Welcome to professors’ picks, offering a weekly curated selection of FT articles by and for business school faculty to connect classrooms to current events and to develop students’ critical thinking.
Read all submissions at www.ft.com/bschoolpicks. Save this link in myFT to receive emails alerting you to each new edition. Search the tags for relevant topics to illustrate teaching points. Encourage students to join the debate in the comments section beneath the article.
Comments or contributions? Get in touch at profpicks@ft.com
Sustainability
ESG is beyond redemption: may it RIP
Sustainability is real and smart investors know it
Tags: Return on sustainability investment, ESG investing, sustainable finance, corporate sustainability
Summary: Two professors from NYU Stern have diametrically opposed positions on ESG and sustainability and have written op-eds to explain their points of view. We want the students to review the two pieces for weaknesses and strengths and make their own determination on the topic based on their analysis and class discussion.
Classroom applications: Sustainability for competitive advantage for undergraduates and MBA students can examine the different perspectives on the return on investment of corporate sustainability and sustainable investing.
Questions:
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Read both op-eds and summarise the key points
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Which arguments do you disagree with and why?
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Which do you agree with and why?
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Are there facts and figures to back up the authors’ arguments? If not, does that weaken the author’s position?
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Where do you come out on the topics of corporate sustainability and ESG investing after reading both viewpoints?
Tensie Whelan, Professor, NYU Stern School of Business
Innovation, Marketing
Challenging economic times are good times for Ikea’: the Swedish giant sweeps into town
Tags: Retail, marketing, sustainability, innovation
Summary: Ikea is shifting from its traditional out-of-town megastores to urban, smaller-format shops to adapt to changing consumer habits, including increased online shopping and reduced car ownership. Despite broader retail struggles and store closures, Ikea is investing in premium locations and digital integration, betting that physical presence boosts online sales. As it faces environmental and ethical challenges, the company’s paradox — balancing mass appeal with sustainability — raises deeper questions about modern consumer culture.
Classroom application: This article provides a platform for faculty and students to explore the ways in which one retailer is innovating to adapt to shifts in consumer tastes, shopping preferences, and sensibilities.
Questions:
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Which of the shifts in consumer preferences highlighted in the article affect all retailers broadly vs Ikea uniquely?
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What evidence is offered for this assertion and do you agree with it? “Over the past decade, shopping behaviour and our way of living has changed dramatically — accelerated by the pandemic.”
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How have other retailers adapted to (or fortified against) the increasing skew towards online vs in-store purchasing?
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What other retailers suffer from a similar paradox to Ikea’s and how are they innovating to remain viable?
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In what ways does Ikea’s legacy model represent disruptive innovation and to what extent does Ikea’s current pivot extend on that legacy?
Tom Davis, Clinical assistant professor, Joseph M Katz Graduate School of Business, University of Pittsburgh
Leadership
The Silence of the CEOs
Tags: CEO Leadership, Ethics, Strategy, Stake/Shareholder Value
Summary: It is surprising that CEOs of leading US companies have remained remarkably silent in the face of Donald Trump’s chaotic tariff policies and refrained from publicly expressing dissent despite substantial evidence and expert warnings that such tariffs could lead to higher prices, increased unemployment, and slowed economic growth.
While CEOs hold significant responsibility for substantial financial and human resources and their shareholders have already lost trillions, the majority seems very reluctant to individually or even collectively stand up and challenge the authorities openly, fearing retaliation. This appears to be one of the biggest failures of executive leadership in corporate history, marked by a lack of bravery and vision that defends stakeholder interests. Most CEOs have undergone extensive leadership trainings, MBA programmes and coaching. So the key question arises: why aren’t they applying their leadership knowledge to action, “fighting for what is right — for shareholders and, frankly, all of us”?
Classroom application: This article presents an excellent opportunity for Executive/MBA and Postgraduate students to engage in a thought-provoking discussion about the power, responsibility and moral obligations of CEOs during times of significant disruptive changes brought about by government actions and policy decisions.
Questions:
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Do CEOs have a moral duty to publicly oppose government actions that may negatively impact key stakeholders, particularly their shareholders?
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Consider Milton Friedman’s mandate in your reflections that “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game”
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Are US CEOs actually fulfilling Friedman’s mandate?
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What are the ‘rules of the game’ now?
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Does Friedman justify silence?
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How can CEOs effectively disagree with higher authorities?
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The article advocates replacing CEO technocrats with “true leaders of vision and steel”. What is your perspective and what should a ‘redefined’ leadership look like?
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What policies and incentives are required to ensure that CEOs always prioritise the interests of their stakeholders over their own in uncertain times?
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What would you write about the legacy of the current generation of CEOs in the ‘history book of leadership’?
Stefan Krummaker, Professor, Queen Mary University of London
Economics
McDonald’s US sales drop by most since height of pandemic
Tags: Brands, business cycle, fast food, geopolitics, nationalism
Summary: McDonald’s reported a 3.6 per cent drop in US same-store sales — the largest decline since 2020 — due to reduced customer traffic amid economic uncertainty and Trump-era tariffs. US low- and middle-income consumer fast-food industry visits dropped nearly ten per cent. Global sales also fell one per cent as anti-American sentiment grew abroad. Promotions like a $5 meal deal aim to revive demand. Revenue and net income missed forecasts.
Classroom application: This article provides an opportunity for faculty and students to analyse which businesses are procyclical and how companies are affected by brand nationalism.
Questions:
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Compare McDonald’s performance to competitors like Taco Bell and Chipotle. What role does consumer sentiment play in forecasting fast-food industry performance?
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In general, what makes a business sensitive to the business cycle?
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Evaluate McDonald’s pricing and promotional strategies in response to falling customer visits. Are they sufficient? Assess the risks and rewards of limited-time offers and promotional tie-ins, like McDonald’s Minecraft collaboration
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Why do companies ‘tap’ into countries’ brand images? Find examples of businesses with strong national identities and discuss how this can backfire in an age of geopolitical conflicts and brand nationalism
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How should McDonald’s adjust its strategic planning to address increasing anti-American sentiment in international markets?
Stefan Legge, Lecturer, University of St Gallen
Finance, strategy
AI ‘application’ start-ups become big businesses in new tech race
Tags: Fundraising, Large Language Models (LLMs), AI, Revenue Generation, technology, entrepreneurship
Summary: By creating useful tools on top of large language models (LLMs) developed by OpenAI, Google and other companies, AI application start-ups like Cursor, Perplexity, Synthesia and ElevenLabs are raising significant funding and quickly growing their income. Within a few years, these businesses have been generating up to $200mn in revenue annually, which is driving a fundraising boom that doubled investments in AI apps by 2024. The possibility of mobile apps to increase productivity without incurring the high infrastructure expenses of developing core models attracts investors. However, customer loyalty, revenue sustainability and the possibility that popular apps could be readily imitated by bigger software companies are still concerns. Although there is still a lot of ambiguity regarding the long-term market structure, many experts see the proliferation of AI applications as a significant technological revolution on par with the development of the internet and cloud computing.
Classroom application: Through a real-time case study of how AI application start-ups are using large language models (LLMs) created by industry leaders like OpenAI and Google to scale revenue and rapidly attract significant investment, the article highlights the intersection of entrepreneurship, venture capital, technological innovation and business strategy. It provides information on the characteristics of start-up growth, such as how some businesses are generating hundreds of millions of dollars in revenue in a few years, much more quickly than earlier tech generations. In addition to examining risk variables like customer retention, product sustainability and competitive copying by larger organisations, students might investigate investment decision-making, particularly the argument around the funding of “application layer” breakthroughs against “foundational model” builders.
Questions:
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Why may AI application start-ups outperform earlier tech start-up waves for revenue growth? What are the causes of this acceleration?
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What strategic differences exist between creating a foundational AI model, such as those from Google or OpenAI, and creating an AI application? What are investors’ benefits and drawbacks?
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What are AI application start-ups’ main risks, particularly those related to competition from bigger tech companies, sustainability and customer retention?
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How can AI app start-ups establish sustainable competitive advantages to prevent easy replication by bigger players?
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In what ways can the simplicity of switching AI models help or hinder start-ups such as Sierra? What might this adaptability teach other industries?
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Why may some venture capitalists hesitate to fund AI app start-ups, even when their sales figures seem promising?
Case discussion positioning: AI applications are revolutionising a number of industries by increasing productivity and creating new avenues for creativity, with start-ups focusing on multiple facets of white-collar jobs. Jack Ma, the founder of Alibaba who has returned from exile, sat in the front row with other business executives during a meeting with Chinese President Xi Jinping last month, which was a very symbolic gesture.
Gregory Stoller, Master Lecturer, Boston University Questrom School of Business
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