Best of LinkedIn: Strategy & Consulting CW 36/ 37

00:00:00: Provided by Thomas Allgaier and Frennus, based on the most relevant LinkedIn posts about strategy in consulting in calendar weeks thirty-six and thirty seven.

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00:00:33: And welcome back.

00:00:35: today we're mapping out atop strategy consultive trends circulating on LinkedIn right now for professionals in strategy.

00:00:41: M&A investments

00:00:43: yeah our mission.

00:00:46: three massive forces that are just converging on the enterprise right now.

00:00:50: We're looking at this huge gap between AI adoption and actual earnings, then a very harsh physical realities of geopolitics in supply chain resilience.

00:00:59: And finally how these macro and physical risks or just like actively repricing the cost of capital?

00:01:04: Yeah it's a lot to unpack.

00:01:05: so let's start with that first theme right?

00:01:07: The Ai Paradox because ai tools are everywhere

00:01:12: literally everywhere.

00:01:14: but the stark reality is that measurable enterprise value is just completely lagging behind the hype.

00:01:20: Yeah!

00:01:21: And TigerTieGarage, here's some really fascinating data on this.

00:01:26: like

00:01:26: seventy-two percent of CEOs claim they have responsibility for AI but only fifteen percent report getting actual real value from

00:01:35: it.

00:01:35: Wait...only fifteen percent?

00:01:37: Just fifteen.

00:01:39: And the differentiator for that successful group.

00:01:41: It's personal, hands-on use.

00:01:43: they used it themselves like as a tutor or sparring partner or an editor.

00:01:46: Brad Jakeman actually highlighted great example.

00:01:49: He observed aboard where the CEO requires The leadership team to bring his self built AI agent To their weekly meetings.

00:01:54: Wow

00:01:55: every week

00:01:55: Every week because you know hands on learning just beats abstract strategy every time.

00:02:00: I mean That makes sense but kind of feels Like AI is new corporate gym membership.

00:02:04: Oh!

00:02:05: I love that

00:02:05: Right?

00:02:06: Everyone bought one For the company But nobody.

00:02:08: he's actually getting fit.

00:02:09: And Frank Powers brought some data that totally backs this up, He showed that eighty percent of respondents get a personal productivity boost from AI like writing emails faster but only thirty seven per cent see an actual earnings impact for their organization.

00:02:24: Yeah which is barely moving the needle

00:02:27: Right.

00:02:28: and Christina Elringman warned about exactly This.

00:02:31: She said That A Patchwork Of Pilots Do Not Equal Measurable Impact.

00:02:36: Oh For Sure pilot purgatory.

00:02:38: Exactly!

00:02:39: She noted that eighty percent of execs are completely dissatisfied with the speed.

00:02:45: If you don't fire the vendors or change the actual processes, You haven't captured any value.

00:02:50: Right!

00:02:50: Just bought a shiny new toy.

00:02:52: But speaking of vendors This is totally upending The software landscape.

00:02:56: Oh yeah Neha Cabra pointed out this massive shift.

00:02:58: Like thirty two percent of organizations have decided against buying off-the-shelf software recently

00:03:03: Because they can just build it themselves.

00:03:04: Yeah

00:03:05: exactly with Kodi agents They realize that they could just build custom tools internally Which is

00:03:09: terrifying if your are a SaaS company.

00:03:11: Terrifying And its hitting consumer choices too.

00:03:26: That's a huge shift.

00:03:28: one in four consumers end up choosing a brand that wasn't even on their original list, just because the AI recommended it based on specs.

00:03:35: That completely evaporates legacy brand motes?

00:03:37: Exactly!

00:03:38: But you know if AI is replacing all this entry-level coding and initial analysis I have really critical question here.

00:03:44: Okay sure

00:03:45: Who's actually training... the next generation of leaders.

00:03:49: Ooh,

00:03:49: that's a good point

00:03:50: because Sol Rashidi calls this The Talent Formation Fracture.

00:03:53: entry-level job postings are down roughly thirty five percent.

00:03:56: That

00:03:56: is massive drop.

00:03:58: right.

00:03:58: and if we automate away all the friction in early career grunt work We basically automated way pathway to expert judgment like who trains your twenty three decision makers?

00:04:09: man they're just not getting.

00:04:10: It's a structural break for sure.

00:04:12: And by the way, if you're finding these insights valuable as you plan your own strategy.

00:04:17: make sure you subscribe so you catch our future editions.

00:04:20: definitely

00:04:21: but moving from these digital constraints we really need to talk about our second theme The physical geopolitical realities that are just hitting global trade.

00:04:30: Yeah!

00:04:30: The era of cheap shipping is totally over Totally.

00:04:34: and Mark Gilbert revealed this massive disconnect here.

00:04:38: He found that nearly ninety percent of companies claim they've strengthened their geopolitical capabilities.

00:04:42: Okay,

00:04:43: that sounds good

00:04:43: Sounds good right?

00:04:45: But only about fifteen percent systematically embed geopolitics into their core business decisions.

00:04:51: Oh wow so there aware but they aren't doing anything exactly

00:04:55: and Stefan Roche Richard echoed this with Swiss companies.

00:04:58: mm-hmm.

00:04:59: like fifty nine percent conducts scenario analyses But only twenty two percent have actually assigned clear responsibility for geo strategic issues.

00:05:07: That is, that's like installing a state of the art fire alarm but not giving anyone the evacuation plan?

00:05:12: Yes.

00:05:12: Yeah!

00:05:12: That's the perfect way to look at it.

00:05:14: yeah

00:05:14: you know The building is burning But nobody knows whose job It Is To open the doors

00:05:18: exactly...but how does this actually translate to the bottom line?

00:05:22: okay

00:05:22: well

00:05:23: Anthony Veal in Trevenstraat and modeled This.

00:05:26: they looked At trade diversification for Canada.

00:05:28: Okay And They found A staggering five hundred billion dollar difference In real GDP over ten Years wait.

00:05:37: Half a trillion dollars?

00:05:38: Half-a-trillion.

00:05:39: Heavily tied to whether or not they overcome those concentrated supply chains that got exposed during the pandemic.

00:05:44: That

00:05:44: is insane, it's the multiplier effect of fragility Precisely And its' not just geopolitical shocks.

00:05:49: there are brutal regulatory realities coming too.

00:05:52: The regulations Yeah.

00:05:53: Peter Jonathan Jameson outlined the upcoming IMO vote.

00:05:56: They're voting on a binding sector-wide carbon price for global shipping,

00:06:01: which is massive

00:06:02: right?

00:06:03: And this isn't just policy It's a real time reallocation of hundreds of billions in enterprise value

00:06:08: winners and losers happening overnight.

00:06:10: Exactly it creates massive winners like green maritime fuels and massive losers Like legacy LNG fleet owners

00:06:18: Yeah, and Jill Wex added a really urgent warning about this too.

00:06:21: regarding the EUDR compliance deadline.

00:06:24: Remind me that's the deforestation regulation?

00:06:27: Yes!

00:06:27: The European Union Deforestation Regulation.

00:06:30: The deadline is December.

00:06:31: thirty twenty-twenty six.

00:06:32: That is right around the corner.

00:06:34: It Is...the time for planning is just over.

00:06:36: Organizations need defensible due diligence and traceability immediately

00:06:40: Or what happens?

00:06:41: OR they risk losing market access to the EU entirely.

00:06:45: Wow So you just can't sell your product?

00:06:47: Nope.

00:06:48: And to round out these physical pressures, Meaghan Martin-Schoenberger noted we're in a perfect storm of rising logistics costs Right

00:06:56: fuel prices capacity constraints Yeah

00:06:59: and higher interest rates making inventory financing incredibly expensive

00:07:03: Which perfectly transitions into our final theme how these physical and geopolitical risks are just actively rewriting the macroeconomic playbook.

00:07:11: yeah they're squeezing the cost of capital everywhere Big time.

00:07:14: And Andreas Dombreth pointed out something wild.

00:07:17: at the sovereign level, US federal debt has crossed forty trillion dollars

00:07:22: which is a number so big it doesn't even sound real

00:07:24: right?

00:07:25: but The hidden danger isn't just the size It's that the Treasury Is leaning super heavily on short-term bills

00:07:31: okay So they have to keep refinancing

00:07:33: exactly?

00:07:34: It creates this refinancing treadmill That threatened central bank independence.

00:07:39: its A phenomenon known as fiscal dominance

00:07:41: Fiscal Dominance Right

00:07:43: Basically, the markets realize that central bank is trapped by government debt.

00:07:48: So they force higher yields to demand fiscal discipline

00:07:52: which trickles down and makes borrowing more expensive for every company out

00:07:56: there.

00:07:56: exactly

00:07:57: but you know I want to push back on this macro doom.

00:08:00: gloom per second okay because There's just really fascinating divergence in executive sentiment right now.

00:08:06: what do You mean?

00:08:07: well Joel Lippmann noted that Australian CFOs have record low confidence in the broader economy.

00:08:13: Like it's sitting at negative thirty six percent,

00:08:16: okay?

00:08:16: That makes sense given the macro environment

00:08:18: right but net optimism for their own organizations is sitting comfortably at positive fifty percent.

00:08:24: wait really

00:08:25: that's a huge disconnect

00:08:26: It Is.

00:08:27: they're basically saying The world is on fire But my house is totally fine.

00:08:32: Are they just completely delusional?

00:08:34: You'd think so, but there's data to back it up.

00:08:36: Merrick Ross Group pointed out that the Euro area GDP still grew in Q one and q two.

00:08:42: Oh wow Yeah.

00:08:43: And that was despite major supply chains shocks like the closure of The Strait Of Hormuz.

00:08:48: So companies are actually getting better at navigating these immediate shocks

00:08:52: Exactly.

00:08:53: But um There is a physical risk That has quietly repricing assets Before disasters even strike.

00:09:00: Uh climate risk

00:09:01: yeah.

00:09:01: Johanna Puetz highlighted that, twenty-twenty five weather and climate losses hit two hundred seventy seven billion dollars.

00:09:09: That's just in one year?

00:09:11: One Year!

00:09:11: And she warned up to twenty-five percent of EBITDA could be at stake by twenty fifty for companies failed to adapt.

00:09:18: A quarter your earnings wiped out.

00:09:20: Gone

00:09:20: because supply chain disruptions uninsurable assets you name it

00:09:24: The profound.

00:09:24: so what here was delivered Patrick Schmucki?

00:09:27: because banks are already reacting to this physical climate risk ahead of actual losses.

00:09:32: Right, they're not waiting for the hurricane to hit?

00:09:34: No highly exposed banks or hoarding capital.

00:09:36: They've actually cut loan originations by ten point seven percent.

00:09:39: Wow!

00:09:40: Ten

00:09:40: point seven Yeah.

00:09:42: and there's severely pulling back on small business lending in those risky areas.

00:09:46: so Climate Risk isn't just an environmental issue anymore.

00:09:49: It's

00:09:49: becoming a credit supply problem.

00:09:51: Exactly if you need alone And your'e high-risk zone you might just be out of luck.

00:09:56: That

00:09:56: is brutal!

00:09:58: It is, and to top it off Omar Ali noted that as all these complex risks mount board remuneration in financial services has surged fourteen point four percent.

00:10:09: so they're

00:10:09: paying a massive premium for Good judgment.

00:10:12: Exactly,

00:10:13: it's totally outpacing global wage inflation.

00:10:16: It is a premium paid for experience judgement in the boardroom

00:10:19: Which really ties all of this together?

00:10:21: And you know I want to leave everyone with final provocative thought that builds on everything we've talked about today.

00:10:27: Because as AI flattens the advantage basic information and geopolitics and climate risk completely rewrite the physical map.

00:10:36: The ultimate competitive mode isn't your technology or geography but its organizational agility and your human judgment.

00:10:43: I mean, if algorithms are making the short lists and banks are cutting credit based on weather patterns ask yourself is you're operating model flexible enough to pivot your strategy in days rather than

00:11:07: quarters?