The Evolving Landscape of Business Strategy: Navigating New Realities

As the calendar turns to 2025, businesses face a fundamentally different landscape. After years of interest rate volatility and persistent geopolitical tensions, organizations are adapting to a new normal of strategic agility coupled with economic hope. The IMF projects global GDP growth to strengthen to 3.2% in 2025, primarily driven by technological innovation and improving market conditions.

While many dubbed volatility transient due to black swan events, including the Global Financial Crisis and the COVID-19 pandemic, the VIX index, often called the fear gauge of Wall Street, has averaged above 20 in recent years, compared to historical averages of 15-17. This heightened volatility has forced leaders to reconsider their approach to everything from strategic trade-offs around capital allocation and tech investments to evolving operating models to meet today’s challenges with increased pressure for innovation and operational efficiency, which are often at odds with one another.

It also suggests a transition into a new business landscape, one marred by increasing change and bookended by the prevalence of artificial intelligence. Thriving amidst this new landscape demands a different playbook than the one that guided companies through the previous decade of near-zero interest rates and nearly unlimited capital. Companies and leaders must now build resilience for a future marked by tighter capital restrictions, AI-driven efficiency, and shuffling geopolitical alliances and realities.

Transforming Capitalization Events

This mindset transformation is perhaps most visible in how companies approach capitalization and capital utilization. The global IPO market, once considered the gold standard of capitalization, has dramatically changed. After reaching peak volumes of over $600 billion in 2021, IPO proceeds plummeted to $179 billion in 2022 and $123 billion in 2023. While 2024 showed signs of recovery with notable listings, including Reddit and Klaviyo, total IPO volume only reached $198 billion — far below historical averages. This multi-year downturn has fundamentally altered how companies view public markets, with many opting to remain private longer or pursue alternative exit strategies. It has also accelerated public-to-private transactions.

Private Equity’s Rise

Private equity has emerged as the dominant force reshaping corporate America and global markets. Global PE assets under management (AuM) have surged and should eclipse $18 trillion by 2027 — up from $11.87 trillion in 2023. Despite more than $3 trillion in dry powder, i.e. uncommitted capital, total deal volume continued an uneven recovery globally, reflecting investor caution and the challenge of bridging buyer-seller valuation gaps in a higher interest rate environment.

The influence of private equity extends beyond financial ownership. PE firms are actively reshaping entire industries through roll-up strategies. Pitchbook notes that add-on acquisitions now represent 73% of all PE deals in mature markets.

The private equity operational playbook has become the de facto standard for corporate transformation, emphasizing data-driven management, strategic M&A, and aggressive operational efficiency. This trend is evident in the rising proportion of operational improvement versus multiple expansion in PE returns, with value creation increasingly driven by revenue growth (contributing 48% of returns) and margin expansion (37%) rather than multiple arbitrage (15%). Even public companies have adopted PE-style governance approaches. Activist investors increasingly push for similar strategic shifts to drive impact with activist fights garnering significant media attention.

Balancing the Private Equity Playbook with Corporate Evolution

The growth of private capital represents a change in how businesses view their growth trajectories and operating models. PE-backed companies are staying private longer. The average holding period has extended to 7.2 years, allowing for more comprehensive transformation programs, which assume a start and end. This shift has attracted a new class of permanent capital vehicles, including continuation funds and the rise of GP stakes, further reinforcing the trend away from traditional public market funding.

Operating models are experiencing an equally profound transformation. The previous maxim of “every business is a digital business” has become obsolete. Effectively mechanizing artificial intelligence to empower people will be the defining characteristic of enterprises set to win this new chapter. Goldman Sachs notes AI could add $7 trillion to global GDP by 2030 while boosting productivity growth by 1.5 percentage points over a 10-year period. This approach fundamentally changes how businesses create and capture value — and how companies can drive continual evolution. The winners will recognize and seize it.

Building Human-Centric Operating Models in the Era of AI

Organizations find that success increasingly depends on having the right people in the right roles with access to the right tools and technology. Companies adopting AI-driven strategies see operations efficiency gains of 25%. The combination of human expertise and AI capabilities proves particularly powerful. Organizations with integrated human-AI workflows report productivity gains of up to 40%.

The evolving talent landscape reflects these changes. LinkedIn reported that demand for AI and machine learning roles grew 74% annually from 2020 to 2024. Consequently, companies currently prioritize soft skills in today’s AI-driven landscape.

Looking ahead, successful organizations will be those that can effectively balance how a company puts all of its components together to execute against its strategy, including structure, roles, and capabilities; the talent and skills needed to fill those fit-for-purpose roles; the behaviors, governances, and ways of working to drive adaptability; the tools and technology needed to enable it.

The World Economic Forum projects that AI and automation may displace 85 million jobs by 2025 while 97 million new roles may emerge. This new reality requires organizations to develop new capabilities in technical and adaptive skills — a new form of continuous evolution. AI has created a new frontier, a powerful general-purpose technology that will reshape how the world works. The jury is still out on projections, but organizations must shift their mindset away from the short-term, AOP-driven transformation view, to a longer-range evolution management view to successfully navigate these compounding dynamics.

The path forward involves significant investment. Global AI spending will reach $200 billion by 2025, while technology spending will increase nearly 10% in 2025. Companies must balance these investments against higher capital costs and increased market scrutiny.

Conclusion

As businesses navigate 2025, they face a convergence of transformative forces that demand continuous evolution rather than periodic change. The rise of private equity has fundamentally altered capital markets and corporate governance while AI’s acceleration continues to reshape how value is created and captured. This new landscape requires leaders to master three critical balancing acts: deploying capital efficiently, integrating AI capabilities while maintaining human centricity, and driving both immediate performance and long-term resilience. Success in this landscape will belong to organizations that can turn these overlapping challenges into opportunities through deliberate planning and strategic adaptation.

Acquis works with companies and private equity firms to drive performance, accelerate technology’s impact, and more. To learn more about how we help companies evolve, please get in touch.