Best of Linkedin: Strategy & Consulting CW 44/ 45

00:00:00: Provided by Thomas Allgeier and Franis, based on the most relevant LinkedIn posts about strategy in consulting in calendar weeks forty-four and forty five.

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00:00:31: So we're diving into the top strategy and consulting trends across LinkedIn right now?

00:00:36: Yeah, And The mission of the steep dive is really to extract actionable insights for YOU – the Strategy & Investment Professional

00:00:43: Exactly!

00:00:43: We are zeroing on how AI is forcing this massive redesign

00:00:50: And we'll also get into the emerging crisis in human judgment, uh...the hard data behind AI governance and those crazy macro pressures hitting boardrooms today.

00:00:59: It's a lot but I mean let's start with this uncomfortable paradox hitting the professional services industry.

00:01:05: Oh it's such a glaring contradiction.

00:01:07: Right

00:01:07: you've got consulting firms marching into their client's offices telling them they need to fundamentally reinvent how they work.

00:01:14: Because of AI?

00:01:15: But then, uh...they turn around and sell those same clients the exact same traditional team structures.

00:01:20: Yeah

00:01:21: Mark Bidecker actually brought this up recently And his argument is just spot-on Like if A.I changes to work The business model has to change.

00:01:29: Yeah

00:01:29: you can't keep that old model.

00:01:30: Exactly He asks why automate ten steps when seven of these steps shouldn't even exist anymore?

00:01:37: Why sell the same top-heavy team structure just, I don't know slightly faster.

00:01:41: It makes no sense.

00:01:42: it's like okay think of it Like inventing a high speed bullet train right?

00:01:47: Okay.

00:01:47: But then you insist on charging The passengers by the hour instead of buy at the distance traveled.

00:01:53: that is exactly it.

00:01:54: You're effectively penalizing yourself for being faster Right?

00:01:58: and Torben Peterson built on this by pointing out how the pricing debate is shifting

00:02:02: toward usage-based AI pricing, I assume?

00:02:04: Yeah but there's a huge friction point.

00:02:06: Clients want that traditional rate times hour math

00:02:09: Sure because it predictable

00:02:10: Exactly.

00:02:11: But the consulting firms they need to figure out who actually pays this growing AI bill

00:02:16: Because compute isn't free.

00:02:18: No its not!

00:02:19: But then you look at M&A reality and things get really interesting.

00:02:22: Chaitanya Kahl shared this wild data point.

00:02:25: Oh, about the coastal cloud acquisition?

00:02:27: Yeah.

00:02:28: So TCS just acquired Coastal Cloud for seven hundred seven million dollars which is a

00:02:32: huge number!

00:02:33: It's massive if you break that down For the investment folks listening That is roughly one point.

00:02:38: seventy five million dollars per consultant.

00:02:41: A million and a half per head.

00:02:43: One point seventy-five million dollars.

00:02:44: yeah Wow

00:02:45: so much for AI wiping out human implementation

00:02:48: Right.

00:02:48: It proves that even when you have platforms like Salesforce pushing all this incredible AI, You still desperately need human implementers to connect it To a client's messy legacy systems Because

00:02:58: corporate reality is chaotic.

00:03:00: Exactly

00:03:01: And Irfan Azlamzal synthesizes perfectly He said.

00:03:04: as AI makes basic research and data gathering super cheap The

00:03:07: value completely shifts?

00:03:09: Right the true value of a consultant shifts entirely away from Gathering information and squarely toward judgment and decision-making

00:03:16: Which is fascinating.

00:03:17: But it brings up this huge bottleneck.

00:03:19: I mean, if the future of consulting value relies entirely on human judgment... Yeah How do we actually develop that judgement?

00:03:26: If AI is suddenly doing all-the entry level work?

00:03:28: Oh man!

00:03:29: That's the question.

00:03:31: And the data we have in this is pretty startling.

00:03:33: Yeah Anthony Chung and Pratik Yarov shared a recent BCG experiment.

00:03:37: Right i saw that

00:03:38: On surface.

00:03:39: you know AI improved quality for consultants

00:03:42: But there's a catch?

00:03:43: A massive catch.

00:03:44: It reduced the diversity of ideas by forty-one percent.

00:03:48: Wait, a forty one percent drop in idea diversity

00:03:52: Yes.

00:03:53: Forty One percent That

00:03:54: is insane

00:03:56: Because these tools basically regress to mean they push out consensus thinking but it gets worse On tasks that actually required financial reconciliation.

00:04:05: The AI users were nineteen percent less likely To reach the right answer.

00:04:09: Less likely.

00:04:10: Yeah

00:04:11: How does a supercomputer make you nineteen percent worse at getting the right answer?

00:04:15: Because they just accepted these incredibly confident, polished but totally incorrect outputs.

00:04:20: Wow!

00:04:21: So they stopped thinking critically because... ...the slide looked pretty.

00:04:25: Exactly.

00:04:26: And Matthew Krop has this great warning about the apprenticeship

00:04:30: loop The apprenticeship loop.

00:04:32: Yeah think about it.

00:04:34: If you automate all of the routine junior work like drafting DAX doing basic variance analysis You're removing the very mechanism by which future leaders learn.

00:04:43: They learned by failing and being corrected by seniors, right?

00:04:47: Crop found that AI agents can execute tasks sure but they totally lack The taste needed to actually steer the ship.

00:04:54: Okay I have to push back on this for a second though.

00:04:56: go for it aren't we?

00:04:57: maybe Romanticizing late-night PowerPoint formatting just a little bit like wasn't in a lot of that junior grunt work Just mindless copy pasting anyway.

00:05:07: But it's not about the formatting itself, you know.

00:05:09: It's about the cognitive reps.

00:05:11: You need those reps to learn how to spot patterns in the data.

00:05:15: Okay that makes sense.

00:05:16: Yeah Diane Gerson actually warns boards about this exact thing.

00:05:20: She calls it Cognitive Atrophy or even more bluntly brain rot

00:05:24: Brain rot threatening future leaders.

00:05:26: That is a terrifying thought.

00:05:28: It's so serious that firms like KPMG, EY and PWC UK are actively countering it right now.

00:05:36: They're setting up critical thinking boot camps

00:05:38: no way

00:05:39: yeah.

00:05:39: And we're even seeing engineer requested AI free Fridays

00:05:44: Free Fridays.

00:05:45: That's literally forcing yourself to go the cognitive gym

00:05:48: Exactly.

00:05:49: By the way if you want make sure you catch our future deep dives into how these workplace dynamics are shifting take a quick second to subscribe.

00:05:56: Yeah, you'll definitely want to stick around because protecting human judgment is just step one.

00:06:00: Right To get actual financial returns from AI at scale.

00:06:03: You can't just rely on individual brilliance and really need enterprise level governance

00:06:07: For sure.

00:06:08: And we are finally moving past that initial hype phase, right?

00:06:12: Dan Martin has pointed out that almost fifty percent of companies now report measurable value from AI.

00:06:17: Fifty percents a huge milestone!

00:06:19: It is and Steve Mills and Julie Bedard shared some BCG research on this.

00:06:24: it proves that companies that scale AI governance alongside innovation actually see three times the ROI for their low-innovation peers.

00:06:31: Three times the ROI.

00:06:34: I mean that proves governance isn't just a bottleneck.

00:06:36: Exactly and Ted Moynihan has this perfect analogy for it.

00:06:39: He says governance is in a speed bump.

00:06:41: It's the brakes on a formula one car.

00:06:43: Oh, i love that

00:06:44: because bitter breaks let The driver push closer to the absolute limits of performance.

00:06:48: Yes You can drive way faster if you have total confidence In your ability To stop.

00:06:53: And Moynihand notes That eighty-eight percent Of well governed users report real productivity gains.

00:06:59: But actually implementing that Is tough.

00:07:01: Enrique Drebis led an internal BCG agentic transformation and he found that AI success is a really strict formula.

00:07:09: What's the breakdown?

00:07:10: It's ten percent algorithms, twenty percent technology...and seventy percent people in process.

00:07:17: redesign.

00:07:18: Seventy-percent process redesign!

00:07:21: That is wild but it makes sense.

00:07:23: its so clear to just you know layering AI onto old broken processes doesn't work

00:07:28: No..it just make the broken process happen faster

00:07:31: Right.

00:07:32: And as Minji Kim points out for industrial companies, if you reshape entire operations not just single tasks around AI You can lift efficiency by thirty to fifty percent.

00:07:42: But very few are actually doing that deep redesign right?

00:07:46: Yeah sadly If you look at the Deloitte data from Sunharji Sekar and Jim Rowan while eighty one percent say AI speeds up their decisions only twenty five percent Are actually using it to deeply modernize their operations.

00:07:59: Only twenty-five percent.

00:08:00: yeah.

00:08:01: so Why is there such a massive gap?

00:08:04: Well, while leaders are trying to redesign these operations they're simultaneously navigating Massive external micro uncertainties.

00:08:12: Oh for sure the macro environment is crazy right now.

00:08:14: Yeah and their biggest blind spot might actually be inside their own companies but They're distracted by the outside.

00:08:23: Peter Jonathan Jameson shared some insights from conversations with business leaders post US midterms.

00:08:29: What's the sentiment there?

00:08:31: Strictly from a business perspective, leaders expect policy continuity.

00:08:35: But they're facing intense budget pressures and really cautious investment horizons

00:08:41: Which makes sense.

00:08:42: growth requires capital but uncertainty totally holds back those big bets

00:08:45: Exactly And Nicholas S. Lang highlighted how this ties to structural strategy.

00:08:51: He looked at Arctic competition and pointed out that in this era of geopolitical fragmentation industrial competitiveness and national security are now Completely inseparable.

00:09:01: You can't separate it

00:09:01: anymore?

00:09:02: No, but here's the pivot.

00:09:04: The external

00:09:05: world is chaotic yes But Patrick Dupont analyze eight hundred and thirty six corporate failure since the year.

00:09:11: two thousand okay.

00:09:13: And he found that twenty seven percent of those failures stemmed from a breakdown in mutuality

00:09:18: Mutuality

00:09:19: like internal relationships exactly.

00:09:21: It's the ability to build reciprocal value-creating Relationships with stakeholders mostly internally

00:09:28: and Lorenzo Posatino And Julia Dar actually brought some data to this With the BCG CEO insomnia index.

00:09:35: it shows how this mutuality is completely fracturing right

00:09:38: now.

00:09:38: Oh, what did they find

00:09:40: there?

00:09:40: Is this massive glaring trust gap?

00:09:44: nearly ninety percent of CEOs are confident that their employees trust their leadership.

00:09:47: Ninety

00:09:48: percent.

00:09:49: Yeah,

00:09:50: ninety percent.

00:09:51: but when you ask the employees Only forty six percent actually agree Wow and in some cuts of the data it's as low as thirty-six percent.

00:09:59: That is a staggering disconnect.

00:10:02: It really does because as AI completely changes jobs people are scared And unscripted frontline conversations are far more effective for building trust than polished corporate videos.

00:10:13: Oh, absolutely slick video just feels out of touch when people are worried about their jobs.

00:10:18: so I mean think About what this means for you?

00:10:21: We are spending billions redesigning our operating models For AI but Are we designing them for trust?

00:10:28: if human judgment and stakeholder mutuality or the true competitive motes in The future perhaps the most critical algorithm your leadership team needs to optimize right now is how You actually listen To Your own People.

00:10:40: If you enjoyed this episode, new episodes drop every two weeks.

00:10:44: Also check out our other editions on PE fundraising, PE exit strategies, PE value creation venture capital and M&A.