Happy Thanksgiving, dear readers!

Everyone hates tariffs, right? Our trading partners hate them, U.S. consumers hate them, and American CEOs hate them, too... or so we assumed. Researchers have analyzed thousands of earnings calls to track and measure CEO sentiment around tariffs, with surprising results. More on that below. 

Also, won’t somebody think about the management consultants?! The inexorable march of AI has now come for consultancy tasks; junior consultant grunt work like research, number crunching, analytics, and report-writing. What does this mean for the future of consulting, and what will it mean for MBA grads who have (until now) seen consulting as a highly attractive career path?

This issue features the usual bunch of AI Insights and recommendations for the week's podcasts, books, shows, charts, and tweets, followed by a final chuckle.

Let’s get going.

Industry Highlights: Tariff Optimism Begins to Climb

When you hear the word "tariff," you might imagine a frustrated CEO cursing the government’s trade wars and the spiralling costs of imports. It’s easy to assume that every executive sees tariffs as a dangerous threat, but recent research from the WSJ reveals something surprising. A deep dive into thousands of earnings calls shows that many CEOs are feeling a lot less anxious about tariffs than you’d expect.

Shift in Sentiment

Data analyzed from over 5,000 earnings calls indicates a significant change in tone among business leaders. Executives are now sounding more optimistic, with many expressing a sense of relief that the worst impacts of tariffs might be behind them.

One reason for the newfound optimism is that the actual tariffs businesses are paying have often turned out to be lower than previously announced rates. The business world is getting wise to the Trump playbook: threaten high but settle lower. 

According to Oxford Economics, U.S. companies paid about 12% on the value of imports in October, a substantial figure, but much lower than the dramatic levels suggested at various points during the trade disputes. Businesses have become adept at managing these costs, utilizing strategies like securing exemptions, raising prices, tweaking supply chains, and tariff engineering.

CEOs Still Dislike Uncertainty

CEOs, according to this research, are increasingly optimistic that tariffs are manageable. But even high tariffs are arguably preferable to the rollercoaster of uncertainty that makes it extremely challenging to plan ahead. Besides the rapid-fire nature of tariff announcements and rollbacks, the other factor adding to tariff uncertainty is the Supreme Court’s recent comments questioning the extent of Trump’s authority to impose broad tariffs. 

Uncertainty means business risk, which is why tariffs can’t be ignored in earnings calls:

A More Complex Picture

So, the image of CEOs uniformly hating tariffs may need a makeover. The data indicates that many executives are adjusting their sails rather than sinking their ships. As they adapt to new realities and find ways to mitigate costs, business leaders seem less constrained by past worries and more focused on future opportunities. It turns out, maybe tariffs aren’t the doom-and-gloom scenario we imagined after all - for the business world, anyway.

The Future of Work: AI Comes For Management Consultant Jobs

AI is shaking things up again, and this time it's redefining what it means to be a consultant. Traditional consulting roles are starting to feel the heat, and the skills that tomorrow’s consultants need are changing faster than ever.

AI’s Capability to Disrupt

The consulting industry is on the verge of a major shift. AI can handle a lot of the research, synthesis, and data analysis that consultants have historically done. Picture AI algorithms sifting through heaps of data, quickly spotting patterns and generating insights that used to take teams of analysts weeks to figure out. It makes you wonder: will consulting firms really need as many entry-level analysts? And why would clients hire these firms when so much of the foundational work can be automated?

According to a Bloomberg article on this topic, firms are seriously contemplating these questions. Ron Kermisch, a partner at Bain & Co., points out that they're starting to use AI directly in client projects to better understand what it all means. Instead of the old pyramid structure, where junior consultants formed the base, the industry might be shifting to a diamond shape. Here, AI takes care of the repetitive stuff, leaving human consultants free to tackle more strategic tasks. This change could streamline operations but also makes firms rethink how many consultants they actually need.

Evolving Expectations for MBA Graduates

With AI on the rise, there’s a fresh focus on what makes a successful consultant. To stay competitive, firms are looking for candidates who can blend technical know-how with human judgment and emotional intelligence. MBA graduates heading into consulting must now be more than just number-crunchers; they also need to be great communicators, skilled at interpreting AI insights and connecting with clients on a personal level.

These firms now see AI proficiency as a basic requirement, just like mastering Excel used to be. This shift has changed how they recruit, with a newfound emphasis on candidates who have both hard and (especially) soft skills. Firms want people who can build relationships, navigate tricky interpersonal situations, and guide clients through change management tasks that AI isn’t ready for (yet).

The Future: Higher-Value Activities

In a typical consultancy engagement, a 'star' partner commands eye-watering hourly rates and is most actively involved during the initial pitch to secure clients. While their expertise and charisma set the tone for the project, they tend to step back once the engagement begins (often to the frustration of clients), leaving their junior consultants to execute the heavy lifting. These juniors handle everything from research to data analysis, effectively becoming the backbone of the operation while the partner focuses on high-level strategy and oversight.

This model faces disruption. If AI can efficiently manage research and data synthesis, the necessity for junior consultants may diminish. The ‘star’, in this scenario, no longer has the option to handball consulting hours to junior team members, and may find it necessary to show up more often. 

As AI takes on routine analysis, consultants can dive into more valuable activities that need a human touch. Consulting firms know that their real strength lies in leading teams, making sound decisions, and building trust with clients. So, instead of threatening the future of consulting, AI is reshaping it into a mix of tech-driven efficiency and human expertise.

MBA grads who learn how to navigate AI tools while also sharpening their people skills will come out on top. The real challenge moving forward is finding the right balance between the capabilities that AI brings to the table and the essential human qualities that make for successful consulting relationships.

By the way, this story follows a wider trend where companies of every size are dramatically reducing their hiring of entry-level roles. Check out my exploration of that topic in The Supply Times issue #88.

AI Insights

This week, I checked out Benedict Evans’s AI Eats The World.

It may sound a little intimidating, but reading Benedict Evans’s 90-slide dive into the current state of AI is well worth the time. Three years into the generative AI era, Big Tech is investing approximately $400 billion each year in infrastructure, but fundamental questions persist. Evans cuts through the noise to provide clarity on the current landscape, arguing that AI is not just an incremental improvement but a fundamental platform shift, making underlying models increasingly commoditized while shifting value to the applications and distribution channels built on top. 

His report highlights that past technological disruptions show that early leaders often don't win in the long run, that AI will likely increase demand for the tasks it automates, and that the focus will shift from the AI model itself to how it is applied to solve specific problems and create new business models.

The Supply Aside

📕 Read - Benjamin Franklin: An American Life

I had the chance to visit a famed half-priced book store and picked up this classic! I’ve always enjoyed the biographies of Walter Isaacson, so l’ve looked forward to digging into this one. 

I love this description of Benjamin Franklin: “The founding father who winks at us. The one who seems made of flesh rather than marble.” Franklin comes alive as a relatable entrepreneur and visionary as Isaacson traces his journey from Boston to Paris. From runaway apprentice to America's foremost writer, inventor, and diplomat who shaped the nation in more than one way. Isaacson’s main thesis is that above and beyond his role in the constitution, the brilliant and very human Franklin played a key part in forging the American national identity.

What Else I’m Reading

• Companies are “Refounding”: Is this the corporate equivalent of a marriage vow renewal? This article explores how companies often lose their way and then try to reclaim their core identity, a process known as "refounding." Examples include Nike's CEO Elliott Hill and Starbucks' Brian Niccol, who are refocusing their brands on what made them great in the first place.

• “Clumsy” layoff tactics angering staff: Employers are evolving their layoff tactics to minimize public distress, but methods like text-email notifications and listen-only video meetings have drawn criticism for lacking dignity. 

• The anti-trust movement is failing: In case you missed it, Meta just won a major antitrust case brought by the US Federal Trade Commission when a judge ruled it does not hold a monopoly on social networking. This article explores a wider trend where the anti-trust movement, once seen as a threat to Meta, Google, Apple and Amazon (see The Supply Times issue #58), appears to be spluttering to a halt.

📺 Watch - The Thinking Game

It’s interesting that Demis Hassabis once worked for iconic British game developer Bullfrog, which released Populous back in 1989. It was regarded as the first “god game”, where you play the role of a deity with divine powers to guide your followers and eliminate your opponents. Fast-forward nearly 40 years, and Hassabis is on a relentless quest to unlock the god-like powers of AGI (artificial general intelligence). The Thinking Game was filmed over five years, starting with the moment his team made history solving the protein-folding problem (AlphaFold) and following their progress and setbacks with AGI. This is an accessible introduction to what is potentially the most important scientific pursuit of our time.

👂 Listen - All-In: Ari Emanuel and the Future of Entertainment

I was interested to see that the comments on this episode of All-In were mainly negative. Listeners don’t seem to like Ari Emanuel, and they particularly disagree with his prediction of an AI-enabled three-day workweek. Personally, I was interested in his insights into the future of streaming platforms. Emanuel talks about Netflix for Creators and how it might compete with Youtube, and what it means for IP ownership. If you’re into sports, you might be disappointed to hear Emanuel’s prediction of a shift to “clip culture” to adapt to ever-shrinking attention spans. 

Some fun facts: Ari Emanuel was the inspiration for the character Ari Gold in the HBO series Entourage, and his wedding ceremony was officiated by none other than Larry David.

🧠 Think: Turkeys at a Loss

To those secretly thinking about supply chains while feasting on turkey tomorrow, here's some good fodder. 

This year's Thanksgiving dinner is actually an interesting case study in economics. The average cost dropped 5% to about $55 for 10 people, with turkey prices falling 16% to $21.50 for a 16-pound bird. But there's a twist, since wholesale turkey prices actually jumped 80% this year due to bird flu. So, how and why are we paying less? Turns out, grocery stores are treating turkeys as "loss leaders," i.e., sometimes selling below cost to get you in the door. Some chains are advertising frozen birds for 27 cents a pound. Retailers absorbed the price shock, locked in early contracts, and used the turkey as bait to fill your cart with higher-margin items. It's a retail strategy disguised as holiday generosity.

Charts of the Week

Quote of the Week

Tweet of the Week

The Final Chuckle

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you. If you have suggestions or topics you want to see me address, email me at [email protected]!

-- Naseem