Companies still have time to adjust their 2025 business plans.
Key takeaways
The areas for adjustment include AI and automation, supply chain resiliency, and cyber resiliency.
Regulatory compliance and dynamic scenario planning are also worth looking at for possible adjustment.
From geopolitical volatility and trade disruptions to escalating cyberthreats, middle market leaders face unprecedented complexity. Regardless of whether you are supplying a product or a service, you must adopt forward-looking strategies that anticipate rather than react.
Costly capital, rapidly advancing technology and regulatory scrutiny define the competitive landscape. Success hinges on proactively reshaping strategies, reassessing resource allocation and embedding agility into operating models.
Here are five essential elements that must underpin your business strategy:
1. Industrial AI and automation
As customer expectations have shifted, generative artificial intelligence has become a boardroom priority. The question is no longer whether you’re using AI. It is how you use it. Focus on use cases and governance that deliver measurable impact across operations, not just prototypes that impress in the boardroom. Key concepts to consider include the following:
- Design to delivery: AI is speeding time-to-market by optimizing product development, predictive maintenance and quality control. Factory-ready models now run live diagnostics, simulate failure conditions and recommend adjustments autonomously.
- Hyper-personalization at scale: AI enables real-time, tailored experiences across support, pricing and promotions, turning dynamic data into increased sales and proactive service delivery.
- Human/machine collaboration: The best retraining programs help teams to supervise, prompt and collaborate with AI.
- The limits of AI: Some customers expect the human touch. For example, retail travel and health care continue to depend on a high degree of nuance and human interaction to maintain the lifetime value of the customer.
- The cost of disruption: Faster recommendations and decisions may not always be the best options.
Strategic question for the C-suite: What percentage of your productivity gains and sales revenue will come from AI-assisted processes and how will you measure it?
Emerging frontier: Agentic AI
Agentic AI is on the rise. These are systems that don’t just assist, but act. These autonomous agents can initiate tasks, adapt to feedback and pursue defined business goals with minimal human intervention. They can affect organizations in many ways:
- Goal-driven operations: AI agents are already managing procurement workflows, sales outreach and service triage, escalating to humans when thresholds are crossed.
- Governance challenges: Businesses must define boundaries such as what AI agents are authorized to do, how decisions are logged and where human oversight is required.
- Org model shifts: Managing a digital workforce of AI agents requires new capabilities including AI ops managers, explainability protocols and ethical guardrails.
The next competitive advantage won’t come from more AI, but from smarter orchestration of autonomous agents.
Key C-suite question: What decisions are you ready to delegate to AI agents—and do you have the controls in place to trust them?
2. Supply chain resiliency
Geopolitical instability from tariffs, trade restrictions and regional tensions has shifted supply chain thinking from speed and cost to being a critical risk managed resilience centre. Key concepts to consider include the following:
Strategic friend-shoring: Diversifying sources and shortening supply lines through nearshoring and ally-shoring mitigate geopolitical risks.
Digital transparency: Real-time tracking, analytics-driven risk assessments and predictive logistics systems enhance visibility and responsiveness.
Regional partnerships: Investing in local supply capabilities strengthens operational agility and safeguards against sudden disruptions.
Resilience test: Assess and test your ability to reroute production swiftly if a key supplier becomes unavailable. Can you resume operations within a week, a month or a quarter?
3. Cyber resilience
Cyberthreats, now weaponized with AI, routinely affect operational technology (OT) beyond the traditional corporate IT environments, leading to painful disruptions. Key concepts to consider include the following:
Unified risk management: Integration of OT and IT security is essential as threats are moving from administrative functions into operational areas.
Zero-trust architectures: Adopt identity-first approaches, robust network segmentation and continuous real-time threat monitoring.
Regulatory alignment: Cyber incidents increasingly carry significant environmental, social and governance and (ESG) disclosure implications, necessitating executive-level attention.
Board metric: Track and improve mean time to recovery for operational disruptions, aiming for rapid response and minimal downtime.
"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."
Accelerate your AI strategy with
RSM's AI Readiness Assessment
Begin with a customized AI roadmap built for results
4. Proactive regulatory reporting
Global (and local) ESG mandates are evolving swiftly. Businesses operating internationally and across U.S. state lines face intensifying pressures from regional regulators. Key concepts to consider include the following:
Comprehensive quality reporting: California’s SB 253 and SB 261 mandate greenhouse gas and climate-risk disclosures. Canada’s S-211 demands transparency on modern slavery. The EU’s CSRD requires detailed, audited ESG data. In addition, several states have added extended producer reproducibility reporting, beginning this year.
Operational embedding: Robust ESG data management, reporting and compliance should become intrinsic parts of operational frameworks, supported by auditable, interoperable data systems.
Establishment of third-party risk management: Staying ahead of strategic, reputational, operational, transactional and compliance risk is a long-term competitive advantage.
Strategic reality check: Proactively managing risk is an investment, not an expense. It mitigates myriad future risks and enhances your corporate reputation.
5. Dynamic scenario planning
Persistently high interest rates, economic uncertainty and regulatory volatility demand heightened financial prudence and strategic flexibility. Key concepts to consider include the following:
Redefined ROI: Adjust capital project assessments, debt financing strategies and M&A activities in light of prolonged high-interest environments.
Scenario agility: Use dynamic scenario modelling to proactively evaluate pricing strategies, supply chain vulnerabilities and financial resilience.
Liquidity buffers: Strengthen liquidity management, emphasizing cash flow optimization and the maintenance of strategic reserves.
Investor narrative: Demonstrating financial agility translates directly into valuation premiums, as flexibility and responsiveness become key differentiators.
Strategy as strategic positioning
Regulatory landscapes, consumer expectations and technological advancements are evolving rapidly. The companies that will lead are quickly building and expanding solid foundations that can withstand instability. 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.
When recalibrating your business strategy, anchor your focus on critical technologies, anticipated risks and market forces shaping your future. Build agility, embed resilience and position your organization to thrive and lead through uncertainty.
RSM contributors
Related insights
Experience the power of being understood
Connect with our business strategy operations professionals today.
