How to Compete Against Agentic Startups

Summary:

Agentic AI is changing how startups form, operate, and compete—something that matters not only for these new businesses, but for established firms at risk of being disrupted.

In a new article, HBS executive fellow Vivian S. Lee, board director for both AI-native and incumbent companies Linda Mantia, and venture studio co-founder and CEO Jon McNeill outline the technological advancements reshaping startups. The trio then describes five ways AI creates competitive advantage for these ventures over time:

Zero-latency iteration: They’re able to change a digital product rapidly after receiving customer feedback.
Automated go-to-market capabilities: They can acquire new customers quickly, rivaling the scale and speed of established companies.
Autonomous business functions: It takes fewer people to get a business off the ground.
Radical capital efficiency: Agentic startups require far less capital to launch, and can raise money faster.
The AI-driven flywheel: Finally, these companies can learn about their customers’ needs quickly and address them early and iteratively.

This poses a conundrum for incumbents. “Employees who have spent a decade mastering stable processes have little preparation for AI-augmented roles,” the authors write. Issues like technical debt and economics magnify these structural challenges. But simply launching dozens of AI pilots to level up won’t move the needle; as the authors note, you can’t “drop an intelligent system into a messy process and expect magic.”

To compete, established firms need to understand the core vulnerabilities of agentic startups: increased risks around quality, reliability, and compliance, and talent shortages for key human roles. Then, they should focus on how to revamp their most important workflows. The article offers six practical steps for how to put this into practice.

New Boss, New Tactics

With reorgs and transformations happening across sectors, it’s likely you’ll need to get to know a new boss sooner rather than later. That process involves some risks, but also opportunities, executive coach Dina Denham Smith emphasizes. Instead of taking a “wait and see” approach, Smith suggests seven strategies to try right away, including:

Hitting reset. Avoid ascribing too many preconceived notions to your now-manager. “Reputations travel fast but are often incomplete or outdated,” Smith says. “One tech leader I interviewed had braced for a difficult dynamic with his new manager based on secondhand accounts, only to find them to be positive and supportive.”
Taking advantage of a clean slate. Because a new leader doesn’t know “your old patterns, your previous struggles, past mistakes, or bad calls,” you can shape how they see you going forward. “What do you want to be known for? Where do you want to step up, and what do you want to step back from? Translate that intent into visible behaviors from day one.”
Aligning with your peers. This one may seem unexpected, but it’s important. When there are leadership changes and teams shift, one common response is to jockey for position or lay claim to scarce resources. However, “these political ploys rarely go unnoticed, shaping how a new manager sees the individuals involved,” argues Smith. “Resisting that pull and working towards team cohesion can set you apart as mature and trustworthy.”

Read through the rest of the article for four more tips, and bookmark the piece for when a new boss comes knocking.

Ruminate on This

One thing to know about me is that I started an article I wrote back in 2021 with the sentence, “I am a world-class catastrophizer.” As such, I was drawn to our new IdeaCast episode with science journalist Donna Jackson Nakazawa on rumination and how to break free from negative thought patterns.

Among the highlights of the interview: The word “ruminate” originates from ruminants, animals who chew their cud all day. Does this make the idea of ruminating funnier and more relatable? Absolutely. Though, as co-host Alison Beard notes, this mental chewing can ultimately diminish our focus and work performance. Rumination also prevents the “267 other areas of the brain” from being creative and solve problems, among other activities. Understanding what my ruminating is getting in the way of was eye-opening for me.

Notably, Nakazawa says that “when people are able to work through their ruminative patterns, they don’t react so much to the small things that are going on around them. They lose the reactivity that takes them out of the productivity and that is a really big deal.” There’s hope for us yet!

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