I’m pausing The Narrative Field Guide for a bit.

I’ve been working on a big upgrade, and to really dial things in, I need to step back from writing for a spell.

In fact, the upgrades I’m making to the newsletter are just part of a bigger investment I’m making back into my consulting business (hint: that homemade website from when I first got started is way past its shelf life).

It’s a big undertaking for me, and I don’t want to make compromises by taking on too many things at once. Hence, a break.

I’m pumped. What started as a fuzzy idea a couple years ago has now evolved into something hyper-focused. I can’t wait to share it with you.

See you soon,

John Rougeux

Not the past as in history lessons, but the past as in the unique experiences that each of us have, which inform and influence how we think and act today. Especially as business leaders. I wanted to grapple with how the past impacts the prospects of our future, because I’m hopeful that if we can understand it better, we can manage it better.

Most people see the past as a negative thing.

We’ve all read about that CEO doing something (or failing to do something) that seems utterly boneheaded from the outside. It probably is. It happens when something about the past created so much inertia, had so much gravity, wired itself so deeply, that things simply couldn’t have gone any other way. Strange, isn’t it? As humans we pride ourselves on being highly rational creatures, yet our conditioning from the past often forces us to act in highly irrational ways.

But if the past can have such a hold on us, can we do anything about it? Is it possible to take this same negative energy that pulls us backwards, and redirect it towards growth?

Terrified

For most of my life, the idea of being in sales terrified me. Sales, as I understood it, was something for the highly charismatic. For a special breed of people who possessed mage-like abilities to persuade, cajole, and woo. Definitely not me. I didn’t create that belief from some traumatic sales experience, though. It was just this general idea I had slowly formed through movies, TV, and culture. But seeing sales as something for “other people” held me back for a long time. It was a big reason I hesitated to go into consulting for myself. How could I survive if all my income relied on my ability to “sell?” The past had defined what I thought I was capable of, even though I was making conclusions based on osmosis, not direct experience.

But it turns out my situation is quite common. Because every client I’ve worked with has dealt with something similar.

For example, a brand I’ve been working with had, for years, been operating under the assumption that being “bold” would lead to bad things. There had been no crisis or PR blunder in the past. No trauma to shock the system into defense mode. It was just how everyone else in their industry operated, and that perspective had eventually become hardwired in the organization’s DNA. This “past” led them to a place where they looked and sounded like all of their competitors. They didn’t like being seen as a commodity, but they didn’t think that anything else was possible.

Or take early Intel. Decades ago, Intel was a highly successful provider of memory chips. It was “who they were.” They happened to make some microprocessors, but that was just a side business, subordinate to everything else. When the memory chip business became decimated (thanks to Japanese competitors who could undercut them on price) profits evaporated. But despite the red ink, Intel still thought of itself as a memory chip company. While Intel eventually forced itself to see reality and move into microprocessors, it only happened through some serious handwringing.

You don’t have to look far to see this happening now, though.

Consider SaaS. Every SaaS business has operated under the assumption that seat-based, subscription-based pricing is just how you’re supposed to operate. Some have even relied with this model for decades. Yet, even as “software” is being redefined to mean something else entirely (thanks to AI), and the legacy pricing model may no longer be tenable, there will be a huge swath of SaaS businesses who simply cannot adapt, despite knowing that their existence depends on it.

Sometimes we let the past put such a strong grip on us that we’re frozen.

I’m guessing you’ve experienced this personally. As a leader in your business, there’s something you know you should do, but can’t. You know it makes sense. You know that there will be negative consequences if you don’t. Yet the decision still sits there, unmade, like some apparition that keeps haunting you.

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Dual Polarity

But negative conditioning from the past doesn’t explain the full picture. The past has a dual polarity.

It can cast a negative light on your perspective, or a positive one.

Here’s the other thing I didn’t tell you about my sales journey. The first major deal I pursued, I won. And no, it wasn’t an inbound lead from someone ready to buy. It was cold outreach. That client went on to be worth multiple six figures. I would be lying if I didn’t say that winning that deal felt pretty damn good. But here’s what mattered more: that positive experience of winning the deal is just as much in my “past” as was all the negative conditioning about “not being a salesperson.” Half of my experience with sales was conditioned through a negative polarity (”I’m not capable of that.”). The other half was conditioned through a positive polarity (”I am capable of that.”) Where I ended up mattered more than where I started.

Think about what would happen if prior conditioning had no effect on us.

If that were true, we would never achieve anything worthwhile. Why? Because positive conditioning is what helps us push through adversity. I haven’t won every single deal since that first one. I have lost many. But because the past conditioned me to believe that I’m capable of closing big deals, I don’t get very frustrated when they go sideways. It’s simply something that has happened, not a reflection of my abilities or what will recur in the future. But without that positive bias I gained from past experiences, I might give up too soon. Or I might fail to put in the necessary effort to prep for sales calls, simply because I didn’t think success was even possible in the first place. What would be the point?

The Past Is Not Something That “Happens” to Your Business

The past can have a positive or negative polarity, but is there more to it? There’s another aspect to the past that most people overlook altogether.

The past isn’t something that happens to us. It’s something we create (maybe not all of it, but enough of it). And because we create it, we have control over it.

I love to mountain bike. Part of my hobby includes going to the downhill bike park, which is essentially a ski resort converted to a series of bike trails for use in the summer. These trails come with hazards: massive jumps, with big gaps between the takeoff and landing. Come up short of the landing and you’ll crash into the backside. Go too far, and you’ll land on a flat stretch, which usually ends badly. Lose control at any point while you’re in the air and it’s also ugly. All of these things have happened to me, on multiple occasions (I can show you the scars.) But the first thing I do after a crash is go off another jump as soon as possible. I know, it sounds unwise. But the reason I do it is to re-condition my perspective of jumping from a negative to a positive polarity as soon as possible. If I let a crash dwell in my head for too long, it will start to take hold of my confidence. Better to “flip” that polarity while I still can. Otherwise, I’d probably be too scared to try again.

I don’t see why business is any different.

Whatever you’ve been experiencing as a negative polarity can also be flipped. Maybe not in a single go. But what you can do is start to change that charge by degrees. You can do one thing that counters the negative perspective you’ve developed, and use that as a positive reinforcement signal to try it again. Maybe with slightly higher stakes.

For that brand that can’t see itself as “bold,” going for a complete identity change all at once would likely be too much, too soon. But what they can do is “try out” that bolder stance in a low-consequence way, maybe in a blog post or in ad copy that just a few people will see. If the world doesn’t explode, then hey, that’s positive feedback to keep pushing. Before long, they will have reconditioned themselves from seeing bold as “impossible and undesirable” to “who are we, and proud of it.”

Intel did this exact thing, actually. They wound down the memory business, by degrees, over the years, eventually devoting themselves entirely to microprocessors. Hard, but possible.

Avoiding Stasis

So now that we can see our propensity to be conditioned by the past for what it is (a survival mechanism, not a character flaw), we can treat it with more objectivity.

The same force that creates inertia is the same one that pushes us through difficult periods, just in reverse. Without that force, your life, and your business, would be static.

If your business is being held back by the past today, the only reason is because you are letting it. Since you can actively create “new pasts,” you can change the polarity of your team’s experience from something that pins you down to momentum that carries you forward. This isn’t just possible, it’s your responsibility. Because how else will things change?

Sometimes I wish we operated differently.

It’s heart wrenching to see a client know they should take action, but wrestle with the decision for longer than they should, stress out, lose sleep over it, and frustrate their team, before finally making the call. It’s hard for me personally, too. Often there are times I can see what I need to do for my own business, but I’m hamstrung by beliefs that have little to do with reality.

But I’m trying to look at things differently. I hope you can, too.

Whether your past keeps you from stepping forward or provides the very momentum you need to do something bold, depends only on how you treat it.

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As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can connect with John on LinkedIn.

Shouldn’t the company that claims to be ushering in the era of AGI and superintelligence, the company with access to more AI thinking power than any enterprise in history, be able to avoid such strategic blunders?

Yes, we know all the reasons given for Sora’s shutdown: the product was losing millions of dollars per day, OpenAI needed the resources it was consuming for other priorities, usage was tanking. The decision to kill Sora shouldn’t have been a difficult one.

But the thing I keep puzzling over is why did OpenAI ever think Sora was a good idea in the first place? Shouldn’t ChatGPT, with all its “wisdom”, have been able to steer the company clear of such a dumb strategy before it ever saw the light of day?

This sounds unfair, you might be thinking.

Given enough time, OpenAI’s models will improve so much that poor strategy will be a thing of the past. Surely this is just a limitation of the current state of the art, and thing will improve once AI models become more intelligent.

And you’d be right. That would be an unfair critique.

Except that strategic decisions were never an intelligence problem. Being intelligent helps, but answers to strategic questions will never reveal themselves through computational power alone. Because fundamentally, strategic decisions are a judgment problem.

There are many aspects to judgment, but perhaps the most important one is “why?” As in: why are we even in business? To answer that, you might need dig deeper with more judgment-based questions, like:

• What problem are we really trying to solve?

• Who are we trying to solve it for?

• What contribution are we making to the world?

• Why does our business need to exist when there are others like us?

• Why is important that we succeed?

If you ask AI for answers to those questions, it will most certainly provide them. So can that magic 8 ball you got as a birthday present back in 6th grade. But getting an answer isn’t the point. Knowing if the answer is correct is what matters.

And that’s why I stay so optimistic.

Access to good judgment has nothing to do with how much money you’ve raised, your profit margin, or how many tokens can spend with Claude Code. It has nothing to do with how long you’ve been in business, the industry you’re in, or where you’re headquartered. With the language you speak, whether you’re remote on in-office, or whether you sell GPUs, cheese curds, or transmissions.

Access to good judgment depends only on your willingness to seek it. That’s why I’m optimistic: your real competitive advantage is something you already have.

OpenAI didn’t make a dumb decision because it needed a better AI model to tell it what to do. It made a dumb decision because it failed to use good judgment.

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What else is going on:

• We just got back from Crested Butte, and I still think spring skiing is underrated. Slush may not be as good as fresh powder, but there’s just something liberating about skiing in a t-shirt.

• I’m attempting to read Europe Central by William T. Vollmann. I say “attempting” because it requires real effort. But I like the idea of trying to understand an artists’s mind, and this book makes me do that.

• Proud dad moment. I got my 13-year old to listen to 30 minutes of Bob Dylan with me in the car without complaining. I think she may have even liked him a bit. Time will tell.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can connect with John on LinkedIn.

Most people get this backwards.

They want major decisions to be easy. They forego the difficulties of discernment and debate, then act surprised when efforts to execute that decision evaporate into the aether.

The media loves to portray successful CEOs as the Platonic ideal of wisdom and clear-headedness. As though that decision to pivot the firm, pull off an acquisition, or make that “bet the company” move were made as easily as picking off the lunch menu. Rarely do you hear about the consternation, the sleepless nights, or the debate with a colleague that got ugly. Those difficulties are for a lesser breed of executive. Or at least that’s how the media sees it.

Yet if you’re dealing with a major decision now, the path in front of you looks anything but clear. Whatever choice you make brings tradeoffs and risks. You may have a point of view, but your CFO is advocating for an entirely different response. Your board doesn’t even understand the problem.

Are they wrong? Or is it you?

The Choice That Never Happened

Years ago, an employer of mine was at a crossroads. The business had tapped out its target market and revenue hit a plateau. On paper, the choice was straightforward: build new products for the same market, or expand the existing product into new markets? But the answer wasn’t. Building a new product would have required outside investors, which the company hadn’t taken on before. Taking the existing product into new markets was unproven; was there even demand?

The CEO was excited about both, but there was never a real, thoughtful discussion around what to do.

We ended up straddling: some mild product improvements (nothing innovative) and a half-hearted attempt to push into adjacent markets. Neither got the investment it needed. When things got difficult, we pulled back. Today the company is in the same place as it was all those years ago: same product, same market, same revenue. The problem wasn’t that we didn’t see the issue. The problem was that we never put enough energy into the decision process itself.

No energy in means no energy out.

In metallurgy, there is a technique called friction welding. You take two rods of steel, rotate them along their axes at high speed, and hold the ends together. The friction heats the metal and fuses it together.

Spin the metal too slowly, though, and nothing happens.

The decision you’re working through right now is no different. Your decision won’t stick unless you’re committed to it. Unless you go all in. Unless you create the heat that fuses your choice into action. That heat will never come if you put the choice aside. If you never wrestle with its consequences or try to have it both ways by splitting your efforts.

That debate you just had with your executive team isn’t a sign of weakness, it’s a healthy sign that you understand the gravity of your situation.

But not all friction is created equal.

Two Types of Friction

Sears used to be the retail powerhouse. When Edward Lampert took over in the 2000s, he pitted each line of business against the others. Clothing, tools, and appliances all had to compete for internal resources. The idea was that by creating internal competition, each unit would become healthier and stronger.

Except that Sears had a bigger problem. Retail was moving to e-commerce. For Sears, making such a shift would have required massive internal coordination. But too much infighting, too much debate, and too much misalignment kept Sears stuck in the 1900s. Today most shoppers have forgotten Sears altogether.

Internal combustion engines are a lot like Sears.

If you fail to lubricate the engine, heat will build up and create friction. Eventually that friction will seize the engine.

At Sears, internal friction seized the entire operation, and it was left with no room to maneuver. This is why you must understand what kind of friction you are creating:

Discernment friction creates the energy that turns decision into action.
Operational friction creates the energy that stops a business in its tracks.

When The Stakes are High, Add Heat

When Satya Nadella took over the CEO role at Microsoft in 2014, the future of the business was uncertain. Microsoft had already missed the boat on mobile and search, and was fixated on Windows and Office. Instead of jumping into action, he sought friction. In his book, Hit Refresh, he wrote:

“I knew that to lead effectively I needed to get some things square in my own mind — and, ultimately, in the minds of everyone who works at Microsoft. Why does Microsoft exist? And why do I exist in this new role? These are questions everyone in every organization should ask themselves. I worried that failing to ask these questions, and truly answer them, risked perpetuating earlier mistakes and, worse, not being honest.”

The decision you’re facing now won’t be solved by putting it on the back burner.

It needs more heat than that.

Maybe it’s time to stop avoiding friction, and time to start creating it.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can connect with John on LinkedIn.

They conflated artifact and belief.

Artifacts are what you produce.
Belief is your willingness to act on it

Most brands only focus on the former. And when they do, they waste millions.

I wanted to understand what had happened, so the client pulled their brand work out of the dust bin and let me have a look. On first glance it looked decent enough. They had built a thorough brand narrative that tied together their origin story, core beliefs, and brand ideals into a thoughtful articulation of who they where. All presented in a slick, well-designed document of about 100 pages. If it failed, it certainly wasn’t for lack of effort or workmanship.

Why isn’t this working for you? I asked.

The problem was that no one believed in the work. Because the narrative was created in a vacuum. It was built by a recently formed “global team,” charged with capturing the brand’s essence across the variety of countries and cultures where they worked. But this “global team” had little connection to the organization itself. It operated in a silo, with little accountability and even less ability to actually drive change across the organization.

They did their job. Mission accomplished.

But it was the wrong mission. This “global team” was simply asked to produce an artifact. Which they did. Once completed, the group was disbanded, leaving their work without an owner or any plan to implement it. The result was an orphaned artifact. It represented the views of a committee that no longer existed, and had no owner to shepherd it to execution.

This is why strategic narrative work should never be about the artifact itself.

It should always be about changing the way an organization thinks: to build shared belief about who it is and who it wants to become. Brands don’t live out a strong point of view because the artifacts they produced had that extra bit of polish. They do so because they put in the effort to decide who they really were. The artifact is simply a way to capture that.

Now, I’m working with the client on starting over.

But our focus isn’t on the document itself. It’s on the intangible belief-building work that really matters. That work doesn’t come from clever copywriting. It comes from hard conversations. Difficult questions. Forcing choices. Challenging thinking.

Every business reaches points where it needs to realign on its aim.

When that time comes for you, remember: the artifact is simply a way to capture the identity, beliefs, and points of view that you’ve already solidified internally. Rushing straight to the artifact is certainly easier in the moment. But you’ll only end up with wasted time, less cash, and a fancy document that no one ever reads.

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As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

• I went to a Denver meetup for the Acquired podcast, a show for strategy nerds if there ever was one. Expecting middle-aged consultants- or business-type folks to show up, I was taken aback to find a room of product managers, data scientists, and PE players, mostly in their 30s.

• I introduced a new strategy framework to one of my clients this week. Of course, the CEO was pumped to lean in. But the first people to dive into the material and ask thoughtful questions weren’t senior business leaders; they were engineers.

• An acquaintance of mine is the CEO of a popular startup community. Startups aren’t “supposed” to care about strategy; they are “supposed” to be scrappy and focus on executing. But a recent newsletter of his flipped that script, calling for the “Age of the Strategist.”

Any of these things on its own would have been interesting, but taken together, I am starting to see a theme emerge: people are craving things that help them make sense of the world. And strategy is how you do that.

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Why sense-making matters more in 2026

Here’s a simple way to think about sense-making.

Many years ago, my wife and I thru-hiked the Appalachian Trail. Georgia to Maine, all 2,000+ miles. The key thing about the Appalachian Trail is that the entire path is already laid out before you. You can even buy books that give you mileage markers for every water crossing, campsite, and mountain peak.

The Appalachian Trail is a stable environment. There’s no guessing about where you are or where you should head. You simply hike. You don’t need to overthink the Appalachian Trail; you don’t need to make sense of it. Put one foot in front of the other for long enough, and you’ll succeed.

This is the same for business.

Strategy Isn’t Indulgent; It’s Necessary to Avoid Executing the Wrong Things

When the world around you is stable, sense-making and strategic thinking can feel indulgent, or even unnecessary. You don’t need to overthink your plans, just execute. Executing faster than your competitors helps a lot.

But when the world becomes unstable, trying to “out execute” doesn’t help you. You must make sense of your environment before you can focus on action. Otherwise, you’ll send yourself right into a ditch.

Your competitors would love that.

In stable environments, speed to execution wins.
In unstable environments, speed to clarity wins.

This is why there is a growing appetite for strategy right now. The world is unstable. If you haven’t noticed, AI is exciting, frightful, an economic boon, a harbinger of unemployment, overvalued, undervalued, a silly distraction, a powerful way to drive productivity, a death knell for some companies, and an opportunity for others, all at the same time. Wars, K-shaped economies, and a weird employment environment don’t help either.

As instability increases, so does the need for sense-making.

In business, good tactics and executional prowess are always valuable, but they don’t help you make sense of the world. Strategy does. And right now, your business will win not from speed to execution alone. That’s only the price for admission, especially as execution gets cheaper every day.

Your business will only win from having speed to clarity.

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As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

And today, we’re only seeing more of it. Not only does AI make it easy for anyone to weave a compelling narrative of the future that seems airtight, but sensational content is also the very kind of material that algorithm-driven content platforms reward. False intel can pose a huge danger to executives working on strategy (that’s you), because it can lead you down some dark alleys:

• You respond to threats that don’t really exist.

• You pursue opportunities that aren’t actually feasible.

• You base decisions on conjecture, not fact.

• You create a false mental model of the world, without even realizing it.

False intel is so pernicious because it’s hard to spot. It can sound a lot like legitimate journalism or actual critical thinking through the use of statistics, jargon, and sheer length.

So how do you tell the difference?

Today, I’m sharing three tools you can use: Vibe Reporting, Digital Ick, and Astonishment. And we’ll use them on a piece that caused quite the stir about AI last week to show you how they work. My goal is equip you to call out nonsense on the spot, so you can build your strategy on fact, not fiction.

The Test for False Intel

When The 2028 Global Intelligence Crisis was published last week, it went viral, getting coverage in The Wall Street Journal in the process. It was even credited for triggering a selloff in the stock market. This “forecast” is presented as a report from 2028, looking back on how AI developments unfolded to cause massive unemployment, economic regression, and civil unrest. It’s 7,000 words of sheer terror. Terrorizing, because despite its doom and gloom, it sounds just plausible enough to be convincing. For a moment, I even considered liquidating my entire portfolio and holding cash for a while. (I didn’t.)

If you haven’t read it yet, go take a look now.

So how do you tell if works like this are useful models of the future, or sensationalism designed to drive virality? You need a test.

And fortunately, I found a great one. It comes from Cal Newport, the best-selling author behind books like Deep Work and Digital Minimalism. Cal has three tests you can run to see if the content you’re reading is legit (these come from episode 391 of his podcast, so I’m paraphrasing):

1. Vibe Reporting. When the author creates a false sensation that something is true. They’ll put loosely related quotes together and omit important details, implying a strong relationship. For example, if a story about Amazon’s layoffs appears next to a quote from CEO Andy Jassy about the potential of AI, it sounds like AI is causing those layoffs. In reality, Amazon simply overhired during the pandemic and is recalibrating.

2. Digital Ick. This is when the author presents an unsettling edge case in the hope of making a more general impression. For example, an AI agent in MoltBook recently created a religion called the Church of Molt. That’s icky. If you didn’t know that this behavior was likely prompted by a human, you’d likely feel icky about AI agents in general.

3. Astonishment. Sometimes authors can short-circuit your ability to think critically by presenting such incredible ideas that you’re simply left in awe. That’s astonishment. Anytime you see a YouTube video of “AI Secrets Sam Altman Doesn’t Want You to Know” or stories about AI superintelligence taking over humanity, Astonishment is at work.

The common thread with these techniques is that there is just enough truth in them to make them feel plausible. Most readers won’t notice the omitted information or have the time or energy to recognize flaws in the logic.

Let’s apply these tests to The 2028 Global Intelligence Crisis to see how they work.

Vibe Reporting: Isolated Changes Result in Economic Contagion

The piece consistently highlights specific negative outcomes that may occur as AI adoption accelerates, while completely omitting any positives that may result. Take a look at these snippets:

SaaS fallout causes white-collar collapse: We spoke with a procurement manager at a Fortune 500. [He told a SaaS vendor that they’d] been in conversations with OpenAI about having their “forward-deployed engineers” use AI tools to replace the vendor entirely. They renewed at a 30% discount… Software was only the opening act. The same logic that justified ServiceNow cutting headcount applied to every company with a white-collar cost structure.

The implication is that cost-cutting in SaaS leads to the widespread collapse of the white-collar labor market. There’s simply no evidence for that. What’s also missing is any mention of the new ways such enterprises could create new value with such savings. A technology like AI isn’t merely an efficiency driver, yet the article treats it as such.

Here’s another one:

The federal government isn’t capable of reacting: The system wasn’t designed for a crisis like this. The federal government’s revenue base is essentially a tax on human time. People work, firms pay them, the government takes a cut. Individual income and payroll taxes are the spine of receipts in normal years. Through Q1 of this year, federal receipts were running 12% below CBO baseline projections.

This leaves out the fact that income tax is just one lever the government has. There’s no mention of changes to corporate income tax. And although it later concedes that there could be a tax on AI itself, the authors speculate that such a tax would be stalled by government gridlock. That’s rarely how governments act in emergencies, though.

Such Vibe Reporting falsely claims that negative outcomes for one sector (e.g., SaaS) will cascade into a series of negative second-order consequences for everyone else in the economy.

That’s like arguing that the demise of the disk drive industry in the 90s would later doom the PC market in the 2000s. When causality is merely suggested, that’s Vibe Reporting.

Digital Ick: Gut Over Brain

The 2028 Global Intelligence Crisis loves to take neutral (or even beneficial) things and repackage them in an uncomfortable way. There were too many examples to include, but here are two of the worst offenders:

Agents never stop (humans do): The part that should have unsettled investors more than it did was that these agents didn’t wait to be asked. They ran in the background according to the user’s preferences. Commerce stopped being a series of discrete human decisions and became a continuous optimization process, running 24/7 on behalf of every connected consumer.

This sounds like AI is going to wrest control over our lives, making purchasing decisions for us and taking over our agency. Well, that’s already the case with things like auto-pay, subscription services, or the index fund in your 401k. Those aren’t negatives, they’re conveniences. The article suggests something sinister that’s not really there.

Human relationships are expendable: Financial advice. Tax prep. Routine legal work. Any category where the service provider’s value proposition was ultimately “I will navigate complexity that you find tedious” was disrupted, as the agents found nothing tedious.... We had overestimated the value of “human relationships.

This one is especially icky because it pokes at one of the most fundamental tenets of society: humans need each other. Instead, it suggests that human relationships were really just inconveniences all along, and AI is ready to exploit that. AI shifts from a mere threat to employment to a threat to humanity itself. Later in the report, when we read that AI has destroyed the economy, we’re not even surprised.

Digital Ick is a powerful rhetorical device because it forces you to react on gut instinct, not think with your mind. But in this piece, it’s amplified. By presenting this report as a 2028 future state that has already happened, its claims feel much more real than those of a mere forecast.

Astonishment: No Justification Needed

I was surprised at how often these technique was used. Consider the quotes below. Does your mind slow down to think critically, or does it switch to panic mode, wondering what might happen if these came to bear?

This is the first time in history the most productive asset in the economy has produced fewer, not more, jobs. Nobody’s framework fits, because none were designed for a world where the scarce input became abundant.

By March 2027, the median individual in the United States was consuming 400,000 tokens per day - 10x since the end of 2026.

AI capabilities improved, companies needed fewer workers, white collar layoffs increased, displaced workers spent less, margin pressure pushed firms to invest more in AI, AI capabilities improved…It was a negative feedback loop with no natural brake.

It should have been clear all along that a single GPU cluster in North Dakota generating the output previously attributed to 10,000 white-collar workers in midtown Manhattan is more economic pandemic than economic panacea.

The exponential steamrolled our conceptions of what was possible, even though every year Wharton professors tried to fit the data to a new sigmoid.

Two years. That’s all it took to get from ‘contained’ and ‘sector-specific’ to an economy that no longer resembles the one any of us grew up in.

Astonishment claims do one thing really well: they relieve the rest of the article from having to justify itself. By painting a vision of a future that’s so far beyond what exists today, the authors can simply claim that we lack the mental models and frameworks to understand them. It’s circular thinking that doesn’t actually provide proof of anything.

The Truth Matters

If you’ve read The 2028 Global Intelligence Crisis, go back and re-read it through this new lens. Is it just as convincing? The challenge with pieces like this is that they contain kernels of truth. It’s not pure speculation. But beneath many established facts lies a poor chain of reasoning. That’s much harder to spot. The test we used from Cal Newport isn’t comprehensive, but it’s a good sniff test to see whether what you’re reading should be taken at face value.

Remember, strategic thinkers must seek the truth.

They must know the difference between logic and fantasy, between judgment and wishful thinking. And right now, the truth especially matters. New AI-first competitors are entering the market; your own business is still getting its arms around using AI itself, and no one is really sure if the economy is healthy or on the brink of something else.

The truth is your friend. Convenient answers or “sure things” are not. Next time a viral piece hits your inbox, run these tests, take a deep breath, then work on your strategy.

I understood why he loved it. We were a small tech company, competing against large, well-funded competitors. It was the sort of rallying cry that made you feel like you had a fighting chance, imbuing a “David vs Goliath” spirit within the team. Who could argue against that?

Well, I’m going to. And that’s what makes this difficult to write. Maybe even difficult for you to read.

The COO’s favorite saying may have sounded pithy. But it was a delusion. It was a delusion because it only captured half the picture of why businesses win and lose. To tell you about the other half, I’m going to rely on Hamilton Helmer, the genius behind the 7 Powers framework. To Helmer, winning requires two ingredients: strategy + operational excellence. To paraphrase his definitions:

• Strategy: the game plan for gaining a meaningful, durable advantage over competitors.

• Operational excellence: your ability to execute with speed, precision, and quality.

Helmer is clear on this: you need both.

And this is why that plucky quote from my COO haunts me. It only looked at half the picture. And that same myopic view is how I’ve come to see too many businesses operate. They fixate on tactics, failing to understand or even notice the other half of the equation. No better example of this comes from the rabid response to the dreaded LinkedIn Swipe File. You’ve seen them. The author will pick a big, heavy-hitting brand, then break down every aspect of their marketing funnel, website design, copywriting system, or brand identity.

There’s a promise that’s implied: follow these tactics, and you’ll find success, too.

It’s not that there isn’t anything to be learned from these deconstructions. The problem is when interesting examples of tactical success get conflated with sure-fire recipes for business outcomes.

OpenAI, Adobe, Netflix, Nvidia, and SpaceX all possess operational excellence. So do thousands of other businesses you will never hear about. And you never will because that’s all they have. Without a good strategy, the best execution of sales, marketing, and product will bear little fruit. Why do tactics enjoy such elevated status? Maybe it’s because tactics are tangible, while strategy can feel fuzzy. Perhaps it's because you can get an immediate dopamine hit from deploying tactics, while strategy can take months or years to bear fruit. Maybe it’s because strategy can’t be replicated the way tactics can. A topic for another day.

The delusion of “tactics-as-sufficient” is enticing one. It promises that if we’re just a bit more clever in our marketing, if we can just unlock a new sales trick, or vibe code faster than competitors, we’ll come out ahead. It’s enticing because it says that success can be reduced to a recipe, a “paint-by-numbers” approach. It promises that we, too, can “punch above our weight” and put competitors in their place. But it’s a lie.

At least it is, without the other half of the equation.

Good strategy is something many businesses claim to have, but few actually do. So I’ll leave you with a quick acid test to see if strategy is really part of your team’s DNA or something just given lip service. Here’s what I’ve seen from being inside the businesses that have it:

• Executives don’t shy away from threats. They seek them out.

• There’s an appetite for understanding, not knowledge.

• There are no sacred cows.

• The culture is comfortable being uncomfortable.

• Complacency is unwelcome.

• No one in leadership is too busy to think about the future.

And most of all, a team with strategy has this odd combination of confidence and humility. Confidence that they can win, but the humility that comes from knowing that answers don’t come from being smart, but from wrestling with ambiguity.

Remember, a business that doesn’t invest in strategy will soon cede its territory to one that does. Which is yours?

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As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

SaaS and AI might compete against each other, but they also share the same problem: they are at risk of losing leverage over their customers.

Yes, businesses already have less reason to pay a premium for SaaS, since AI agent platforms can let them build their own software. But similarly, why pay a premium for an AI agent platform if you can just use Claude Code directly?

Both categories face a common enemy: the threat that customers capture value for themselves and reduce their pricing power.

There are four things these businesses can do to regain leverage over their customers: control points, network effects, domain expertise, and architecture. And that’s what we’re going to unpack today: how software companies of either sort can use these levers to avoid getting squeezed out of the middle.

First, some definitions:

• Legacy SaaS: any SaaS business that predates AI and relies primarily on subscription-based pricing.

• AI agent platforms: tools that allow businesses to create and manage their own AI agents, often on top of SaaS products the business already uses.

• LLMs: the models that AI agent platforms run on top of (Claude, Grok, ChatGPT, etc.).

• Software companies: For this article, I’ll use this to refer collectively to both legacy SaaS and AI agent platforms.

To get started, let’s take a closer look at why software companies are at risk of losing leverage over their customers. Then we’ll unpack the four things software companies can do to regain this leverage.

When Customers Can Build Your Product, You Lose Leverage

In the past, SaaS vendors could do something their customers could not: create software at an attractive price point. For most businesses, the “make vs buy” case was pretty clear: buy. But now, customers have regained some of that ability. How much they have regained depends largely on the type of software at hand. But the trend is there.

What does this mean for SaaS vendors? If your customers can build parts of your solution themselves, your pricing power declines.

For example, let’s say a manufacturing business uses Acumatica, a common ERP. There are a few things the manufacturer wishes Acumatica could do, so it starts experimenting with agentic AI tools like Dust or Claude Code. As it continues to explore what’s possible, it reaches an “aha” moment. “These AI agents can replace features we were already using in Acumatica, but better,” they realize. They’re paying for features they no longer need. At a certain point, the manufacturer really only needs Acumatica to serve as a behind-the-scenes database, while AI agents handle all the functionality. Then there’s the uncomfortable phone call. “Why are we paying so much,” they ask, “if we only need your back end?” Acumatica is forced to make pricing concessions.

And so it goes. This is how you lose power over your customers.

I’m not trying to claim that SaaS will go away completely. But if SaaS vendors have less value to offer, their pricing power will erode.

AI Agent Platforms Aren’t Immune From This Pressure Either

Does this mean that AI agent platforms are in the clear? Not so fast. They provide the tooling that enables customers to create, manage, and orchestrate their own AI agents. Many of them are wrappers around existing LLMs. What they’re selling (at the moment) is essentially middleware that bridges the gap between SaaS and LLMs.

Like SaaS, I haven’t heard a good case for why AI agent platforms will have much power over their customers either (if you do, let me know in the comments). What’s to keep a business from using one AI agent platform over another? Is one offering that much better than the other? Are there switching costs? Or worse, what will keep a customer from cutting an AI agent platform out of the picture completely and going directly to Claude Code? It’s too early to know for sure, but if I were running an AI agent platform, I would have this on my radar.

The point I want to make is that both SaaS and AI agent platforms face the same problem: they must keep their customers from reducing their pricing power.

4 Ways Software Can Regain Leverage

Let’s see what a software business could do about this. So far, I’ve found four ways they could regain leverage over customers: own control points, create network effects, leverage domain expertise, and build superior architecture.

Own Control Points

This concept comes from Dave Yuan at Tidemark. The idea behind a control point is simple: they are the core functions that businesses rely on to operate. As Dave explains:

Control points, as a function of their workflow and data gravity, inherently enjoy an unfair right to sell multiple products to their merchant customers, even potentially becoming an “operating system” within their vertical. This remains true not only for traditional software products but also for new AI offerings. (source)

Here’s an example from my own business. I use Gusto for payroll processing (yes, I pay myself as a W-2 employee, but that’s a topic for another day). Gusto “owns” the flow of money and data between my payroll system, my bank accounts, and my state tax accounts. This gives Gusto a degree of control, because ripping out and replacing all those connections is something I’d be loath to do.

But Tidemark also points out that control points “…have the unfair right to offer most products a merchant needs.” That’s exactly what Gusto did recently, when they purchased 401 (k) provider Guideline. Now, Gusto manages my payroll and my 401(k) plan (which is also thorny to set up, by the way). Now, Gusto owns two control points. They’ve gotten stickier, which means it’s harder for me to disintermediate them. Good business move. This is the kind of play every software vendor needs to explore.

Foster Network Effects

Network effects occur when more value accrues to customers when other customers use the same product. Facebook and LinkedIn are classic examples. One way network effects come into play with software is through the ability to improve outcomes for AI agents. As more customers join a platform, there’s more data for agentic AI to learn from, which means better results for everyone. The question is: how much value does this create relative to what a customer would get by building their own software? Your mileage may vary. But keep it on your radar, especially because network effects can edge competitors out, too.

Leverage Domain Expertise

I’ll use the Gusto example again. There is so much involved with reporting data on payroll taxes, getting these taxes paid, and doing everything in a compliant way. It’s not something you can get “mostly right.” It needs to be 100% right. Software vendors that know how to navigate compliance or regulatory territories have an advantage over their customers because they know how to solve something their customers don’t. Being able to vibe code doesn’t mean you have the domain expertise to tell those agents what to do in the first place. This isn’t to say that domain expertise can’t be obtained by LLMs themselves (see Anthropic’s legal offering), but at a minimum, it buys some software companies time to figure out the rest.

Build Superior Architecture

I may get in trouble with this one. I’m not a technologist, and I don’t claim to understand all the nuances of how technology platforms work. But here’s what I’ve learned from people who do. There are essentially two layers to software: the experience layer and the architecture layer. The experience layer is the interface where features and functionality live. The architecture layer is the behind-the-scenes foundation that allows the experience layer to work.

Historically, SaaS companies handled both. But with vibe coding, that changes.

The experience layer is now something customers can build directly. But if they want AI agents to perform well, the architecture layer becomes even more important to get right. (In part I of this series, we described this as a unified data layer). What engineers have told me is that building high-performance architecture is no trivial thing. So while customers can vibe code AI agents themselves, building the right architecture for those agents to work may be too formidable an undertaking. This provides an opportunity for software vendors, both legacy SaaS and AI agent platforms alike, to regain control.

We’ve Come Full Circle. AI Will Drive Consolidation

I noticed something else while writing this.

These four levers not only give software companies leverage over customers, they also give them leverage over each other. In other words, if a given software vendor were to gain ownership of control points and create more value through network effects, domain expertise, and superior architecture, they’d be more likely to win on all fronts. Competitors without such leverage wouldn’t just be reduced to a commodities, they might also be edged out of business altogether.

And so we have come full circle.

At the beginning of this series, I posited that the need for a unified data layer would push out point solutions and favor consolidated software offerings, driving “category collapse” from one vector. Now, we’ve seen that category collapse will come from a second vector: as software companies try to regain leverage over their customers, they will edge out each other in the process.

Interesting times ahead. Good luck.

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As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Everyone is saying that SaaS is dead. Or at least it will be, once AI is done eating it for lunch.

But I think this “SaaSpocolypse” view misses the real question.

It’s not about whether ”AI-first” or “traditional SaaS” will win out. There is a more fundamental question at play: how much software ownership do customers want to take on for themselves?

AI-first software, like that from 8090 Solutions, is special because it changes something fundamental: it shifts the responsibility of owning software functionality from the vendor to the customer.

This is the shift I want to explore.

While AI-first software makes lots of promises, I’m not convinced that every business will want to go all in.

To show you why, we’ll look at three supposed advantages of AI-first software: lower cost of ownership, more flexibility, and greater capabilities. Then, we’ll answer two questions: Are these advantages as large as they seem, and are they durable? And are those advantages things customers will want, given the tradeoffs?

For the purposes of this article, we’ll contrast two approaches to software:

1. AI-first software is designed to give users control over what the software does. For example, 8090 Solutions lets customers specify product requirements and then builds software accordingly. It’s the customer who owns product development.

2. Traditional SaaS is designed to maintain vendor control over the software. The vendor determines which new functionality to develop and then releases it to the customer. Sometimes, customers can create their own workflows or automations, but they cannot directly alter the software itself.

Whether a customer wants ownership, though, is a question that’s worth scrutinizing. While the investor community has already made up its mind, I think this is a rush to judgment.

AI-First Software Makes Three Promises Over Traditional SaaS

The benefit of AI-first software comes down to three things:

• The first is the cost of ownership. While a traditional SaaS business might need hundreds of engineers to maintain and update a product, an AI-first business can provide the infrastructure for a customer to create its own software with far fewer employees.

• The second is development flexibility. Traditional SaaS requires customers to accept the features and functionality provided by the vendor, but AI-first software enables customers to design what they need, quickly.

• The third concerns capabilities. AI already offers capabilities that traditional SaaS hasn’t provided yet, like agentic AI. This gives AI-first products a head start on the value they can deliver.

But which of these benefits are durable (they provide an advantage that SaaS companies could not obtain for themselves) and which are desirable (customers actually want them, given any tradeoffs they might impose)?

To find out, let’s explore each:

Cost of Ownership

The premise behind this advantage is simple: if AI-first vendors can develop software with a smaller engineering and product team, they have a lower cost basis and can profitably sell their software for less. But there are two reasons why this equation isn’t so simple.

The first is that we don’t yet know the true cost of running an AI-first business at scale. While AI-first software makes it easier to develop user experiences, it requires a much more robust architecture underneath. What is the true cost of supporting that, especially when you consider the computing costs that AI requires? I’m not saying that AI-first companies won’t have a cost advantage, but I am saying it’s too soon to be certain of how large this advantage is.

The second, and more important, consideration is that engineering and product staff do not make up the majority of a traditional SaaS company’s expenses. Sales and marketing do. This used to be the other way around. But as SaaS software categories became immensely crowded in the 2010s and 2020s, traditional SaaS companies have had to ramp up sales and marketing spend dramatically to remain competitive. AI-first companies don’t face such pressure (yet) because this category is relatively nascent. But what happens to sales and marketing costs when more competitors emerge?

Development Flexibility

Personally, I like the promise of flexibility that AI-first software makes. Who wants to wait for a feature to come out when you can just vibe code it yourself? But there’s the rub. Deciding what you need and how it should work is not a trivial undertaking. As you move to the enterprise, that “ownership tax” can become a real burden.

Microsoft Excel is actually a good microcosm of this. If you’re building a financial model, Excel’s built-in formulas make the cost of manipulating data almost zero. The real effort comes from deciding what the financial model should be. That’s why even though it’s easy enough to learn Excel, CFOs are as valuable as ever.

I think there’s a similar dynamic at play with software. Just because a business can take ownership of its software, does that mean it wants to? I’m not sure this is a given. It’s the same kind of “make vs buy” decisions businesses have always faced. Product ownership requires a competency that many businesses may lack, and it may be cheaper to delegate this to someone else.

Capabilities

This is where AI-first software may have the strongest advantage. It has a fundamentally different architecture that allows it to do things that traditional SaaS cannot.

Agentic AI is one such example. As we discussed earlier, agentic AI needs a unified data layer to give it context about the business. AI-first companies built their products with such an architecture in mind, but traditional SaaS companies did not. When data is fragmented, siloed, and inconsistent, agentic AI is a non-starter.

If every SaaS company were built this way, it would indeed prove fatal for the category at large. But here’s the thing: the software ecosystem isn’t so black and white. Some forward-thinking SaaS companies have already re-architected their products to be AI-native. This isn’t conjecture; I’ve met product leaders who have already done this.

But because this has happened behind the scenes, it’s easy to lump in these progressive SaaS companies with the laggards. They may look the same on the outside, but underneath, they’re very different. And they’re not at the same disadvantage as you might be led to believe. With the right foundation in place, these “SaaS + AI-native” businesses might be in a position to win after all.

This Chapter Is Really About How Much Ownership Customers Want

This is what I think the market is overlooking.

Yes, AI-first software can do more (at least today) than traditional SaaS can. But it’s changing something more fundamental: who takes responsibility for what the software does, how it works, and how it’s supposed to achieve outcomes.

Some organizations will love this. But for others, it will feel like an ownership tax they’d rather pay someone else to handle, even if there are some cost advantages. I know my way around Excel, but I still hire an accountant.

That’s why I don’t see this as a battle between AI-first and traditional SaaS.

I see this as a new chapter in which businesses figure out how much ownership of their software they want to take on themselves, and how much they want to delegate to a vendor.

The answer, in my view, is not going to be at either extreme. Which approach emerges as the dominant one, and whether it’s come from progressive, AI-ready SaaS companies or new entrants in the AI-first camp, is very much up for grabs.

What does each camp need to do in order to win?

That’s what we’ll unpack next week. See you then.

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As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

What do these software businesses have in common?

• When Notion launched in the mid-2010s, it was a humble document editor, offering a neat alternative to tools like Google Docs. Today, Notion has encroached on multiple categories: CRM, databases, project management, workspace collaboration, and task trackers, to name a few.

• HubSpot used to be a pure marketing automation platform that cheerily espoused its “inbound marketing” philosophy. Not anymore. Now, HubSpot provides a full stack of GTM tools for everyone, from marketing, sales, and customer success.

• CrowdStrike, a cybersecurity company, began by protecting employees' devices, such as smartphones and laptops, from security threats. But CrowdStrike covers so much more today, like threat intelligence, cloud security, and managed response.

• HR platform Workday got its start by moving employee records software to the cloud. But once that was locked in, they soon expanded into payroll, benefits, talent management, and workforce planning, covering all the bases HR needed.

SaaS Has Always Had a Good Reason to Consolidate into Platforms

See the trend? SaaS tends to scale from point solutions to broad platforms. And they’ve had good reasons for doing so over the last couple of decades.

For starters, many SaaS companies are VC-backed, which comes with a high growth expectation. It can often be faster to fuel top-line revenue by acquiring other firms and selling more functionality to existing customers. That move also creates higher switching costs and can improve appeal to enterprise customers, who tend to prefer a few large software vendors over dozens of smaller ones. And finally, let’s not forget that scale brings compound advantages: lower cost of acquisition from better brand recognition, better pricing power from being the “safe” choice, and better negotiating power with suppliers, to name a few.

But as SaaS companies themselves have good reasons to scale in this manner, it doesn’t mean that’s what every buyer wants.

Why get locked into a single vendor when you can piece together a selection of “best of breed” tools, so the thinking goes. Software integrations and APIs certainly make it possible. Not only do you get more flexibility, but you also get to avoid the lengthy and expensive integration process that’s often part and parcel with buying big enterprise platforms (if you’ve ever gone through a Salesforce deployment, you know this all too well).

So why do some businesses buy big platforms at all?

One reason relates to trade-offs. As your business (and the software running it) becomes more complex, the cost of maintaining all of those integrations increases. At a certain point, whatever benefits you might gain from a “best of breed” approach are outweighed by the cost of keeping such a system running.

In other words, when the “cost of coordination” exceeds the benefits of a “best of breed” approach, buyers switch from point solutions to platforms. Since there are businesses on both sides of that equation, there’s a sort of equilibrium that exists between platforms and point solutions.

That’s where agentic AI will change things.

Agentic AI Changes the Value Equation for a “Best of Breed” Approach

As a reminder, agentic AI means optimizing for business outcomes with minimal human intervention. To do that well, an AI agent needs accurate information about your business, awareness of what other AI agents are doing, and context about its goals:

For AI Agents to operate effectively, they need seamless access to high-quality, real-time data. Yet, many enterprises struggle with fragmented data spread across disconnected systems, limiting the AI’s ability to make informed decisions. Without a unified foundation, AI Agents can’t fully optimize workflows, automate tasks, or adapt to new information. (source)

In other words, AI agents must coordinate their actions with everything else that is happening in the business. And it must do so on its own, in real time.

That’s a stark contrast to how things work today.

Here’s just one example. In one of my VP, Marketing roles, our executive team would review our BI dashboard each morning, which showed data from across the business. It was useful, but rarely something we could act on directly. Partly because there were always reporting problems and partly because that data needed human interpretation before we made a decision. That created a disconnect between reporting and action. But for agentic AI to optimize for outcomes on its own, the cost of coordination needs to be manageable.

That’s why the “best of breed” approach breaks down when it comes to agentic AI. The cost of coordination is simply too high. Here’s an example of a software vendor, Bird, that has reached a similar conclusion…

Point solutions promised to solve specific problems exceptionally well... But as businesses adopted more of these "best-in-class" tools, an unexpected problem emerged: the connections between them became the weakest links… Companies that embrace unified platforms early will gain significant advantages. They’ll have cleaner data, faster operations, and AI-powered insights that point solution users simply can’t access. (source)

Before agentic AI, the cost of coordination might have been manageable because the stakes were lower. Having your BI analyst fix a reporting issue was annoying, but it wouldn’t shut things down. Agenetic AI, though, doesn’t have such tolerances. Best case, data problems shut things down, eroding your efficiency gains. Worst case, they cause AI agents to make poor decisions.

Since Agentic AI raises both the costs and the stakes of coordination, the point at which the costs of a “best of breed” solution begin to outweigh its benefits happens earlier. As this happens, platforms will become increasingly attractive to smaller businesses because this will be the only way they can access agentic AI cost-effectively.

You can map this shift in a simple graph:

And while software vendors have always had good reasons to consolidate, this shift only adds another reason to the list. If agentic AI is how you stay competitive, taking a more platform-centric approach is how you get there.

To put a bow on this:

• If you’re a SaaS buyer, you have a strong reason to choose a platform over a “best of breed” approach because that’s the only pragmatic way to access agentic AI.

• If you’re a SaaS vendor, you have a strong reason to expand the breadth and depth of your offering, because that’s how you deliver the agentic AI capabilities the market wants.

So if you’re a niche player, how do you avoid getting eaten alive? And if you’re already a software platform, how do you stay ahead when the platforms you’re competing against will be making the same moves?

That’s what we’ll explore next week. See you then.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

You’ve probably heard the phrase, “Nobody got fired for buying IBM.” It’s a story that dates back decades, when IBM sold mainframe computers. Yet the dynamics that gave rise to such a statement foreshadow what may happen with agentic AI platforms. Today, we’ll find what that connection is, so you have a better sense of what’s to come in the age of AI.

The Lesson from IBM Mainframes

By the mid 1970s, IBM was in an enviable position. Not only was it generating north of $14B in revenue each year (about $86B in today’s dollars), it reportedly had up to 70% market share in mainframes. IBM’s position in the category was so dominant, in fact, that its competitors were called “The 7 Dwarves.“

There are many reasons for IBM’s success, but one of the biggest drivers came from IBM’s decision to create a computing platform that could evolve with a business, while competitors offered fragmented solutions that were onerous to upgrade. Here’s what I mean.

Back in the 1960s and 1970s, computer operating systems, hardware, and software were not interoperable the way they are today. Most mainframes were vertically integrated and essentially proprietary. Buying from IBM meant buying IBM’s operating system, IBM’s hardware, and IBM’s software. Same story if you bought from a competitor, like Burroughs or Honeywell.

There was a big problem with this approach, though. Upgrades could mean putting your entire computing investment at risk. Imagine wanting to move from macOS Sequoia to Tahoe, but finding out you’d need to replace your laptop and every piece of software you’ve purchased. But that’s how computers worked then.

At least, until IBM made a $5B bet.

In 1964, they introduced System/360. It was a family of computers that had a compatible architecture across different components. For the first time, a business could make an upgrade without having rewrite its software, retrain its staff, or go through an expensive integration process. And this wasn’t a one-time release; System/360 was a new architecture that would provide continuity for years.

It was such a game-changer that, within a few years, IBM mainframes became the industry standard. Jim Collins, the author of Good to Great, even ranked it as one of the top three business accomplishments of all time.

With a proven architecture that could grow with a customer, a strong brand and reputation, and a growing ecosystem of available software, there was little reason not to choose IBM. What an enviable place to be, huh?

I’d love to share more of the story, but we’re here to talk about agentic AI. What’s the connection?

Preferences vs. Incentives

In his work, Micromotives and Macrobehavior, economist Thomas Schelling famously showed how choices are often driven less by what people prefer and more by the incentives and constraints that shape those choices. Or as Charlie Munger is famous for saying, “Show me the incentive and I’ll show you the outcome.” This same dynamic was at play with IBM’s mainframe business, and now, it’s starting to play out with agentic AI.

Here’s an everyday example of how this works: buying your next car.

If you’re shopping on preference, you might choose a car based on styling, brand, or features that make the driving experience more comfortable. You might buy a Jeep Wrangler because it looks cool, a Range Rover to show your neighbors how successful you are, or a Subaru WRX because you love how fun it is to drive. In other words, you’re shopping based on your tastes.

But buying based on incentives means you have hard constraints.

For example, if your long commute means fuel costs are eating up your budget, you might buy a Tesla Model 3, even though it doesn’t suit your tastes. My wife’s car had even tighter constraints. With four kids, a minivan was the only option that could hold everyone and leave enough space in the garage. And living in Colorado, so was all-wheel drive. Her incentives drove her choices down to one: a Toyota Sienna.

In the mainframe era, a buyer might have preferred to buy from one of IBM’s competitors. Perhaps its software was better suited to its situation, or they offered an option that better aligned with its initial budget. But as strong as those preferences might have been, there was an even stronger incentive to buy from IBM (and stay with them). Since IBM was trusted, proven, and was less likely to cause headaches when it came time to upgrade, buying from IBM meant you were making a safe choice that wouldn’t put your career at risk.

Why This Matters for Agentic AI

That’s the same dynamic that will play out with agentic AI.

Today, some buyers might have preferences for “best of breed” solutions. But as we discussed in the last issue, AI agents require a unified data layer, the ability to coordinate, and context about what’s happening in the business to work well.

In the past, a “best of breed” approach meant an acceptable tradeoff: better functionality and no vendor lock-in in exchange for fragmented data. That’s a preference-driven choice. But with agentic AI, that equation changes. Fragmented data doesn’t mean a tradeoff; it means that agentic AI can’t even work reliably. That’s an incentive that buyers simply have to accept.

In the next issue, we’ll take a closer look at this and explore why agentic AI is only going to accelerate the consolidation movement that’s already in play.

See you then.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Ever since the days of Lotus Notes and Windows 1.0, software has perennially wowed us with all the new things it could do. Now it feels like a shift is happening. Software evolution today is less about new functionality and more about how that functionality is performed.

You already know what’s driving this: agentic AI.

As agentic AI becomes more prevalent, we’ll be less focused on handling tasks ourselves and more focused on setting goals and overseeing the work. It’s a lot like moving from an engine room operator to the captain of a ship. But that’s not what matters most.

What really matters is how agentic AI will change the competitive dynamics of the software industry itself.

Why? Because agentic AI requires a fundamentally different approach to how software is structured. This has huge ramifications. Power dynamics will shift, economies of scale will grow in importance, barriers to entry will rise, and the lines between software categories will start to blur. There’s a lot to unpack.

That’s why I’m devoting my next newsletter series to this topic.

I don’t have all the answers, but I can give you a better understanding of what’s happening now, so you can be better equipped to make the right choices for this next chapter.

Today’s goal?

I simply want to share why the shift to agentic AI is such an important factor in the industry’s dynamics. Understand this, and the changing landscape will become much clearer.

Agentic AI is Just Like Football

The easiest way I can explain agentic AI is with football.

In the NFL, a football team can’t win simply by having talented players. It needs to run the right plays at the right time. When a play is called, it means every player knows what his teammates are going to do – even before they start moving. It’s this coordination that tells the offensive line to create a hole in the defense, that tells the quarterback when to make the handoff to which running back, and when and where that running back should run.

For a team to run plays well, it needs a unified understanding of the plays themselves, the players and their respective roles, and the goal at hand. They also need visibility into what’s happening on the field so they can make real-time adjustments. (Engineers will undoubtedly find plenty of flaws in my analogy, but for our purposes, it’s close enough.)

AI Agents Need a Unified Platform

For AI agents to execute a business process, they need a shared understanding of the goal, the agent’s role, how the process itself works, and what else is happening in the business. Now, you don’t need to be a technical person to imagine what this might mean for how software needs to be structured.

Without unified context and data, AI agents cannot take intelligent, correct action on your behalf. Here’s a more technical overview:

Agents operate in parallel, and they need the same understanding of customers, products, events — everything. Otherwise, you get contradictory decisions that only show up after damage is done. A unified, identity-resolved layer [is] what keeps agents grounded and lets them collaborate instead of stepping on each other. Without that shared memory, agents “learn” different realities, and your system becomes incoherent fast. It’s a different mindset from traditional software design, closer to designing ecosystems than applications. (Source.)

Companies like Salesforce already understand this. And they are acting accordingly. Here’s what their EVP and Chief Scientist, AI Research, had to say:

...today’s AI leaders will be those who focus on deploying digital labor within a deeply unified platform that connects AI to real-time data, logic, and workflows. For a deeply unified platform to truly scale, it must integrate data, trust, and agentic AI into cohesive solutions that are context-aware and scalable. Instead of simply generating insights, these models become seamlessly embedded into business workflows, driving maximum impact and efficiency. (Source.)

What may not be obvious is that traditional SaaS simply wasn’t designed with an agentic AI architecture in mind. Many legacy software companies, especially those that have only recently started to take action, are at risk of getting left completely behind.

Agentic AI is Creating an Inflection Point in the Software Industry

Why does this matter from a strategy standpoint?

Because agentic software requires a deeper and broader connection to a customer’s data, software platforms have a distinct advantage over niche players. And from a customer’s perspective, assembling a “best of breed” collection of point solutions may no longer be a viable option.

This will have second-order consequences, too.

Buyers may face greater switching costs, while software providers may compete more heavily for that first sale. Cost of customer acquisition may go up, but so too may lifetime value. Niche players, and especially those “middle ground” software providers that are neither point solutions nor platforms, may have less room to maneuver.

This is just a preview of what we’ll cover.

But for now, remember this: agentic AI isn’t just introducing a new set of features and functions; it’s creating a category-level inflection point in the industry. Old software categories will collapse. The boundaries of existing software categories will be pushed. And new categories will surface. Are you ready?

In the next issue, we’ll unpack why this consolidation will happen, and what it means for you. See you then.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

I just wrapped up my annual planning retreat: a few days of nothing but Colorado wilderness and a pile of notes about my plans for 2026. I thought I’d share some of my takeaways, in the hope that a few of them resonate with you.

The Meaning of Your Work

For most of us, annual planning starts with “how much” questions: how much revenue, how much growth, how much to spend on this, how much time to put into that. These are the organizing questions that provide much-needed structure. But I have found much more value from “why” questions: why am I in business, why is this pursuit worth my energy, why is it important that I succeed?

This week, I kept coming back to an idea that I wrote down years ago. My “why” is to help the best ideas (and the people behind them) win. That’s something I can look back on, decades from now, and feel proud of. When client work gets difficult, when I’m wrestling with a new problem, or when I have no idea where my next client will come from, my why gives me a reason to keep pushing. Without one, I’d fail.

I can’t tell you what your why is. It may be something grandiose; you’re literally working on curing cancer. Or something more unassuming, like simply being called to bring joy to those around you. But I hope you find it. Because business is not worth your time or energy otherwise.

Dynamic vs. Mechanistic Thinking

One of my favorite thinkers, David C. Baker, presented the idea of “mechanistic” thinking in a recent podcast. It’s the idea that your business is a machine. A mere collection of gears that reacts predictably when you adjust it. A classic example of mechanistic thinking is how marketers grow their pipeline: X dollars yield Y leads, which yield Z customers. More customers simply require more dollars.

It makes sense on paper, but in reality, the world never works this way. Why? Businesses aren’t mechanistic at all. They are run by people. People who react, learn, adapt, and generally behave unpredictably. Your customers are no different.

This landed with me because I’ve seen the penalty of mechanistic thinking firsthand this year. That framework I built worked amazingly for one client, but fell apart with another. My workshop process was seamless until someone asked a question that threw me off balance. My approach to sales feels unstoppable one month, and worthless the next. All that uncertainty can leave me craving for stronger processes and greater control.

But the answer, as David points out, isn’t to tighten your grip. It’s to see that business isn’t a machine at all; it’s a dynamic system that requires resilience and adaptability above all else.

Playing the Long Game

One of the hardest things about running a solo practice is forcing yourself to spend money on the business. Every investment is money you could literally take home instead. This year, I can remember a few decisions that were particularly hard to swallow: hiring a coach/mentor, flying to NYC just to host a dinner, and making major updates in my brand (which you’ll see next year).

These investments made no sense in the short term because they had no immediate payoff. So, how did I make them anyway? I had to remind myself that without investing back into the business, there is no way I can reach my goals. They aren’t inconveniences; they are necessary moves for long-term success.

This is true at every scale, though. One of my clients spent a tremendous amount of money (for them) on an R&D project in a year when growth was softer than they planned. A short-term mentality would advise conserving cash. But they invested anyway, because their aspirations as a business require them to think beyond the next quarter. A few years from now, they will be so much stronger for it. I hope you find the perspective to do the same.

I appreciate you reading this one. Here’s to a great 2026!

John

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Before we end the year, I wanted to share some thoughts to leave you with as you wrap things up for 2025. These are some reflections that have been top of mind as I’ve reflected on my experiences working with leaders like you this year.

I’ll Never Forget What This CEO Told Me

A CEO said something to me this year that I will never forget. He confided, “John, I know what steps one, two, and three are. And I can see ahead to steps eight, nine, and ten. But all those steps in between? I have no clue.” If you feel out of place for not having everything figured out, don’t be. The CEO who shared this is as successful as they come. When you hear someone claim otherwise, I can promise you that the narrative inside their head is very different. Remember that progressing doesn’t mean having all the answers. It just means progressing to new questions.

The Kind of Leader I’ve Come to Respect Even More

My respect for leaders of “second chapter” businesses has only grown this year. By “second chapter,” I mean any business that has had to navigate through a major shift. Andy Grove, Intel’s founding CEO, called these “strategic inflection points.” They can require you to ride a new technology wave, work your way through an industry that is being upended, or make a major shift to how you do business, to name a few.

But here’s the thing I’ve noticed about these inflection points. Dealing with them often requires a hidden, but very real, struggle that the public rarely sees or appreciates. It means having hard conversations about who you are as an organization. Making a bet on who you think you can become. Saying “no” to something that may be easier in the moment but is best in the long term. All of this brings sleepless nights, self-doubt, frustration, impatience, and uncertainty. This is why so many businesses, faced with these inflection points, get stuck with the status quo instead of defining their second chapter.

Many of you have told me, privately, just how hard this can be. And that’s why you have my respect. While the press is fixated on the latest company to hit the trillion-dollar mark, you are waging a quiet battle behind the scenes. My hat is off to you for your ability to press forward.

Don’t Settle for Surface-Level Problems

There is no shortage of solutions to surface-level problems right now. It doesn’t matter what area of the business you work in. AI is only adding to this noise. The problem with solving surface-level problems is that you only get surface-level results. But that’s where many businesses operate. Because surface-level problems are alluring, they offer the promise of a quick win, they don’t require much risk, and they offer a pleasant distraction from the deep questions you really need to address. While they feel good in the moment, they don’t change the course of your business. Instead, if you can commit to digging deep, you’ll be thanking yourself this time next year.

A Thank You

Whether you read one issue this year or every single one, I’m thankful for you. Knowing that you took the time to hear from me means so much. And to those of you who left a comment, sent me a text, or emailed me your thoughts, it means more than you know. Every bit of feedback is another log added to the fire that keeps this work going! And to my clients, thank you for the chance to do this work. It’s not lost on me that very few people get the chance to do work they love, with people they love working with. Thank you for the partnership.

I’ll be back in January.

In the meantime, enjoy some time off, have a Merry Christmas 🎄 and a wonderful New Year 🎉, and I’ll see you in 2026.

Cheers,

John

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

This is exactly what’s playing out in streaming platforms right now.

Both Netflix and Paramount are making competing bids to acquire Warner Bros. Their moves can teach us a lot about when these windows of opportunity open up and why they require action.

First, some background.

You’re already familiar with the players. In addition to Netflix and Paramount, this space also includes Disney+, Hulu, HBO Max, Apple TV, and others. Streaming platforms initially emerged as a new category because they introduced a new distribution model for content. Instead of watching content as it was broadcast or renting movies from a store or by mail, streaming allowed you to watch whatever content you wanted, whenever you wanted.

In the early chapters of this category, this was the category driver: the mechanism that defines how the category provides value.

This first chapter of the category, of course, was led by Netflix.

For a time, they were the only streaming service. But soon other players entered the space. Fast forward a few years, and streaming itself is no longer the category driver. It’s a given. Now, the space has shifted to a new category driver: unique content (IP). Early on, Netflix didn’t have any IP. It simply licensed existing content from studios. But, for user retention or cost reasons (or both), Netflix began developing its own IP. Remember House of Cards? That’s where it started. Now, Netflix’s IP is one of its core differentiators.

Want to Win in Streaming? Now, It Means Having the Best Catalog of IP

Today, unique IP is the main reason for picking a streaming platform.

Fan of Stranger Things? Better keep your Netflix subscription. Can’t get enough reruns of The Office? You need Peacock. Star Wars fan? Disney+. In other words, streaming platforms no longer compete based on their ability to stream content. They compete on their ability to provide the content subscribers want. And all the better if that content isn’t available anywhere else. Today, the category driver has shifted from a unique distribution model to IP ownership.

Buying Warner Bros. provides a whole new library of IP that has immense value: the DC Universe, Harry Potter, Game of Thrones, The Lord of the Rings, and the HBO catalog. Plus classics like Looney Toons, The Matrix, and my personal favorite, National Lampoon’s Christmas Vacation.

That’s what Paramount and Netflix understand.

Both companies need Warner Bros. And it’s why they are willing to pay so much (in the neighborhood of $80B, as it currently stands).

Netflix, for its part, is a category leader, and it must sustain that leadership. It already has one of the strongest IP libraries, and acquiring Warner Bros. would give it an unrivaled catalog. Paramount is a mere contender. With a weaker IP library, it’s more focused on survival. Buying Warner Bros. keeps it in contention, but it doesn’t necessarily help it take the lead.

(More on category strategy here).

For either buyer, Warner Bros. doesn’t just provide a one-time boost. It delivers a compound advantage. A larger IP library improves user retention, lowers the cost of customer acquisition, and lowers the cost of new content development (building on existing franchises tends to be more profitable and less risky than developing new ones). All this provides more profit that can be reinvested.

Can either company overpay for Warner Bros.? Of course. But whoever pulls off the acquisition is one step closer to winning the next chapter of streaming.

Here’s what this means for you:

• Categories often reach points where the category driver changes.

• What once provided a critical advantage has become the status quo.

• These provide inflection points, where the rules of the game are shuffled. There is a limited window of opportunity to take advantage of them.

• If you can recognize them (and act) before competitors, then you can use these situations to come out ahead.

• But if you overlook them or take too long to make your move, then you may find yourself squeezed out, with little room to maneuver.

Review these questions with your team:

1. What was the original category driver in our space?

2. Is that category driver still relevant? If not, what’s replacing it?

3. What must we do to take advantage of this shift?

4. What will happen if we do, and what will happen if we don’t?

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Last week, I shared diagnostic questions you can ask yourself to see if your business is approaching an inflection point. This week, I want to share why the decision you make at this critical moment is more important than you think.

If you felt uncomfortable going through last week’s issue, that’s a good thing. It means you’re starting to see that the game plan that brought your business to where it is today is unlikely to be the one that helps you win tomorrow.

But seeing an inflection point and doing something about it are two different things. Leaning into an inflection is uncomfortable. It means new questions, new challenges, and new risks. So today I want to leave you not with tactics or frameworks, but with a moral and philosophical case for why you must redefine your business when you reach these moments.

And I want to start by sharing my own inflection point.

What Kant Taught Me about Tough Choices

Early in my career, I had one objective: to become the CMO of a major business. It seemed straightforward enough. After a brief stint as a financial analyst, I found myself in the deep end of marketing. I loved it. I soaked up everything I could, and progressed to bigger and more interesting leadership roles as my career advanced. Working towards that CMO role just felt natural.

But after a few years, I was forced to rethink things.

For starters, things weren’t progressing as well as I'd hoped. An acquisition didn’t go as hoped, COVID upended another business, and the “crypto winter” that followed whipsawed a blockchain startup I joined. But mainly it had to do with where my energy had gravitated. As much as I loved marketing, I accumulated one too many firsthand experiences of how difficult life is when the business doesn’t have a clear direction. That scar tissue only deepened my interest in solving business problems and drew my attention away from the very different challenges of running a marketing team.

So one day, I took a good look at where I was. It hit me: being that big-time CMO wasn’t going to happen. First of all, the chances were slim. I didn’t have the string of exits or hypergrowth stories that served as an unspoken prerequisite for most of the top CMO jobs. But more than that, my passion for strategy had finally outweighed my interest in anything else.

I was at my own inflection point.

I had been heading down the CMO path for years. That path now felt blocked. But I couldn’t move forward without some serious discernment between two options. The first was the easy one. Easy, at least, because it required the least creativity and the least courage. It meant retaining my identity as a “marketer” and simply convincing myself that I didn’t need that CMO role after all. I could find other, less senior roles in marketing and try to find satisfaction simply from being employed.

But I knew where this would lead.

If I didn’t give myself the chance to pursue something more in tune with my wiring, I’d regret it. The notion of looking back 20 years from now, knowing that I didn’t fully follow my purpose, was unsettling. But at least this path felt safe.

The other option was anything but.

I had done some consulting in the past, but only in the confines of side projects and working under others. Could that be the right move? On the plus side, I could work on the kinds of problems I loved solving. To focus on the root issues businesses faced. That alone seemed thrilling. But the risks were right there, staring me down. When you have four kids, a mortgage, and your family relies mostly on your income, the pressure is real. This path meant starting with zero income. Extra stress for our family. And a very real chance of failure.

So how did I choose?

In the end, it had little to do with risk and rewards, or pros and cons. My decision came down to a moral lens. Years ago, I had studied the work of philosopher Immanuel Kant. He suggested that you could evaluate any choice by asking a simple question: “What would happen if everyone acted on the same principle I’m acting on?” It seemed like the right frame, so I explored my own answers.

Keeping my career as a marketing employee would mean preserving the status quo. No exploration, no discovery, no option to pursue what was possible. It would mean putting my energy into something that didn’t match my wiring. I’d be compromising my potential and my ability to help others, in favor of doing what was safe.

Who wants to live in a world where everyone acts like that?

But the consulting path offered a different answer. It meant the possibility of maximizing the value I could create with the skills, experiences, and perspective that were uniquely mine. It meant that whoever I worked with would be getting the best version of me. And honestly, I was drawn to the adventure. A world where everyone pursued their best was a world I could get behind.

This is the lens I want to offer you.

Preserving the Status Quo is a Failure

If you’re at an inflection point now, I want to tell you something most consultants won’t. Preserving the status quo costs you more than falling short of your potential. I believe it’s a moral failure, too.

As a leader, you are charged with stewarding an asset. That asset isn’t just a source of cash flow; it’s employment for hundreds or thousands of people, the creation of products and services that solve problems, and an enterprise that can literally define society.

You must ask yourself: Do you want to live in a world where businesses tend to stagnate? Where the world is deprived of what could have been? Or one where businesses provide hope and energy, where they give employees the chance to do their best work, and provide delight to the people they do business with?

Your choice, at this inflection point, determines the difference.

For all of us.

I can’t make that choice for you. But I can help you think through it clearly, align your team around it, and execute it well. That’s the work I’ve chosen to do, and the work I love to do. My hope is that you choose wisely.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Last week, we covered three real-world examples of inflection points that brands are encountering right now, and how they are navigating them:

• GM faces a shift in buying preferences. After committing to go all-electric by 2035, slowing EV adoption forced GM to scrap a $300M EV plant and invest $888M in V8 production instead.

• AMD was getting left out of the AI race. The CEO pivoted the company, made a strategic acquisition to kickstart the transition to AI, and pushed its valuation from $90B to $300B in the process.

• CBS News has a reinvention mandate. New owner David Ellison acquired Free Press for $150M and installed its founder, Bari Weiss, as editor-in-chief. The goal? Target the center-left and center-right and counter politicized content.

Today, we’re covering the warning signs that your business is about to hit an inflection point, so you can act while you still have time.

During the Cold War, Canada and the United States created the Distant Early Warning system. It was a network of radars, placed near the Arctic Circle, that could detect Soviet attacks early enough so they had time to react.

Inflection points aren’t that much different.

Seeing one on the horizon puts you at an advantage. Recognizing one too late comes with an opportunity cost and leaves you little room to maneuver.

So today, I’m sharing a “distant early warning” system for telling if your business is approaching an inflection point.

Look at the questions below. The more that describe your situation, the greater the likelihood that you’re reaching an inflection point yourself.

And the more critical it is that you act now.

Outsiders Have a Different View of the Business Than Your Team Does

Sometimes the writing’s on the wall, but you’re the last to see it. When investors, analysts, the press, and even potential employees have a more cynical view of your prospects, it could be a sign that you’re no longer equipped to win.

• Has it become more difficult to raise capital because investors are no longer excited about your category?

• Are your shares undervalued, even though you continue to meet or beat analyst expectations?

• Have analysts and journalists grown tired of covering your brand?

• Has it become difficult to attract high-quality hires, even though you have a good culture, offer competitive pay, and seem like a great place to work?

• Are your executives now being passed over for speaking opportunities at the kinds of events that used to invite them regularly?

Your Operating Paradigm Has Become Outdated

Times change. A product that was once in high demand is no longer as attractive. A business model that once helped you dominate is on its way out. When the game itself has changed, a mere shift in tactics won’t get the job done.

• Has a new product category started to draw customers away from you?

• Has a competitor introduced a new pricing or distribution model that is rendering yours obsolete?

• Does your once-growing category now feel like a zero-sum game?

• Has a new technology wave hit your industry, but no one seems to know what to do about it?

• Have pricing or cost pressures put you in a position where once healthy margins are now razor-thin?

• Have you had to increasingly rely on discounts or promotions to reach sales targets, when such tactics weren’t needed in the past?

Company Culture Shifts from Offense to Defense

When your team starts to doubt your company’s future, you’ll see this show up in the way they behave. These are signs that your team lacks a clear mental model of the business. The story about the future must be clarified.

• Has your once-innovative product team become fixated on matching competitors instead of breaking new ground?

• Does cutting costs feel more reasonable than growing revenue?

• Have your employees started to care more about beating each other instead of beating the competition?

• Has your company culture shifted from thinking about “How can we win?” to “How can we avoid losing?”

• Does your team believe it’s no longer possible to create demand?

• Have you become overly reliant on existing customers because attracting new ones feels impossible?

Hard Conversations are Needed, but No One’s Having Them

Changing course means having difficult conversations and making hard choices. So sometimes, a team will distract itself by finding secondary problems to solve. When that happens, be on the lookout for the real issue.

• Has your org chart started to feel like a game of musical chairs?

• Is your marketing team convinced that an expensive rebranding effort is the only way forward?

• Does your ops team keep pushing for a new CRM or ERP, even though it will consume all your attention for several quarters?

• Do attempts at strategy discussions keep devolving into debates about tactical, short-term plans?

• Is there a revolving door of ad agencies that are finally going to “fix” things?

• Has your engineering team become consumed by ways to “build more efficiently” instead of exploring what should be built?

• Do you leave planning offsites feeling inspired, or just thankful to have the ordeal behind you?

Remember, no business has everything figured out.

But if too many of the questions on this list sound too close to home, then it’s time to put tactics aside and re-evaluate the game you’re playing. Your team needs a new mental model about the business: a shared belief about what your next chapter should look like, and why.

It’s time to reset. Do it now, while you can.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Here’s what we covered last week:

• There are four forces that can pull your business backwards when you reach an inflection point: fractured team views about the future, the inability to communicate a new vision, customers operating on outdated beliefs, and the inertia of the past.

• There are also four processes that counteract these forces:

  • Category strategy is how you resolve fractured views of the future. This is an executive team process that defines the market territory you compete in and why you’re uniquely equipped to win.

  • Strategic narrative is how you communicate your view of the future. It transmutes your strategy into a compelling story that’s memorable, emotional, and builds belief both internally and externally.

  • Market conditioning is how you change outdated beliefs. This is the process of getting customers to see the same future you do by focusing on one idea at a time in your communication.

  • Category review is how you prevent old paradigms from taking over. This quarterly exercise examines each business area, spots threats and opportunities, rewires your thinking, and helps you focus resources.

• All four processes must work together. Combined, they provide both the strategic foundation for navigating change and the means to apply it in your business.

By now, we’ve covered a lot of theory about inflection points:

• Why the future of your business depends on your ability to navigate them.

• The 11 inflection points to look out for.

• Four processes you can use to steer through them and come out ahead.

At this point, you might be wondering, what does that look like in practice?

So this week, we’ll go through three real-life examples that are playing out right now. You’ll see how inflection points require each business to rethink its future, and you’ll get a glimpse into how I would approach these situations myself.

P.S. If you haven’t read The 6 Category Strategies yet, now may be a good time.

GM: Backtracking on a Strategic Initiative

• Background: Just a year or two ago, electric cars seemed destined to take over. Every other house in my neighborhood seemed to own a Tesla. Probably yours, too. In response, auto brands everywhere committed to moving away from internal combustion engines for good. Among them was General Motors, which publicly stated that by 2035, all its vehicles would be electric.

• Inflection point: Since that announcement, the adoption rate of EVs in the U.S. has slowed dramatically. A change in buying behavior meant GM’s all-EV push was premature. This has forced GM to rethink its plans. Not only did GM scrap its plans to invest $300M in EV production, but it also announced a new V8 plant at a cost of $888M.

• What I would advise: There are two category strategies GM can lean into right now. The first is to sustain its category leadership in full-size SUVs and high-powered sports cars. That will continue to produce profits that it can reinvest in R&D. The second is to double down on self-driving technology. Instead of playing catch-up in a category led by Tesla, GM has the chance to define a new space where the winners haven’t yet been chosen.

AMD: Pivoting Brings New Competitors

• Background: For years, AMD was a solid producer of CPUs and GPUs for consumer PC, gaming consoles, and data centers. It was a sizeable company ($90B market cap), but not in the same tier as mega-cap tech stocks.

• The inflection point: In the early 2020s, it became apparent that AI, not personal computing or traditional data centers, held the most upside. But as an onlooker, AMD was at risk of falling behind. So in 2022, CEO Lisa Su decided to pivot the company. AI was a huge opportunity that could not be passed up. They kick-started the effort by acquiring Xilinx for its AI capabilities. In 2025, its AI capabilities helped it secure partnerships with OpenAI and Oracle, bringing its market cap to over $300B.

• What I would advise: AMD is now a direct competitor with NVIDIA. But that could put them in a weak position. If demand for GPUs holds, suppliers will compete by offering more compute for less energy. With less cash to reinvest, AMD may not be able to keep up with NVIDIA. But if demand wanes, suppliers will face pricing pressure. Since AMD doesn’t have the economies of scale that NVIDIA enjoys, that would also put them at a disadvantage. Instead of competing head-to-head, AMD could explore niche applications where there are better opportunities to build a moat.

CBS News: A New Owner Wants Reinvention

• Background: CBS News is a mainstay of news programming in the U.S. It features programs like 60 Minutes, CBS Evening News, and CBS Mornings. The business also runs a news streaming service called CBS News 24/7. CBS News has a smaller audience base than ABC News and NBC News.

• Inflection point: David Ellison, who recently became the company’s owner, made two major moves. First, he purchased a popular news and opinion site, called Free Press, for $150M. Second, he installed the Free Press’s founder, Bari Weiss, as editor-in-chief. His goal is to put a check on politicized content and, in his words, “speak to that 70% of the audience that would really define themselves at center-left to center-right.” Essentially, the new editor-in-chief has been given a mandate to reinvent the business.

• What I would advise: Broadcast news is a legacy, mature space. It’s the perfect opportunity for CBS News to reimagine a stagnant category. (This is the same strategy Zoom used, by the way.) For example, it could rethink how streaming news is delivered, packaged, and produced, or develop novel news products that competitors haven’t thought of. CBS could also build a brand around news for “everyday” Americans, bringing a fresh take to a sea of highly politicized options. As the smallest of its competitors, CBS has the least to lose and, with new ownership, the most room to maneuver.

I hope this rounds out the picture of how inflection points don’t just present challenges to push through, but opportunities to come out ahead.

Next week, I’ll share some tools you can use to evaluate inflection points in your own business, so stay tuned for that.

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.

Here’s what we covered last week:

• Recognizing inflection points is everything. The sooner you spot one, the better your odds of coming out ahead.

• There are two types of inflection points. External ones happen to you (and often affect your whole industry), and internal ones come from the decisions you make.

• There are 11 inflection points to watch for. I shared a checklist to help you identify which type of inflection point you’re facing.

• Your team won’t automatically know how to respond. Even if leadership sees the inflection point clearly, you may not be able to recalibrate without explicit realignment.

• The real risk is moving too slowly. If you take too long to respond, you’ll burn through quarter after quarter moving sideways.

By definition, inflection points require you to redefine who you are as a business. You must recalibrate your aim and define a new chapter. But there are forces that pull you back into the past, if you let them.

Last week, we saw how Intel fell prey to this. Instead of leaning into the future, like NVIDIA did, Intel tried to preserve the past. The result destroyed billions of dollars in enterprise value.

I don’t want you to end up like Intel.

So today, we’re going to break down what these forces are and how you can keep them from dragging you backwards when your business hits an inflection point.

The 4 Forces That Pull Your Business Backwards

There are four forces that conspire to prevent your business from making its next chapter a successful one:

1. Your team has fractured views about the future

2. The new vision can’t be communicated

3. Customers operate on outdated beliefs

4. The inertia of the past prevents progress

Here is a breakdown of each, and a process for counteracting them.

#1 Your team has fractured views about the future

When you hit an inflection point, you must recalibrate the business. It needs a new aim. But knowing what that aim should be is where the confusion sets in. It’s not that you don’t have options; you have too many. Choosing feels impossible.

This puts you on the path to one of two bad outcomes.

One is that your executive team spins its wheels quarter after quarter, hoping that the right idea emerges. When it doesn’t, each leader has to operate under ambiguous direction. And if the plan is open to interpretation, your team will end up working at cross purposes. The business becomes a complicated mess.

The other outcome is that your team finally achieves “consensus” on your next move, but the vision is just the average of everyone’s views. The resulting plan is too watered down and too incremental to achieve anything meaningful.

You can fix this by building your category strategy.

Your category is the market territory that your business competes in. Your category strategy is your plan for how you will win and defend that territory. It’s a blueprint that defines the game you’re playing. Category strategy has its roots in positioning theory (from Al Ries and Jack Trout) and category design (from the book Play Bigger).

A good category strategy answers questions like:

• What problem are we solving?

• Who are we solving it for?

• Why do we believe this problem needs to be solved?

• Why can’t it be solved today?

• How are we uniquely equipped to solve it?

• Who do we need to become in order to win?

Without a clear category strategy, your business must act defensively and react to competitors. But the right category strategy helps you define the terms of competition in your favor. When I work with clients, there are six category strategies that we explore, which you can read about here.

#2 The new vision can’t be communicated

Imagine reading the rulebook for baseball, but you’ve never watched a game. Conceptually, baseball might make sense. But you would have a hard time imagining what the game is actually like.

That’s not unlike the next challenge you’ll face.

Having a category strategy is a huge leap forward because it gives your team a shared mental model about the business. But for that mental model to be acted on, it must be felt. You must give your audience the business equivalent of watching a baseball game.

That’s where a strategic narrative comes in. A strategic narrative:

• Casts a vision for the future your business wants to create

• Creates an airtight argument for your strategy

• Intentionally uses language that stirs emotion

• Is short enough to be memorable, but long enough to have substance

• Proves your brand truly understands the problem your customers face

Stories are the most powerful communication medium available to humans. To tap into that, a strategic narrative takes your category strategy and transmutes it into a story that can be easily understood and retold.

Here’s another analogy. Before going to court, a trial lawyer will pore over laws, legal precedents, and evidence to create a case theory: the framework that explains why their client should win. But if the lawyer wants to convince the jury, they need to turn that theory into a compelling story.

When you build a strategic narrative, you’re doing the same thing.

You are creating a story that builds belief in where your business is headed, and why. Internally, the strategic narrative helps the entire organization get behind this new direction. Externally, it lays the foundation for what you communicate to customers, investors, and partners.

#3 Customers operate on outdated beliefs

When you land on your strategic narrative, you’ll breathe a huge sigh of relief. Finally, you have a shared mental model about the business and a way to communicate it. But as far as your customers are concerned, nothing has changed. You are still the same business, operating just like you did last year. If that continues, you will start to become less relevant to them.

Market conditioning is how you change that.

Market conditioning is the process of systematically building the right beliefs and counteracting the biases that keep customers from seeing the same future you do. There's one main principle behind market conditioning: you win by keeping things simple. You cannot change someone’s thinking about everything all at once. You must pick the most important idea and focus on that until it sticks. Then, move on to the next.

To develop a market conditioning plan, ask yourself these questions:

1. What do customers currently know and believe about our brand?

2. How are they acting in response to those beliefs?

3. What beliefs should be counteracted or reinforced?

4. What gaps in information or understanding need to be filled?

Then, decide which bias is most important to overcome or which belief is most important to instill at that point in time. Lean into that until your customers are ready to move on.

There’s another advantage to this method.

Your marketing, sales, and comms teams will be overwhelmed if they try to share a dozen different ideas all at once. Instead, market conditioning is a systematic approach that helps you focus on communicating one idea well. And it gives customers a clear, sustained idea to latch onto. You can use the same approach when you communicate with investors, partners, and employees.

#4 The inertia of the past prevents progress

This last force might be the most insidious of all. Remember: before you hit an inflection point, your business was operating on a different mental model. That mental model was wired into the brains of your team for years. Maybe even decades. When behavior becomes ingrained, it creates inertia.

That’s a good thing, as long as you’re moving in the right direction.

But when that direction needs to change, that same inertia will pull you back into the old paradigm. Things get even tougher when the market’s moving quickly and you start acting on old instincts.

What to do about it? Some rewiring is in order. You must regularly recalibrate your team’s thinking, so the old way of thinking doesn’t take over. This means regular, intentional focus on how you are executing your category strategy.

One way to do this is a category review.

This is an exercise you can do across all departments. I recommend doing it every quarter. Here’s how to approach it:

1. Examine each area of your business: is it contributing or detracting from your category strategy?

2. If detracting, identify the threat if this problem is left unaddressed.

3. If contributing, identify how this can create more opportunities to win.

4. Brainstorm what to do next quarter to improve your situation.

5. Find the most critical projects, and work those into your quarterly plan.

Chances are, you won’t have a shortage of ideas. As with market conditioning, the real question is which options are worth prioritizing. There are limits on what’s feasible. Better to make a dent in a few important areas than spread your efforts too thin and have little to show for it.

This is a process I’ve run with my clients, and it’s a helpful clarifying exercise. Not only are you focusing on the right things to prosecute your category strategy, you’re rewiring the way your team thinks.

How These 4 Processes Work Together to Help You Win at Inflection Points

So far, we’ve mapped out the four forces that conspire against your next chapter, and the four processes you can use to counteract them. Here’s a simple way of seeing how they fit together:

You need all four processes for your next chapter to stick.

If you only pursue the top row (Category Strategy and Strategic Narrative) you will align your team on your new direction but won’t have a way to act on it. Working on only the left column (Category Strategy and Category Review), you’ll have the technical elements in place, but no way to rally the market.

Will You Come Out Ahead or Fall Behind?

Inflection points in your business are opportunities to reassess what’s possible.

Yes, they can present threats.

Some businesses do not survive inflection points. Just ask Kodak, Compaq, PanAm, or Blockbuster. Some only emerge as shadows of their former selves, like IBM, Nokia, Yahoo!, and Sears.

But with the right approach, inflection points can become windows of opportunity. Instead of getting tripped up, you have the chance to become something even greater.

Remember, it’s not about if you encounter inflection points, but how you respond that counts. In the next issue, I’ll share some specific examples of how brands have put this framework to use (and are starting to win).

As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.