Category Archives: Corporate Transformation

Social Platforms in the Age of Generative AI

August 21, 2025 By in Business Model Innovation
This entry is part 3 of 8 in the series Gen-AI Erodes Business Models

For nearly two decades social platforms like Facebook, Twitter (X), YouTube, and TikTok have defined the way information is consumed online. Their business model has been remarkably consistent:

  1. Capture attention through feeds optimised by algorithms.
  2. Monetise discovery by inserting ads into those feeds.
  3. Lock in creators and audiences by making the platform the essential intermediary between the two.

This model relies on one central feature: control over content discovery. The feed is the bottleneck and the algorithm is the gatekeeper.

Generative AI is shifting that balance of power.

From Algorithmic Feeds to User-Directed Discovery

In the old model users consumed what the platform’s algorithms decided was relevant. Discovery was not organic, rather it was curated by the system to maximise engagement.

Generative AI enables a different interaction. Users can now summarise, filter, or reorganise content themselves without depending on the platform’s feed. For example:

  • Instead of scrolling through thousands of tweets, a user can ask an AI agent to summarise trending discussions.
  • Instead of relying on YouTube’s “up next” suggestions, a user can instruct AI to curate a learning path across multiple creators.

The power shifts from platform-driven feeds to consumer-driven control. Continue reading →

The Airline Loyalty Program Revolution

August 20, 2025 By in Business Model Innovation
This entry is part 1 of 2 in the series Business Model Innovation

Airlines are notorious for their slim margins. Volatile fuel prices, labor disputes, and economic downturns have historically left the industry exposed to shocks that can wipe out years of profitability in a single quarter. Yet hidden in plain sight lies one of the most successful business model innovations of the last half-century: the airline frequent flyer program.

What began as a simple marketing perk in the late 1970s, rewarding customers with miles for loyalty, has since evolved into a multi-billion-dollar financial powerhouse. In fact, loyalty programs have in some cases become more valuable than the airlines themselves.

Examples include:

  • United’s MileagePlus was appraised at $21.9 billion in mid‑2020 while the airline itself was much less valuable.
  • United also secured a $5 billion loan using MileagePlus as collateral—valued around $20 billion.
  • United’s and Delta’s programs were separately valued at $22 billion and $24 billion respectively.

From Perk to Balance Sheet Powerhouse

Early frequent flyer programs were straightforward: fly more, earn miles, redeem them for free flights. But over time airlines recognized that miles were more than just a perk—they were a currency.

By selling miles to banks, credit card companies, hotels, and retailers, airlines created high-margin, recurring revenue streams. In 2019 alone U.S. airlines generated billions in revenue simply from selling miles to credit card issuers.

The true significance of this shift came into focus during crises. In American Airlines’ 2011 bankruptcy its AAdvantage loyalty program was valued at nearly USD 20 billion far exceeding the airline’s market capitalization at the time. During the COVID-19 pandemic airlines used their loyalty programs as collateral to raise emergency financing. What once looked like a side business became the crown jewel of the balance sheet.

Reframing the Business: Airlines as Financial Services Firms

The key insight was reframing. Airlines realized they weren’t just in the business of moving passengers from A to B. They had become issuers of a loyalty currency, with economics closer to a financial services firm than a transport company. Continue reading →

Search Engines in the Age of Generative AI

August 18, 2025 By in Business Model Innovation 1 Comment
This entry is part 2 of 8 in the series Gen-AI Erodes Business Models

 

For two decades, search engines have been the primary gateway to the internet. Their business model rested on a simple formula:

  1. Aggregate attention by being the starting point for information discovery.
  2. Monetize visibility through advertising, with sponsored results and keyword auctions.
  3. Lock in users through habitual use and incremental improvements in relevance.

This model created some of the most profitable businesses in history. Yet generative AI now strikes at the very foundation of this model.

From Queries to Answers

Traditionally, search engines returned lists of links. Users had to sift through them to find what they needed. Advertisers paid to appear prominently in those lists.

Generative AI reframes this interaction. Instead of links, users receive direct, synthesized answers. The entire logic of the search engine — page ranking, sponsored slots, click-through funnels — is undermined when the answer bypasses the list.

Erosion of the Advertising Core

This shift has two profound consequences:

  • Fewer impressions – If the user receives their answer in the AI output, they have less reason to scroll through search results or click ads.
  • Weaker targeting – AI intermediates the query, stripping out much of the context advertisers once used to optimize placements.

The economic engine of search is paid visibility and weakens as AI compresses the user journey from query → links → clicks to simply query → answer. Continue reading →

Gen-AI Erodes Business Models: Series Introduction

August 18, 2025 By in Strategy, Business Model Innovation
This entry is part 1 of 8 in the series Gen-AI Erodes Business Models

 

Generative AI is beginning to erode some of the most entrenched business models of the last century. Where traditional competitive moats relied on scale, distribution, information asymmetry, or regulatory capture, AI is flattening those advantages. What once seemed unassailable is now vulnerable.

This series explores how AI is reshaping industries not by incremental efficiency gains, but by dismantling the very structures that created durable equity value in the first place. The common thread: AI collapses barriers to entry, redistributes power, and creates space for small, nimble actors to compete with, or even replace, incumbents.

The Core Thesis

Most legacy business models share a common foundation: they controlled the first step in the customer journey (search, discovery, or access) and extracted value through aggregation. AI undermines this control by allowing consumers and businesses to bypass the gatekeepers and move directly to optimal outcomes.

This shift does more than disrupt individual companies, it also changes the geography of global commerce. Power tilts away from monolithic institutions and toward decentralized ecosystems, where SMEs and independents can thrive on equal footing. Nations and cities that once competed to host multinational headquarters may instead compete to host the AI ecosystems that enable these SMEs worldwide.

Where We’re Going

Upcoming posts will map out how this plays out sector by sector: Continue reading →

Executing a Corporate Transition

January 24, 2020 By in Management, Corporate Turnaround, Corporate Transformation Tags: , ,
This entry is part 4 of 4 in the series Corporate Transformation

In this fourth article in a series on corporate transformation focused on my experience in the GCC I look at how to execute a corporate transition. In the first article of the series I described how I use a SWOT matrix to define four different corporate states and the relevant strategy for each state. This article focuses on strong firms in stressed markets. Such firms need to transition their product and service offerings to meet the new challenges of the market. This is the simplest form of corporate transformation as the company is starting with a strong management team and the market challenges are known. At this point an organizational diagnostic has been performed and an internal team has been assembled. In terms of strategy, the triage in terms of removing executives is probably unnecessary. What’s left is executing an adaptive strategic plan.

Don’t just give a man a fish

The conventional approach to change management is hiring consultants to map out the current state of the company, the market direction, the future state of the company and to provide the transition plan. Although a solution is provided the client is left to figure out how to execute the change plan on their own. This like giving a man instructions on how to fish. If you’re a fisherman, you know that this doesn’t work.

A relatively more recent approach is to hire the likes of Alvarez & Marsal or AlixPartners who provide an interim management team to lead the change management project. This solves the issue of how the change plan is executed. But the client still hasn’t learned how to fish, they have simply paid someone to fish on their behalf.

My approach of leading a team assembled from the client’s employees allows for not only knowledge transfer but also direct experience and practical skills transfer. This difference in philosophy means that my goal is to build change management capability into the company and allow the company to then effectively manage the change on their own. This is an important difference to simply managing a single change process.

Continue reading →

Strategic Planning in Transformations and Turnarounds

January 22, 2020 By in Strategy, Leadership, Corporate Turnaround, Corporate Transformation Tags: , ,
This entry is part 3 of 4 in the series Corporate Transformation

This is the third in a series of articles on corporate transformation, focused on my experience in the GCC. In the first article I developed a framework to define the current state of a company: leader, obsolete, stressed, and distressed. Identifying the current state then allows me to select a strategy type to develop: innovate, transform, transition, and turnaround. In the second article I introduced the first phase of strategic planing, which is the organizational diagnostic. This  first phase determines which of the four states the company is currently in. In this third article I describe the main phase of strategic planning that I use.

Organizational triage

The organizational diagnostic will usually result in identifying some quick wins that will have a material impact on the business. When a company calls in external executive management to manage change there are usually two main reasons:

  1. The existing executive management is competent in its job and just needs support planning and executing change while they continue to run the business; and/or
  2. The existing management cannot or will not effect change.

Which scenario is present will come out during the organizational diagnostic phase. If the second scenario is present it is critical to resolve the issue immediately. This leads to two immediate tactical changes necessary for the development and execution of a transformation / turnaround strategy.

Continue reading →

Corporate Transformation: Organizational Diagnostic

December 3, 2019 By in Strategy, Corporate Transformation
This entry is part 2 of 4 in the series Corporate Transformation

This is the second in a series of articles on corporate transformation, focused on my experience in the GCC. In the first article I developed a framework to define the current state of a company: leader, obsolete, stressed, and distressed. Identifying the current state then allows me to select a strategy type to develop: innovate, transform, transition, and turnaround.

With this framework I have a foundation on which to develop an effective strategy. The first step is to determine which of the four states the company is currently in. The conventional term for this is  organizational diagnostic. Organizational diagnostics are a well studied subject in academia, each major consultancy has its own methods for performing a diagnostic, and great companies will also have  their own methodology. In reviewing these different methodologies I was unable to find one that was effective for the companies that I was involved with, be it as an executive, board director, investor or transformation manager. So I had to develop my own, sometimes using relevant parts of the methodologies developed by others.

Failure of Conventional Organizational Diagnostics

My starting point was understanding the challenges in applying conventional diagnostic tools to companies in the GCC. The common theme is that the GCC has seen several centuries worth of evolution in their economies happening within about a 50 year period. I will touch briefly on a few of these challenges.

Continue reading →

Turnaround, Transition, Transform or Innovate?

November 12, 2019 By in Corporate Transformation Tags:
This entry is part 1 of 4 in the series Corporate Transformation

Corporate strategy begins with an understanding of the current state of the firm. The state of a company can be defined in multiple ways and my corporate framework uses leader, obsolete, stressed, and distressed. Corporate leadership is generally well understood – the company  and the economy are doing well and the executive team’s goal is to remain ahead of the competition and in tune with its clients’ needs by innovating. However, the phrases corporate turnaround, corporate transition and corporate transformation are often used, especially in challenging economic times, but there is no clear agreement amongst business executives and board directors as to what these terms mean. This confusion in terms of defining the state of the company usually leads to catastrophic strategic failure since any strategy that does not understand the current state of the company cannot address the issues faced by the company.

Disagreement about these issues is partly due to a lack of a general consensus on definitions but also partly due to the negative connotations they can evoke. In the minds of business executives the phrase “turnaround” immediately signals a distressed company which is considered an unacceptable message. At this point minds close. Executives avoid discussing what distressed might mean in this context and why it should be considered unacceptable. At one end of the scale are companies with large negative cash flows, no cash, no current assets, high short term debt, and facing legal action. Such a company is easily understood to be distressed. But at the other end of the scale is a company with multiple product/service lines that have high barriers to entry, each generating strong free cash flow. This is a successful company. The question is where on this scale does a company switch from distressed to a leader?

This question can be decomposed into three questions: 1. What is the corporate health scale that we are using? 2. What are the possible corporate states a company can be in? and 3. Where on the scale is each corporate state positioned?

Continue reading →

Effectiveness beats Efficiency in Strategy

December 29, 2017 By in Corporate Transformation Tags: ,

Efficiency slowed profit deterioration

Effectiveness will replace efficiency as the main strategic goal of UAE companies in 2018. At least, it will for the successful companies. 2017 was the year of efficiency, as companies learnt to do what they used to do with less. Less money, less time, fewer people. Efficiency cut costs and slowed down profit deterioration. As important a step as that was, it was a stepping stone to the important strategic goal of effectiveness. In simple terms, efficiency is getting things done whereas effectiveness is getting the right things done. After all, there’s no point finding cheaper ways to reach a goal if it is the wrong goal.

Effectiveness leads to profit growth

Effectiveness looks at where new revenue, and profit, are going to come from as, opposed to efficiency’s focus on costs. There is nothing wrong with working to achieve efficiency first, as it gives the company time to understand the new external environment. But there comes a time when cutting costs no longer works. In the end, sustainable profit growth is driven by increases in revenue, not decreases in cost. So how do companies become effective? What does it even mean? It means evolving, even transforming if necessary, so as to adapt to the new realities of the economy.

Executives might ask what can they do to generate revenues in a challenging economy? A simple example, just to make a point, is this: take advantage of all the efficiency initiatives. Cost cutting means downsizing, so moving companies will thrive. But what else can happen? Property management companies might provide a discounted rent during the time a client is unemployed. Continue reading →

Cash Conversion Cycle Red Flags

December 24, 2017 By in Corporate Transformation Tags: , ,

In my work helping companies transform themselves to take better advantage of economic opportunities and to manage risks more efficiently, working capital risks are frequently overlooked even though they are at the front line of risks faced by companies of all sizes.

The cash conversion cycle, an important liquidity measure that usually forms the core of a company’s working capital, is of particular importance . The cash conversion cycle is a measure of how long it takes for a dollar that is spent on the development of a product or service (which is subsequently sold on to a client) to be converted back into cash in the form of revenues. Mismanaged it can destroy a company’s finances. Continue reading →