Best of LinkedIn: Strategy & Consulting CW 18/ 19

00:00:00: Provided by Thomas Allgeier and Frennus, based on the most relevant LinkedIn posts about strategy in consulting from calendar weeks eighteen to nineteen.

00:00:09: Frenness is a B-to-B market research company supporting consultancies with the Market & Competition perspective for example in commercial due diligence or CDD.

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00:00:36: Right, so with that out of the way let's jump in.

00:00:38: Yeah exactly!

00:00:39: So you have to hold a training session to teach your employees how to execute your new corporate strategy while uh...your strategies already failed.

00:00:46: Oh

00:00:46: absolutely it is dead on arrival

00:00:47: right?

00:00:48: So today we are doing deep dive into the silent killers of corporate execution.

00:00:52: We're basically cutting through all the noise.

00:00:54: bring you top strategy and consulting trends across linkedin over past two weeks.

00:01:00: Yeah, and the mission for today is to really look under-the-hood of how businesses are actually operating right now.

00:01:05: Keep it smart keep it focused And you know just skip the fluff.

00:01:09: Exactly!

00:01:11: We're starting directly at The Foundation because I mean You cannot execute a highly complex M&A deal or like A massive AI transformation if your underlying corporate engine Is just sputtering

00:01:25: It won't work.

00:01:27: And that insight you just mentioned about the training session, That comes from Zulia Sakibu.

00:01:32: Zulaya makes an argument that strategy fails when execution isn't built into formulation form day one.

00:01:37: Okay let's unpack this because in a lot of board rooms you know formulation and execution are treated as two entirely different phases.

00:01:44: Oh

00:01:44: completely!

00:01:45: They're usually handed off to entirely different teams.

00:01:47: You have people who draw them out then they actually drive their car.

00:01:53: Are we saying the map makers need to be driving?

00:01:55: Well, it means a properly formulated strategy inherently contains its own execution guide.

00:02:00: Right The departments that will actually do the work they have to participate in translating That corporate vision into their operational reality while

00:02:08: the planning is happening

00:02:10: exactly during the planning phase.

00:02:11: Yeah because if they aren't in the room you get what Olga Patapsiva calls an operating model gap wearing a strategy hat.

00:02:20: I love that phrase!

00:02:21: It's so accurate, right?

00:02:22: She used omni-channel retail strategies as an example.

00:02:26: like they rarely stall because the high level planning was bad They scall Because there is fundamentally broken operating model underneath it

00:02:33: all.

00:02:34: So what does actually look for you if your working inside one of these companies Six months post-approval, the roadmap is built.

00:02:41: The executive sponsors are named but if you look closely digital marketing and physical operations Are all still running on their own legacy metrics?

00:02:49: Yeah They haven't changed the incentives.

00:02:51: Right

00:02:52: Marketing is getting bonuses for digital clicks.

00:02:54: Operations Is getting bonuses For cutting in store labor costs.

00:02:58: You have absolutely no shared definition of what good actually looks like across those silos.

00:03:03: No shared outcomes at all.

00:03:05: It is exactly like handing a team a blueprint for a skyscraper, but nobody agrees on who operates the crane.

00:03:11: Yeah or who pours the concrete?

00:03:13: Exactly!

00:03:13: Or how we even measure if foundation level.

00:03:17: And when you leave those misaligned metrics in place I mean The organization just begins to rot from inside If... We connect this with the bigger picture.

00:03:26: Zoe Carl-Wathaca Highlighted the four E's of corporate decline.

00:03:29: The Four Is Okay.

00:03:31: what are they?

00:03:31: Ignorance Inertia Individualism and infighting.

00:03:35: Wow,

00:03:36: yeah that sounds about right.

00:03:38: Let's just look at the mechanics of individualism over say a standard twelve month timeline.

00:03:44: Month one across functional project launches Month three, friction arises between departments because like you said their incentives just don't align.

00:03:52: Right marketing wants one thing ops want another

00:03:54: Exactly.

00:03:54: and by month six rather than elevating that conflict to leadership To actually get it resolved department heads retreat into their silos to protect their own P&L

00:04:02: to survive.

00:04:03: Yeah

00:04:04: And my month twelve.

00:04:05: the strategy is dead not because the market rejected It but because individual survival trumped enterprise success.

00:04:11: You

00:04:11: know I would argue that as a direct failure of leadership.

00:04:14: If department heads are retreating to their silos, the leaders aren't demanding the right

00:04:19: things.

00:04:20: That's fair point.

00:04:21: Rajesh Sethi shared a really honest reflection about this exact dynamic.

00:04:25: He realized that by trying to be the chief empathy officer, meaning he was acting as a shield To protect his team from corporate friction.

00:04:33: He was actually destroying their effectiveness.

00:04:36: He called it building organizational debt didn't they?

00:04:38: Right exactly By absorbing the friction of a struggling project himself You know jumping into snoo things over or just do the hard work for them.

00:04:47: He wasn't being a good leader.

00:04:49: He was subsidizing underperformance

00:04:51: and turning himself in to a bottleneck.

00:04:53: Exactly authentic leadership means raising the standard.

00:04:56: It means demanding clarity, forcing those tough conversations about misaligned metrics out into the open and frankly preparing your team to resolve conflict when you aren't in their

00:05:06: room.".

00:05:06: But

00:05:07: here is the trap right?

00:05:08: A lot of leadership teams realize they're internal operating model is bogged down by that exact individualism an inertia.

00:05:16: but instead doing a hard painful work to fix their internal engine They try.

00:05:23: they look to inorganic growth.

00:05:25: Oh, right!

00:05:26: They turn to M&A?

00:05:27: Yeah...they think if we just acquire or carve out this shiny new asset well that will fix our growth.

00:05:33: but

00:05:33: the reality of value creation and m&a and private equity right now is shifting incredibly fast.

00:05:39: I was reading what Hannah Twist brought up about carveout strategies.

00:05:42: she noted That you have to perfectly match The carve-out approach To the buyer type

00:05:47: because PE and corporate buyers view the exact same asset in completely different ways.

00:05:52: Exactly!

00:05:53: A private equity liar is looking for a clean path to independence, right?

00:05:57: They want day one readiness so they do not wanna rely on the seller's IT systems or HR departments a minute longer than necessary.

00:06:04: Right...they wanna cut the cord.

00:06:05: Yes

00:06:06: But a corporate buyer is often willing to pay a synergy premium meaning their paying extra because they assume that can merge the acquired company sales team with supply chain and save money.

00:06:18: And because of that, they expect to integrate the asset on their own terms usually in a much longer timeline.

00:06:47: Jay Hennig book calls pointed out that M&A value heavily depends on governance, but most integration models suffer from a mandate gap.

00:06:55: A mandate gap?

00:06:56: Meaning they don't have the power to do what needs to be done.

00:06:58: Exactly Committees are built to coordinate activity and schedule status updates.

00:07:03: They're not actually empowered To resolve the severe trade-offs that Hannah Twist was talking about.

00:07:07: So when a corporate buyer realizes their IT systems can easily swallow The new asset The government's board usually lacks the authority to make a hard, expensive pivot.

00:07:16: And we are seeing corporates adjust their entire acquisition philosophy because of this.

00:07:21: Sen, a Pidgett observed that India's M&A market has completely shifted away from opportunistic buying.

00:07:27: Yeah, corporates are deliberately buying for specific capabilities and scale To reposition their portfolios rather than just snapping up cheap assets Because they're there.

00:07:36: That makes a lot sense.

00:07:37: But on the private equity sign There are massive structural hurdles suddenly popping up in the math itself.

00:07:44: Eric DuVoisin highlighted a crucial Swiss federal Supreme Court ruling regarding LBO interest deductibility.

00:07:53: Let's pause on that debt pushdown structures.

00:07:56: We really need to be absolutely clear on the mechanics here.

00:07:58: Yeah, it is fundamental structural awareness point for anyone because it puts immense pressure on those debt pushdown structures.

00:08:07: Right, so normally a private equity firm buys a target company and they load the debt from that acquisition onto the Target Company's own books right?

00:08:16: The Target Company then has to pay interest on that debt which obviously lowers their taxable income.

00:08:20: It is very standard way to shield income from taxes.

00:08:23: But this Swiss court ruling basically said that the interest expenses linked to that Acquisition Debt had to be added back for tax purposes.

00:08:30: Wait really why?

00:08:31: Because the debt wasn't commercially justified but what the target company actually does for a living.

00:08:36: The deductibility analysis now has to be performed at the level of the merged entity based on its actual business activity

00:08:43: post-merger.".

00:08:45: Wow, that completely blows up traditional tax math for these deals?

00:08:49: It really does!

00:08:50: If you can't deduct interest your return on investment just plummets...

00:08:52: So What is this all mean when external global shocks hit those carefully planned deals?

00:08:58: because Corporate buyers struggling with mandate gaps, PE buyers facing regulatory attacks on their debt structures.

00:09:05: And all of this is happening while global supply chains are just fracturing.

00:09:09: Well,

00:09:09: geopolitics has no longer a background issue.

00:09:11: you can just hedge against.

00:09:13: Nicholas S. Lange and Andreas Parshak both stress that geopolitics is now central to strategy...

00:09:18: Central to it?

00:09:19: Yeah!

00:09:19: It's effectively core ESG issues right now.

00:09:21: Companies were having to build dedicated in-house capabilities

00:09:28: And you can see it in the numbers.

00:09:30: Look at the data from Gregory Daco, The Middle East conflict is already constraining US business profits and hiring higher input materials costs are forcing nearly a quarter of us firms to scale back their investment plans right now.

00:09:44: Yeah It's having very real impact.

00:09:46: But I have ask though Is this just temporary spike?

00:09:49: Because executives kind used waiting out geopolitical storms.

00:09:52: You know

00:09:53: Gina promotes perspective answers that pretty well.

00:09:55: She reminds me managing these risks isn't just about temporary protection or compliance anymore.

00:10:01: Taking an end-to-end view of geopolitical risk, really simplifying that complexity is actually how organizations grow with intent and speed today.

00:10:10: Ah!

00:10:10: So it's a growth lever not just a shield?

00:10:12: Exactly

00:10:13: the fragmentation is in temporary.

00:10:14: It Is The New Operating Environment period Right,

00:10:18: so to navigate these shrinking margins the fractured supply chains and the heavier tax burdens.

00:10:23: The entire consulting in private equity world seems to be reaching for the exact same life raft which is artificial intelligence.

00:10:30: Oh of course everybody's talking about AI

00:10:33: But based on the insights from the past two weeks, most boardrooms are completely miscalculating how AI actually impacts the bottom

00:10:40: line.

00:10:40: Yeah Mark Byershoder provided a really harsh reality check on that.

00:10:44: he pointed out that ninety percent of companies expect AI to reshape their business model but only five percent are actually using advanced egentic systems To redesign there end-to-end processes.

00:10:56: Five percent!

00:10:57: That's massive gap

00:10:58: It is.

00:10:59: The vast majority of companies are confusing higher adoption rates with true transformation.

00:11:04: They think that because, you know their employees or using co-pilots to write emails faster the company's transforming.

00:11:11: But if the company itself isn't working differently If the workflows and layers decision making Are exactly same as they were in twenty nineteen it Isn't a transformation.

00:11:20: No its just productivity tool.

00:11:22: And if you are sitting in a boardroom right now looking at an IT budget and assume your AI costs will scale linearly just like old software licenses did, You're walking into massive financial blind spot.

00:11:33: Oh Nadine Charlon issued a stark warning about exactly that!

00:11:37: She talked the five-year IT Budget Gap regarding AI runtime costs.

00:11:42: Because it's not like sauce.

00:11:44: Exactly Think of traditional sauce products...you pay flat fee per user.

00:11:50: If that user logs in once a month or one hundred times per day, your cost remains flat.

00:11:54: Right.

00:11:55: Predictable

00:11:55: But AI does not work this way.

00:11:57: Every single query every autonomous workflow an agent executes overnight generates compute costs.

00:12:04: Your costs scale with usage and complexity Not by headcount.

00:12:07: Wait but computing power gets cheaper each year right?

00:12:10: Moore's law isn't just temporary pricing problem until the hardware catches up.

00:12:14: Well... The underlying compute gets cheaper yes But the complexity of tasks we are asking agents to perform is growing exponentially.

00:12:22: Moving from a co-pilot that drafts an email, To autonomous agent who audits whole supply chain.

00:12:26: That means massive spike in token usage and processing time

00:12:30: which brings up the existential debate happening in the advisory profession right now.

00:12:35: Sahil Perry pointed out that AI absolutely automates research, benchmarking and market sizing used to take junior consultants weeks to build.

00:12:44: Right!

00:12:45: The grunt work.

00:12:45: Exactly but the true value of consulting remains purely human.

00:12:50: It is the judgment, it's having a hard-earned experience to look as CEO in the eye and tell them that this question they are asking isn't actually what they need answered.

00:13:00: Ben T Smith took that logic even further.

00:13:03: he completely dismissed the dorm room debates that AI will kill the consulting industry.

00:13:08: Really?

00:13:09: How

00:13:09: so?

00:13:10: He argued because AI increases effectiveness of consultants.

00:13:14: demand for them would grow If the tools allow a consultant to deliver three hundred percent more impact in the same amount of time.

00:13:21: Enterprise demand for that impact is essentially uncapped.

00:13:24: I mean, i get That but I am kind of skeptical that human judgment will remain completely insulated.

00:13:30: There Is A dark Side To All This Cognitive Offloading We're Doing.

00:13:33: What's Fascinating Here Is Sol Rashidi'S Warning About what She Calls Intellectual Atrophy

00:13:39: Intellectural Atrophy.

00:13:40: Yeah AI Is Quietly Eroding Our Tolerance For Hard Problems When you reach for an AI tool.

00:13:47: before you even attempt to think through a complex problem yourself, You begin to lose your critical thinking skills.

00:13:54: So we're just getting lazy?

00:13:56: Essentially yes!

00:13:57: Her advice is to outsource your tasks but never outsource Your Thinking.

00:14:01: But what happens when a company loses its tolerance for hard problems?

00:14:05: As AI scales from being a simple assistant into these autonomous agentic AI systems, the technological foundation of a company is data.

00:14:13: It's enterprise architecture that becomes the ultimate battleground for revenue.

00:14:17: Yeah.

00:14:17: Neha Cabra shared a fascinating look at how Agentic AI directly threatens core banking revenue pools by destroying what is known as The Friction Gap.

00:14:26: Okay, here's where it gets really interesting.

00:14:27: The friction gap is one of the most reliable profit engines in the world right?

00:14:31: For decades retail banks have profited immensely from the fact that customers are busy and frankly a bit lazy.

00:14:38: think about the trillions of dollars sitting in checking accounts yielding zero point one percent interest

00:14:43: making nothing

00:14:44: Exactly.

00:14:45: Those customers could move their money to a high yield account making five percent, but you know filling out the forms and changing their direct deposits takes effort.

00:14:54: The bank literally relies on the customer's own inertia To maintain their profit margin.

00:14:59: But

00:15:00: AI agents do not have inertia.

00:15:02: they can instantly compare rates read the fine print And move that money autonomously in milliseconds They systematically destroy that friction gap.

00:15:10: Wow Yeah, Nat West in the UK is already launching guidance apps inside ChatGPT.

00:15:16: The decision of where a customer puts their money is now forming way upstream before they ever even interact with traditional banking channels.

00:15:22: But we are unleashing these autonomous engines to manage our money, order code and run our processes but don't actually have guardrails yet.

00:15:30: Evan Benjamin shared data showing that sixty-three percent organizations cannot enforce purpose limits on AI agents.

00:15:37: Sixty three percent.

00:15:38: That is a staggering governance failure

00:15:41: it isn't?

00:15:41: I mean

00:15:42: most companies are still relying entirely on identity controls.

00:15:45: They ask can this specific agent access?

00:15:49: This specific database?

00:15:50: It is the difference between giving a valet The keys to park your car versus giving them the keys and realizing they could also drive into Vegas And sell it

00:15:59: exactly.

00:16:00: we're giving AI agents the keys toward enterprise systems without defining the destination.

00:16:05: Regulators require purpose controls.

00:16:08: They want to know, is this agent permitted to read the specific customer record for a specific purpose at that time?

00:16:16: Right now agents have broad access to systems but lack those records level boundaries.

00:16:21: The solution always comes back with underlying architecture.

00:16:23: Arvin Morely when he was summarizing takeaways from Informatical World in twenty-twenty six noted that enterprise conversation has entirely shifted from AI For Data to data for AI Meaning

00:16:33: the data foundation had come first.

00:16:34: Exactly, an AI agent needs metadata.

00:16:38: It needs trusted identity.

00:16:39: it needs trusted context.

00:16:41: if your enterprise data is a mess Your AI agents will hallucinate.

00:16:45: they will make catastrophic decisions and the trust in your operating model Will just completely break.

00:16:50: Christian Rausch echoed this perfectly regarding SAP cloud migrations.

00:16:55: so many executives still treat A cloud migration as a tedious IT checkbox.

00:17:00: But keeping a clean core is no longer just about IT discipline.

00:17:04: Let's

00:17:04: define what a clean-core actually means in this context, because it's important.

00:17:08: Imagine buying a standard house and custom wiring at yourself so heavily over twenty years that when the power company tries to update the neighborhood grid your house catches fire?

00:17:18: That's great analogy!

00:17:19: Right

00:17:20: – A Clean Core means sticking to standard non customized processes

00:17:23: Because without that clean core autonomous AI agents cannot function.

00:17:28: If you have twenty years of heavily customized legacy code holding your supply chain together, an AI agent cannot plug into it without breaking it.

00:17:35: A clean core is the fundamental price-of-admission if you want to operate a model that can survive for five more

00:17:39: years.".

00:17:40: And all this connects back with the foundation Zelya Sakibu mentioned at very beginning our deep dive...

00:17:45: Right!

00:17:45: The strategy and execution link.

00:17:47: Exactly…if infrastructure is flawed, intelligence layered on top will be flawed too.

00:17:54: Which actually brings me to my final thoughts from Doug Shannon.

00:17:58: He pointed out that AI is no longer just a tool, it's quietly becoming infrastructure much like the global highway system.

00:18:06: The danger isn't to sci-fi robot apocalypse...the real danger is humanity gradually outsourcing our operational judgment into systems we simply stopped questioning because they have become the default.

00:18:19: That is a terrifying but incredibly important point because if AI is shaping our supply chains, or procurement and corporate governance we have to ask an uncomfortable question.

00:18:30: Whose cultural norms?

00:18:31: Who's laws?

00:18:32: And whose risk tolerances are you blindly accepting into your operations when you turn those systems on?

00:18:36: Exactly!

00:18:37: Are you actually running your own business or just renting the judgment of engineers who train infrastructure?

00:18:43: Definitely something to think about before your next graduation meeting.

00:18:45: Absolutely!

00:18:45: Well, if you enjoyed this deep dive new deep dives drop every two weeks.

00:18:49: also check out our other editions on private equity venture capital and M&A.

00:18:54: Thank You so much for joining us.

00:18:55: don't forget to subscribe And we will see you next time.