The other one about boundaries
ABCDE, part IV
Friends,
I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.
In today’s newsletter, we dig deeper into strategic boundaries including their pragmatics.
Also, as ever, an update on my schedule and the market vitals - this week including tariffs, consumer sentiment worries, EU CSR legislation pullbacks, Nvidia, the reality of data centers, and Salesforce.
Now accepting keynotes for 25Q3-25Q4
Every year for the last decade or so, I have created three main presentation decks. For 2025, however, I have (for the first time) added a fourth due to popular demand. They are:
What to Do When You Don’t Know What to Do: How to turn change into a competitive advantage. (Based on the new book by the same name.)
Leadership in a Time of Change: How to steer an organization through a sea of uncertainty.
Resilient Retail: How to build a profitable retail business in the modern marketplace. (Based on the 2025 follow-up to the highly praised 2022 white paper The Gravity of e-Commerce.)
Artificial Intelligence Beyond the Bullshit: How to establish the real-world relevance of a new technology.
If you want to book me for your event, corporate speaking slot, or workshop, merely send me an email. To make sure I am available, please do so at your earliest convenience; my availability is limited and the schedule tends to fill up fast. More information may be found here.
A couple of updates before we go-go
Well, at least we got one day until someone got sick again. Once again, the eldest brought home a cold from kindergarten. Although it appears - knock on wood - that the rest of us managed to steer clear of it, it meant another few days of “agile working schedules”.
Ah, the joys of working from home.
Less than a week to go until the Richmond digital marketing & AI forum at The Grove in Hertfordshire just outside of London. If you are attending, do let me know; I will be one of the featured speakers and discuss some of the findings from the new book.
Because of my travels, next week’s newsletter may arrive slightly later than usual (either Friday afternoon or Saturday morning). I will do my best to ensure that it does not, but with the family health situation being what it is, I thought I might give a heads up.
After the UK dates, I will be off for the US and Austin, Texas. More information to come.
My favorite story of 2025 so far: a couple of morally bankrupt individuals decided to break into a car in Toulouse and steal, among other things, the owner’s credit card. Knowing that it would get cancelled as soon as the theft was discovered, the thieves quickly used the card to buy various items, including a lottery ticket, from a bar. As it turned out, the ticket was a winner worth half a million euros. But, of course, since they bought it using a stolen card, they cannot collect the winnings without giving themselves up.
Karma.
Moving on to the market vitals.
The market vitals
Another week, another threat of new tariffs made by The Orange One. This time, he proposed a blanket 25% on all goods from the EU, adding that the union was formed to “screw the United States". Leaving aside that its original aim was to stabilize Europe and avoid the large scale conflicts of the early 20th century (and that a unified foreign and security policy, common citizenship rights and cooperation in the areas of immigration, asylum, and judicial affairs have approximately three fifths of fuck all to do with the US), it yet again spooked the stock market.
What is now becoming clear, though, is that the worries are starting to spread beyond Wall Street. The US consumer confidence index has fallen for three straight months as more and more Americans anticipate a looming recession. The University of Michigan’s consumer sentiment index reported a nearly 10% drop in February from the prior month, indicating widespread pessimism about the economy. Retailers are projecting a weak outlook for the year. Blue collar business leaders are expecting hundreds of thousands of lost jobs. On it goes.
Although we have yet to see many tariffs actually implemented, Trump yesterday declared that the proposed and subsequently postponed penalties on goods from Canada, Mexico, and China (the latter of which did get a 10% add-on) would go into effect on March 4 as planned. If they do, expect a further decline.
Oh, and keep in mind that we are still just in February.
Oy vey.
Speaking of the European Union, it recently announced that it would delay its much talked about Corporate Sustainability Reporting Directive (CSRD) in order to simplify the rules and boost international competitiveness. This is something that we predicted would happen when the regulations were first discussed; with the US going one way on CSR issues and the EU going another, eventually something had to give. And it appeared highly likely that the money would win in the end, since it pretty much always does.
As bad as it may be for the environment, and as much as it will piss off the Greta Thunbergs of the world, the fact is that the geo-political landscape has changed in recent years. If the EU is to build a more competitive Europe in the current reality, having one hand tied behind one’s back by red tape does not help.
To be clear, I am not taking a personal stand on the matter. I am merely explaining the relevant reasoning.
The most anticipated quarterly results of, well, any came in this week. Nvidia beat both earnings and revenue expectations, and provided an outlook above of the consensus estimate for the next quarter. Perhaps most notably, the firm reported data center revenue of $35.6B, up 93% YoY. However, the stock still declined by roughly 9% - the firm’s largest post-earnings decrease since November 2018.
The reason for the slide was reportedly a concern that growth had peaked, or at least will peak soon. Although I understand the thought process, I am not fully convinced by the underlying evidence. Nvidia’s numbers are still immensely strong, client capex figures are still increasing, and Blackwell (the firm’s latest generation GPU) was the star of the report.
As far as I see it, the biggest threats to the company’s near-term fortunes are a) Trump’s tariffs, and b) the speed at which the relevant technology is democratized (which, as we know from the 4E model, accelerates innovation and efficiency). We do not know enough yet about the former, and despite the hoopla surrounding DeepSeek have not seen much improvement in the latter.
Certainly, there is a danger that investor patience runs out. AI has long promised earth-shattering returns, but outside of decent numbers from cloud services, there simply has not been any. A Jerry Maguire moment will inevitably arrive if things do not change. But we are not there yet.
Speaking of AI and data centers, it is interesting to note that they hardly provide an employment bonanza for the masses despite political and tech leader claim to the contrary; the number of created jobs per square foot is immensely low. The new OpenAI facility in Abilene, for example, will employ around 100 people - a fraction of the people who, as Tom Dotan noted, might work on the same one million square feet if it were an office park, factory or warehouse.
As previously discussed, the salary costs of AI may be large, but they chiefly come from a very small, very expensive group of people.
Salesforce quarterlies were decent but not mind-blowing; its fiscal year revenue outlook came it at somewhere $40.5B to $40.9B, nearly $1B below consensus. The headline item was the potential of AI agents, but thus far the customer adoption rate has proven to move at about the same pace as a glacier.
In a way, one of the biggest threats to Nvidia is one of the biggest opportunities for Salesforce. If indeed DeepSeek’s results were to prove possible to replicate and significant cost reductions are obtainable, Salesforce would stand to gain a lot. This opens up for rather interesting hedging.
Moving on.
Boundaries, part deux
Theory, practice, and praxis
Two weeks ago, we began to dig into strategic boundaries within the context of adaptive strategy and what one might call organizational steering. In particular, we lingered on the concept of apophasis - i.e., denial or negation - and how even if we cannot express what something is, we can often state what it is not.
Just as how an individual such as yourself might live their life not by who they want to be, but who they do not want to be, businesses can make a lot of good decisions by eliminating, or at least limiting, bad ones. The problem is that the way that they go about doing it, spurred on by conventional strategic management wisdom, typically creates the opposite effect of that desired.