Best of LinkedIn: Strategy & Consulting CW 38/ 39

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

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00:00:33: So if you are a strategy M&A or you know an investment professional consider this deep.

00:00:39: dive Your shortcut through The Noise.

00:00:41: Yeah

00:00:42: exactly I mean we've spent the last few days Basically, just analyzing the top strategy and consulting insights circulating across professional networks in late September of twenty-twenty six.

00:00:52: Right

00:00:53: And there is a lot noise right now.

00:00:55: Oh!

00:00:55: There really is.

00:00:57: But I want you to imagine something for a second.

00:00:59: Imagine finding out your firm is legally liable For like thousands dollars in damages All because A piece software you deployed hallucinated fake refund policy Then decided to honor it autonomously.

00:01:13: Ouch Yeah, that's a nightmare scenario.

00:01:17: It is but it's not a hypothetical risk.

00:01:19: I mean That exactly what happened to Air Canada recently.

00:01:22: Wow And the tension right?

00:01:24: The tension between breakneck speed of technological execution and lagging reality of risk management really driving major discussions across market now

00:01:34: Absolutely!

00:01:35: And sets this stage for three core themes we're unpacking today.

00:01:39: First looking closely at how AI is maturing.

00:01:42: Specifically, how organizations are scrambling to restructure their governance and their talent pipelines.

00:01:48: To handle autonomous agents

00:01:49: huge topic right now

00:01:51: yeah.

00:01:51: in second we're exploring the transition of geopolitics from like an abstract board level risk into a hard daily operational reality.

00:01:59: it's unavoidable at this point

00:02:01: exactly.

00:02:02: And finally We will look at How sustainability has completely shed its compliance based reputation?

00:02:07: To become The core driver Of global economic security.

00:02:10: Well, let's start with that first piece because the anxiety around AI governance right now is just palpable.

00:02:15: Oh yeah totally

00:02:17: A lot of the sources are hyper focused on this shift from generative AI to agentic AI.

00:02:23: and Just to be clear on the mechanics for anyone modeling these risks Generative AI Is essentially an incredibly smart intern drafting in email for you Right

00:02:31: it's just text generation

00:02:33: Exactly but a genetic AI That isn't.

00:02:36: in turn that doesn't just draft the email.

00:02:38: It has the keys to your database, it sends the e-mail... ...it processes a refund and updates CRM entirely on its

00:02:44: own.".

00:02:45: That

00:02:45: distinction is critical!

00:02:47: And this is exactly why frameworks for managing these tools are having to evolve so rapidly.

00:02:53: If Anjou shared methodology recently about gaining some serious traction….

00:02:58: …it's called Know Your Agent or KYA.

00:03:01: Oh I like that!

00:03:02: Kind of like KYC in banking?

00:03:04: Exactly like that.

00:03:05: It's structured as a five-step approach, you don't just turn an agent on

00:03:11: Right!

00:03:11: You can't flip the switch

00:03:12: No...you assess its specific capabilities You profile the risk of it's intended tasks You assign in to RISC's tier You build specific technical guardrails for that tier And finally..You establish strict human oversight protocols.

00:03:28: The analogy jumps out at me is handing corporate credit card to new hire.

00:03:34: Oh, that's a good way to look at it.

00:03:36: Right because you don't give a junior analyst an unlimited black card on day one?

00:03:39: Absolutely not!

00:03:40: You give them a card with a strict like five hundred dollar limit and set up alerts so every single swipe notifies the finance department...you are bounding their autonomy.

00:03:50: Yeah..You're putting up guardrails.

00:03:51: But that brings up a glaring operational question If we are designing these agents to act autonomously but they inevitably make mistake that breaches contract who actually takes fall?

00:04:04: That is the multi-million dollar liability question, isn't it?

00:04:07: It really is.

00:04:08: The consensus among technical leaders right now as overwhelmingly against the idea that the AI itself can carry the blame...

00:04:15: Oh!

00:04:15: Really?!

00:04:16: Yeah Dr.

00:04:17: Bernhard Guerra and Dr.

00:04:18: Anne Kleep just released some fascinating data on this.

00:04:22: They found over seventy percent of experts explicitly warned that treating AI agents fully autonomous decision makers Is a guaranteed path to failure.

00:04:31: Wow!

00:04:32: Seventy percent

00:04:34: Yeah, and furthermore, seventy-two percent of those experts demand that named human owners be built directly into the system architecture from day one.

00:04:42: Wait let me make sure I follow how that works in practice.

00:04:45: so Named Human Owners means if i deploy a procurement agent to negotiate vendor contracts And it hallucinates a terrible pricing term.

00:04:56: My name is literally on legal documentation as an accountable party.

00:05:00: Precisely

00:05:01: Oh wow.

00:05:02: The precedent was essentially set by that Air Canada tribunal case you mentioned at the top of show.

00:05:07: Right,

00:05:07: right.

00:05:08: The airline tried to argue in court.

00:05:10: their chatbot is a separate entity and it's accountable for its own errors

00:05:14: And the Court didn't buy them?

00:05:15: The Tribunal completely rejected this defense.

00:05:19: Oversight belongs to an organization built on architecture and individuals who authorized use.

00:05:25: That makes total sense.

00:05:26: legally

00:05:27: Yeah, governance is no longer a post-launch checklist.

00:05:30: It has to be a foundational design requirement...

00:05:33: Which makes the successful scaling we are seeing even more impressive?

00:05:36: I mean if the liability was that high.

00:05:38: you would expect companies to be paralyzed!

00:05:41: You'd think so.

00:05:41: yeah

00:05:42: But Jeff Walters highlighted leading companies in Asia Pacific region Are finally moving past those endless isolated AI pilots.

00:05:49: They're executing focused CEO led transformations.

00:05:53: Yeah, the era of pilot purgatory is definitely closing for market leaders.

00:05:58: Pilot purgatori?

00:06:00: I love that term!

00:06:01: It's so true though... And if you want to look at mechanics on how this has actually achieved without triggering massive governance failures….

00:06:08: Look at data Juan Martín Muglioni and Nacho Hafnerota shared regarding BCG & Connecta.

00:06:14: Oh yeah – The BCG case study.

00:06:16: Over the past twelve months they took eighty different generative AI deployments live.

00:06:21: Eighty And they deploy these tools to twenty-five thousand employees.

00:06:25: That

00:06:25: is massive scale!

00:06:26: The business impact was staggering too, a forty percent lift in conversion rates and a thirty five percent reduction in average handling time.

00:06:34: But how do you wait?

00:06:36: How do you roll out eighty different deployments To twenty five thousand people In a single year without the whole system just collapsing under its own risk

00:06:44: By not letting the AI roam free?

00:06:46: Ah okay

00:06:47: They achieved that scale by heavily restricting the scope of each deployment.

00:06:51: They didn't build one massive AI to run the entire company.

00:06:54: Right, no God machine.

00:06:55: Exactly they built eighty hyper specific sandbox tools that were deeply supervised by domain experts The optimized for specific workflows rather than general intelligence.

00:07:06: Okay That makes a lot of sense

00:07:08: but that incredible speed of execution creates A massive downstream implication For the consulting and strategy industry itself.

00:07:15: in what way.

00:07:16: well mark Byer showed or argued recently that ai is effectively killing quote-unquote, information advantage.

00:07:23: Wow!

00:07:23: I mean that challenges the baseline assumption of entire advisory business model.

00:07:27: It

00:07:27: does?

00:07:28: Historically a massive portion firm margins came from simply knowing right framework synthesizing raw research faster or pulling market precedence.

00:07:37: Exactly

00:07:38: gathering data was the job Right.

00:07:40: and if an AI can map competitor landscape structure preliminary deal thesis in twelve seconds you just can't bill a client premium rates for gathering data anymore.

00:07:51: The baseline knowledge has essentially become commoditized, the new Premium Asset is judgment!

00:07:57: A Client isn't paying YOU for the AI's output.

00:08:00: they are paying you to know whether the AIs' Output is actually robust.

00:08:05: They're

00:08:05: paying you spot-the-flood assumption in the model or to realize that the AI failed to account for cultural nuance and cross border merger.

00:08:13: I see logic there But that creates a terrifying paradox for talent development.

00:08:17: Oh, the talent pipeline!

00:08:19: Right?

00:08:19: Yeah

00:08:20: If The Machine is doing all of baseline drafting data gathering and initial analysis basically grunt work how do junior analysts ever develop premium judgment.

00:08:30: That's huge problem.

00:08:31: We are asking twenty two year olds to step up evaluate complex strategic outputs without having done fundamental work themselves.

00:08:39: And this is the exact apprenticeship crisis that Shazeb Sanwal and Christian Husing are flagging in their recent posts.

00:08:46: It's a crisis for sure!

00:08:47: If we automate lower rungs of The Learning Ladder to save money, the pipeline for future senior judgment completely dries up.

00:08:55: Yeah... Husing points out that junior colleagues were never actually supposed just draw slides or format spreadsheets – That was merely byproducts from the technological era they were in….

00:09:05: …that was how they learned context?

00:09:07: Exactly The real work was always the apprenticeship.

00:09:10: Okay, but how does that apprenticeship actually function now?

00:09:13: If I'm a senior partner... ...I can't just tell an analyst to go spend forty hours building a slide deck because they will use AI and be done in an hour!

00:09:20: Right it requires a fundamental shift in how leadership spends their time.

00:09:25: Leaders have to be aggressively present.

00:09:28: Aggressively

00:09:28: present?!

00:09:29: Yeah you have to drag those juniors into high-stakes client meetings.

00:09:33: You have to expose them to live organizational friction, to tense vendor negotiations.

00:09:38: To the messy irrational human realities that an AI model simply cannot

00:09:42: parse.".

00:09:43: So they build context by watching how a client reacts to bad news in a board room not by formatting a chart?

00:09:49: Exactly!

00:09:49: That makes a lot of sense.

00:09:50: you have to teach them And that actually ties perfectly into an insight from Paolo Loberi Badoni, who really stood out this week.

00:10:02: He made a crucial distinction – AI dramatically speeds up analysis but it does not intrinsically speed-up good decisions!

00:10:10: It's very important separation

00:10:12: Right because the physical world we are trying to make decisions about —the global markets and trade routes— is incredibly volatile

00:10:20: Unpredictable

00:10:21: Exactly.

00:10:22: An AI can give you a lightning-fast optimization model of the manufacturing supply chain, but if government changes tariff overnight or canal gets blocked that perfect historical analysis is completely useless!

00:10:34: Which is the perfect bridge into our second core theme... Geopolitics in Trade.

00:10:38: Yeah

00:10:38: let's get to it.

00:10:40: If your modeling a deal and mapping a corporate strategy right now geopolitics are no longer an abstract.

00:10:45: what IF risk sits on the appendix for your board deck?

00:10:49: It IS THE PRIMARY operating environment.

00:10:52: We are literally operating in a landscape where the fundamental rules of global trade are being rewritten live, all while companies are trying to execute long-term capital plans.

00:11:01: The disconnect there is alarming.

00:11:03: according to insights from KPMG's Phil Smart and EY's Oliver Jones roughly a third of executives admit they are frequently surprised by geopolitical risk events

00:11:13: A third?

00:11:14: That's terrifying for investors

00:11:16: It is.

00:11:17: And the underlying reason for that constant surprise, is that boards are still attempting to predict their future rather than preparing for

00:11:25: it.

00:11:26: They're trying to guess the outcome of next election or trade dispute.

00:11:30: instead they need to stress test their operational resilience against multiple drastically different plausible futures.

00:11:36: The danger of trying to predict the outcome Is that governments aren't just reacting to chaos?

00:11:41: They are engineering

00:11:42: exactly.

00:11:43: Just look at the current application of tariffs.

00:11:45: Sebastian Kuiper argued recently that tariffs are no longer just random trade disputes or protectionist chaos, they're deliberate strategic leverage.

00:11:53: Yeah the assumption that open frictionless global trade is a default state of economy officially dead.

00:12:00: Officially Dead.

00:12:01: So Kui per points out.

00:12:02: if you are strategy professional before making a knee-jerk sourcing change based on news headline You have to do deep exposure mapping.

00:12:11: And doesn't mean looking at your direct supplier.

00:12:13: If you are importing components from Mexico to avoid a tariff on China but your Mexican supplier relies entirely on raw materials from Shenzhen, Your risk profile hasn't actually improved.

00:12:23: Not at all!

00:12:24: And when you look the physical mechanics of that exposure The reality gets incredibly sobering.

00:12:30: How so?

00:12:30: Jacovo Piccolo Brunelli reminded the network That roughly eighty percent Of world trade still moves by sea.

00:12:37: Eighty percent.

00:12:38: That's massive.

00:12:39: And an enormous volume of that maritime trade relies on a handful of unavoidable, highly exposed physical choke points.

00:12:46: So if you are in M&A professional building evaluation model for just-in time manufacturing asset and haven't factored the physical vulnerability to those specific maritime straits to geopolitical blockade your DCF model isn't built on data.

00:13:01: it is built pure hope.

00:13:03: Absolutely is.

00:13:04: You have to model the physical path of goods, not just financial transaction.

00:13:09: For a highly tangible example how these macro lovers instantly rewrite micro valuations.

00:13:15: Aiden Mir brought up recent news regarding U.S planning to remove tariffs on Irish whiskey.

00:13:19: Oh it's brilliant micro case study.

00:13:22: It really is.

00:13:22: I mean previously Irish Whiskey was operating at massive competitive disadvantage to scotch in US market solely because this specific tariff.

00:13:31: Just because of the geopolitical lever.

00:13:34: Exactly, and with one geopolitical stroke off a pen removing that trade barrier The playing field is leveled instantly

00:13:41: overnight.

00:13:42: Yeah if you are a private equity firm holding beverage assets That single policy shift alters your sales projections Your capital expenditure plans And entire growth trajectory Of distilleries in Ireland.

00:13:53: Instantly

00:13:54: Right.

00:13:55: Tracking these seemingly minor geopolitical levers is literally the difference between an outsized return and a totally busted investment thesis, And actually if you're actively modeling these kinds of operational vulnerabilities for your next deal strategy or trying to understand how these global shifts impact your firm's margins.

00:14:11: make sure you hit subscribe on this deep dive so you don't miss future editions.

00:14:15: we are constantly tracking these exact mechanics.

00:14:18: it Is critical to keep a pulse on this because the lever's governments are pulling our only getting more complex.

00:14:24: Oh absolutely.

00:14:25: And zooming out from specific tariffs, the way we fundamentally define geographic risk is changing.

00:14:32: Rami Rafi highlighted BCG research showing that a coordinated Europe is rapidly forming its own distinct global pole of power Really?

00:14:41: Yeah complete with it's own massive economic gravity and aggressive regulatory frameworks

00:14:47: Which means we have to stop thinking about global expansion purely on country by country basis.

00:14:52: Precisely Investors and strategists can no longer assess risk simply by looking at a map.

00:14:58: You have to assess your exposure to specific overlapping geopolitical blocks.

00:15:04: So like what is your operational exposure?

00:15:07: To the European regulatory sphere versus North American trade agreements,

00:15:12: right And how do those blocks conflict with emerging market alliances?

00:15:17: Which brings us to a fascinating realization.

00:15:20: We talk about tariffs on steel or whiskey, Or semiconductors but the ultimate geopolitical leverage The asset that actually controls the global board is access To the physical resources That power those economies

00:15:33: Energy Agriculture Critical minerals

00:15:37: Exactly.

00:15:38: And that shifts our focus entirely to our final theme, sustainability and climate.

00:15:42: Yeah this might be the most significant strategic rebranding we saw in the sources of this cycle.

00:15:47: Rebranding how?

00:15:49: Well, sustainability has completely shed its fluff reputation.

00:15:54: It is no longer a compliance exercise or you know public relations effort isolated In a corporate ESG report.

00:16:01: Its moved past that

00:16:03: Completely According to Kichi Ushijima and Hannah Solump, who cited the recent World Economic Forum's chief sustainability officer outlook.

00:16:11: Sustainability is now explicitly defined as an economic security-and business resilience agenda.

00:16:17: It has been embedded directly into core capital expenditure decisions

00:16:21: For a harsh reality check on why capital allocators are suddenly treating climate as a hard economic metric.

00:16:27: Just look at data Sholini Unakrishnan shared regarding food commodity price volatility.

00:16:32: That data was wild.

00:16:33: Over the last decade, food commodity prices have spiked drastically driven directly by a combination of localized climate impacts and geopolitical friction.

00:16:41: Yeah when agricultural supply shocks and wild price swings become the baseline normal resilience stops being a corporate buzzword.

00:16:48: it becomes The ultimate competitive advantage for procurement teams

00:16:51: because if your procurement team cannot physically guarantee access to raw materials at a predictable price Your brilliant corporate strategy is totally relevant.

00:17:00: right you literally don't have a functional business.

00:17:03: I understand the gravity of the resource scarcity, but let me challenge the framing here for a second.

00:17:07: Okay

00:17:08: go ahead If

00:17:09: The Modern Definition Of Sustainability Is Entirely Focused On Securing Supply Chain Resilience Locking Down Critical Minerals And Protecting Resource Access Hasn't Sustainability Just Become Another Branch Of Geopolitics?

00:17:21: Are They Even Separate Disciplines Anymore?

00:17:24: Well they are distinct disciplines But They're Absolutely Colliding To Form A New Kind Of Industrial Policy.

00:17:30: Interesting

00:17:31: Abhishek Sharma's analysis of the BRICS' twenty-twenty six summit illustrates the mechanics to this collision perfectly.

00:17:38: Sustainability has become a premier trade and investment battleground,

00:17:42: right?

00:17:42: Because with the regulations

00:17:43: exactly you have The BRICs nations actively pushing back against unilateral Western climate measures most notably the EU's carbon border adjustment mechanism or CBAM.

00:17:53: let's actually pause an unpack how CBAM works for a second because the mechanics there are vital for anyone dealing with crossborder supply chains.

00:18:00: It's a complex mechanism, but essentially the European Union calculates the embedded carbon emissions of certain imported goods like steel, cement or aluminum.

00:18:10: Okay

00:18:10: If those goods were produced in a country with less stringent climate policies than the EU The importer has to buy carbon certificates to cover the difference.

00:18:18: Oh I see.

00:18:20: Yeah it effectively applies the EUs internal carbon price To foreign manufacturers preventing companies from simply moving dirty production offshore to dodge regulations.

00:18:29: So if I am a multinational manufacturer, I might successfully raise green capital in India to build a new facility.

00:18:37: And i'd be praised locally for my sustainability efforts.

00:18:40: right exactly.

00:18:41: but the second I try to export that aluminum to Germany?

00:18:45: I'm hit with crippling carbon trade costs at the border because My local grid and india relies on coal.

00:18:50: Exactly these sustainability requirements In one region become A massive geopolitical trade barrier in another.

00:18:57: It creates an incredibly complex, fragmented operating environment where climate policy national industrial strategy and geopolitical maneuvering are all driving the exact same vehicle.

00:19:20: Japan is

00:19:22: currently facing surging electricity demand largely driven by the explosion of data centers and domestic semiconductor manufacturing.

00:19:30: To solve this, Japan is looking closely at European energy markets to extract lessons on how to balance energy security affordability and massive decarbonization scale.

00:19:40: but The crucial takeaway from their analysis And this is a recurring theme across all our topics today Is that there is no simple importable blueprint right?

00:19:49: Japan has a completely different physical geography, an isolated grid and entirely different geopolitical vulnerabilities compared to Europe.

00:19:57: They can study the European structure, but they must adapt the mechanics to their hyper-localized

00:20:24: context.

00:20:26: remain the most valuable, irreplaceable assets a strategy professional can possess.

00:20:31: The machine learning model can process historical data instantly but only an experienced human can read the room understand cultural friction and adapt to the unseen variables.

00:20:41: Exactly So we'll leave you with this final thread to pull on as review your own portfolios in deal models This week.

00:20:47: Let's hear it!

00:20:55: accurate, predictive models.

00:20:57: But as we've just discussed our current geopolitical and climate reality is defined by unprecedented structural volatility entirely new trade blocs forming physical maritime routes shifting in climate policies rewriting global taxation.

00:21:11: if the future looks absolutely nothing like the past how can any solid investment thesis rely purely on automated analysis?

00:21:19: it can't

00:21:19: right?

00:21:20: In a world of engineered chaos you simply cannot remove the expert human from

00:21:25: Navigating.

00:21:26: that.

00:21:26: chaos is the premium skill

00:21:46: of.