on the core assumption driving this twenty-four trillion dollar decoupling narrative.

00:17:09: All

00:17:09: right, go for it!

00:17:10: We throw around the word de-coupling as if is a neat executable strategy.

00:17:14: like its just switch we flip.

00:17:15: but when you look at underlying mathematics of global economy Is actually possible separate these spheres without triggering crippling permanent inflation?

00:17:25: That's that twenty four trillion dollars question

00:17:27: Right?

00:17:28: Look at demographic and economic realities inside China.

00:17:31: Iacob Coch Vaser at BCG analyzed China's fifteenth five-year plan.

00:17:37: And the data shows Chinese domestic savings stubbornly hovering around thirty-five percent of disposable income,

00:17:42: which is massive!

00:17:43: It's

00:17:43: huge!!

00:17:44: The internal population simply not consuming enough to absorb their own industrial output.

00:17:49: and that lack of internal consumption is colliding with a massive demographic cliff on the horizon.

00:17:54: exactly.

00:17:55: they are facing a projected demographic decline of one hundred fifty million people by twenty fifty Wow.

00:18:01: So if the domestic market is shrinking and people who are there saving their cash, The internal economy cannot support the manufacturing base?

00:18:09: Yeah!

00:18:09: The math is absolute.

00:18:11: China most export.

00:18:12: to survive They have to vent that excess industrial capacity outward.

00:18:16: No choice

00:18:17: Right.

00:18:17: And the trade map is actively redrawing itself around this imperative.

00:18:22: Joe and I at McKinsey pointed out that ASEAN nations has quietly surpassed the west To become China's largest trading partner.

00:18:28: Interesting

00:18:30: China operates as the factory to their pantries now.

00:18:33: They export cheap intermediate components to places like Vietnam or Mexico, which then assemble the final product and ship it to the US in Europe

00:18:42: by passing the tariffs.

00:18:43: exactly so aren't we just playing a twenty four trillion dollar game of global whack-a-mole?

00:18:49: The West claims that is decoupling but in reality We are making exact same supply chains longer vastly more opaque and infinitely more expensive.

00:18:59: Well, that assumes efficiency and price stability are still the primary goals of Western governments in corporate boards okay?

00:19:05: And they're not!

00:19:06: The calculus has completely changed.

00:19:08: Governments are actively deciding that higher inflation and longer supply chains are an acceptable price to pay for sovereignty and resilience.

00:19:15: hmm you really have to evaluate these moves through the lens of fifty-year geopolitical architecture...not short term trade fixes

00:19:22: like longterm bets.

00:19:23: exactly yeah consider clear agreement.

00:19:28: that was analyzed by Peter Jonathan Jameson at BCG.

00:19:31: On paper, you know it looks like an energy infrastructure deal but in reality It is a fifty-year strategic anchor.

00:19:39: By giving American firms priority access to build the Saudi nuclear program, The US secures of physical and technological foothold in the region for half a century.

00:19:49: Wow I see!

00:19:50: It provides Saudi Arabia with advanced tech but explicitly blocks out reliance on Russian or Chinese vendors.

00:19:57: It is a massive structural bet designed to absorb future shocks.

00:20:02: That makes a lot of sense, and you see that same long-term capital deployment strategy internally within the Middle East too?

00:20:07: Yeah

00:20:08: definitely.

00:20:08: Yasser Jarrar noted that evaluating the Gulf's future trajectory based strictly on the spot price of crude oil it completely misses the underlying mechanism of their economy.

00:20:17: now

00:20:17: Right.

00:20:18: its not just oil anymore.

00:20:19: No The real narrative is the six trillion dollars in sovereign capital being aggressively deployed into advanced AI, digital infrastructure and next generation logistics hubs.

00:20:31: The nations controlling the capital are abandoning legacy revenue models And they're just buying the infrastructure required to make themselves indispensable In a fragmented multipolar world.

00:20:42: Right?

00:20:43: So If we pull all of these signals together from the micro-mechanics of AI token costs to the macro mechanics of sovereign wealth deployment, We arrive at a singular thesis.

00:20:52: Okay late

00:20:53: Oni

00:20:53: Nishma Gosrani at Bain shared a white paper From The Cambridge Judge Business School that captures this perfectly!

00:20:59: We are entering an era defined by two parallel forces endless universally cheap machine generated intelligence operating within incredibly complex volatile and fragmented geopolitical reality.

00:21:10: Oh wow.

00:21:11: So when the machine can generate an optimal strategy based on data, but that is constantly disrupted by unpredictable human conflict.

00:21:19: The value of raw intelligence plummets.

00:21:21: Exactly!

00:21:22: Which means... The ultimate, scarce competitive advantage is no longer having the fastest AI model or the largest dataset.

00:21:30: The ultimate advantage is human judgment.

00:21:32: You

00:21:33: in judgement?

00:21:33: Yeah It's a capacity to look at an agentic AIs flawless mathematically perfect recommendation.

00:21:40: recognize that it fails to account for sudden regulatory shift of cultural nuance and overrule machine

00:21:47: Because the machine doesn't understand human chaos

00:21:49: Exactly.

00:21:50: When complex reasoning is completely automated and cognitive offloading becomes the default corporate state, independent critical thinking becomes exceptionally rare.

00:21:59: So the provocative reality we're facing is this as firms race to deploy autonomous systems to strip out operational friction they are actively optimizing for efficiency And in doing so They risk automating away The exact human judgment required To survive.

00:22:17: Are we over-optimizing our firms for efficiency and accidentally automating away the judgment?

00:22:23: that is a heavy thought to leave people with?

00:22:25: But it's exactly what you need to be asking.

00:22:26: If you enjoyed this episode, new episodes drop every two weeks!

00:22:30: Also check out other editions on PE Fundraising – PE Exit Strategies – PE Value Creation Venture Capital in M&A.

00:22:39: Thanks For Listening.

00:22:39: Thank You For Joining Us On This Deep Dive.

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