AI agents are reshaping operations and governance.
Key takeaways
ESG reporting remains a strategic advantage.
Scenario planning drives financial agility.
Middle market leaders are facing a volatile mix of costly capital, artificial intelligence disruption, supply chain instability and regulatory pressure. But it’s not too late to recalibrate. These five strategic shifts can sharpen your 2025 business plan and lay the groundwork for a stronger 2026.
1. Industrial AI and automation
Generative AI has moved from buzzword to boardroom priority. The question isn’t whether you’re using AI—it’s how far you’re allowing it to act. Companies must shift from piloting AI to productizing it. Governance must ensure measurable impact. Here are key concepts to keep in mind:
- Faster design to delivery: AI is accelerating time to market through predictive maintenance, live diagnostics and autonomous quality control.
- Hyper-personalization at scale: AI enables tailored experiences across support, pricing and promotions. This drives proactive service and sales.
- Human and machine collaboration: Retraining programs help teams supervise, prompt and collaborate with AI systems.
Agentic AI systems are autonomous agents that initiate tasks, adapt to feedback and pursue business goals with minimal human input. Middle market firms are assigning AI operations managers to oversee digital agents and ensure compliance with governance protocols. Some are using agentic AI to automate workflows like sales outreach and procurement, with escalation protocols built in.
Key question for the C-suite
What decisions are you ready to delegate to AI agents, and do you have the controls in place to trust them?
Design, deploy and govern autonomous AI agents with confidence.
RSM's AI advisors meet innovation in action.
2. Supply chain resilience
Geopolitical instability has shifted supply chain thinking. Speed and cost are no longer the only priorities. Resilience and risk management are now central. Here are vital concepts to consider:
- Strategic “friendshoring”: Nearshoring and ally-shoring reduce exposure to geopolitical disruptions.
- Digital transparency: Real-time tracking and predictive logistics improve responsiveness.
- Regional partnerships: Local sourcing strengthens agility and safeguards operations.
In 2025, several U.S.-based automotive suppliers shifted production from East Asia to Mexico and Central America in response to rising tariffs and shipping delays. These moves reflected a broader trend toward regionalization and risk mitigation. Companies are also investing in digital control towers and platforms like SAP Integrated Business Planning to improve forecasting and visibility.
Resilience test
If a key supplier fails, can you reroute production and resume operations within a week, a month or a quarter?
3. Cyber resilience
Cyberthreats, now weaponized with AI, are targeting operational technology (OT) as well as IT systems. The risk is no longer theoretical—it’s operational. Here are important concepts to keep in mind:
- Unified risk management: OT and IT security must be integrated to prevent cross-domain vulnerabilities.
- Zero-trust architecture: Identity-first security, network segmentation and real-time threat monitoring are essential.
- Regulatory alignment: Cyber incidents increasingly carry environmental, social and governance (ESG) and disclosure implications.
Companies are using mean time to recovery as a board-level metric to assess cyber resilience. In addition, they’re adopting unified governance frameworks to manage OT and IT security under one umbrella.
Security question for the board
Is your cyber recovery plan integrated across OT and IT?
In the middle market, strategy must quickly break out of the boardroom and hit the ground running. Most companies don’t have the luxury of time or the cushion of deep pockets.
4. Proactive regulatory reporting
ESG mandates are evolving rapidly. Businesses face intensifying pressure from regulators. Here are vital concepts to consider:
- Comprehensive quality reporting: California’s Senate Bills 253 and 261, Canada’s Bill S-211, and the European Union’s Corporate Sustainability Reporting Directive require detailed, auditable ESG disclosures.
- Operational embedding: ESG data must be integrated into operations and supported by interoperable systems.
- Third-party risk management: Staying ahead of reputational, compliance and transactional risk is a long-term advantage.
Across the middle market, ESG reporting is no longer a side initiative—it’s becoming a core part of strategic planning.
For example, Jack in the Box began their ESG journey by aligning internal priorities with external expectations, focusing on transparency, stakeholder engagement and long-term value creation. Their approach reflects a broader shift in the market, where ESG is not just about compliance, but about building trust and resilience.
ESG disclosures increasingly influence investor confidence, brand reputation and regulatory risk. Inaction or poor data quality can lead to penalties, reputational damage and missed opportunities in capital markets.
Governance questions for the C-suite
Are your ESG disclosures aligned with operational data, and can you defend them under regulatory scrutiny?
5. Dynamic scenario planning
Persistently high interest rates and economic uncertainty demand strategic flexibility. Here are important concepts to keep in mind:
- Redefined return on investment: Reassess capital projects, debt strategies, and mergers and acquisitions in light of financing costs.
- Scenario agility: Use dynamic modeling to evaluate pricing, supply chain vulnerabilities and financial resilience.
- Liquidity buffers: Optimize cash flow and maintain strategic reserves.
In 2025, the Federal Reserve’s rate hold and global inflation pressures forced middle market companies to rethink capital allocation. Many are using scenario modeling to simulate the impact of delayed investments, margin compression and liquidity stress. This is especially critical for private equity-backed firms and capital-intensive industries, where access to financing is tightening and investor expectations are shifting.
Planning questions for the C-suite
How many scenarios have you modeled for interest rate volatility, and which ones are driving your capital decisions?
Building resilience into leadership decisions
Competitive pressure isn’t easing. Regulatory shifts, evolving customer expectations and technology acceleration are reshaping the middle market. The organizations that will lead in 2026 are already reinforcing their foundations. Strategy can no longer linger in the boardroom. It must translate into decisions that shape operations, risk posture and capital allocation.
For leaders, this means taking a hard look at how AI is governed across the enterprise, how supply chain and cyber risks are tested and mitigated, and how ESG reporting is embedded into operational frameworks. These aren’t side initiatives. They are signals of strategic maturity. The ability to model uncertainty, respond with agility and communicate resilience is becoming a differentiator. Now is the time to align your strategy with today’s market realities.
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