High-Friction Firms in a Low-Friction World
When the external cost of transactions falls to zero and the internal cost is still huge.
The dominant narrative is that AI reduces costs. We are told that headcount will drop, API calls are cheap, and the cost of intelligence is trending towards zero.
But inside most large organisations, the real cost of a single meaningful transaction isn’t computing power. It is buried in approvals, handoffs, email chains, and governance theatre.
AI doesn’t solve this. In fact, if you add high-speed agents to a high-friction organisation, you just get faster chaos.
From the outside, it looks like a modern firm. From the inside, it feels like wading through glue.
The Shift: If the external market moves to zero-friction agentic interactions while your internal operating model remains high-friction, you aren’t just inefficient. You are structurally obsolete.
In this article, I break down:
Why the next era of the enterprise is not about firing people, but about removing internal drag.
How to stress-test your 2026 investment roadmap for “Agent-Readiness.”
A simple mapping exercise to expose where your real transaction costs live.
A challenge for this week: Run the mapping exercise inside on just one workflow. If you find the friction points but aren’t sure how to remove them without breaking the process, hit reply (or DM me).
The Post-Firm Enterprise: Why Your Internal Friction Is Your Biggest AI Risk
Everyone talks about agents killing transaction costs. Few admit how expensive transactions still are inside their own walls.
We like to tell ourselves that AI is pushing the cost of transactions towards zero.
API calls are cheap. Models are getting better. Agents will soon be able to talk to other agents and systems and vendors and customers. “Everything will just… happen.”
From a distance, it looks like the cost of getting something done is approaching zero.
Inside most large organisations, it’s nowhere near zero.
The real cost of a single meaningful transaction is buried in:
approvals and sign-offs,
handoffs between teams,
email chains and Teams chats,
risk and compliance reviews,
“who actually owns this?”,
“can you resend that deck?”,
and a dozen systems nobody fully trusts.
From the outside, it looks like a firm.
From the inside, it feels like wading through glue.
The myth of zero transaction costs
There’s an old idea in economics: firms exist because it’s cheaper to do things inside the firm than in the open market.
Ronald Coase made this point almost a century ago, firms arise when the transaction costs of using the market (searching, negotiating, contracting) are higher than the cost of coordinating work inside a single organisation. If it’s cheaper to coordinate internally, you build a firm. If it’s cheaper to coordinate externally, you don’t need one.
That might have been true when “inside” meant:
fewer contracts,
simpler coordination,
clearer ownership.
Today, for many enterprises, that logic has quietly flipped.
The apparent cost of doing something internally (no vendors, no procurement, no new contracts) looks low. The real cost, in time, attention, meetings, escalations, rework, is huge.
You see it every time you try to:
launch a new product,
change a process,
or connect two systems that “should just talk to each other”.
On paper: trivial.
In reality: months of friction.
This is the transaction cost that rarely appears on a budget line, but shapes everything.
The post-firm enterprise
When people talk about the agentic economy, they often jump straight to a kind of utopia:
Agents negotiating on our behalf.
Work routing itself to the right capability.
Processes that are self-optimising and self-healing.
It sounds like a world where you no longer need everyone under one metaphorical roof. Work flows through a network of capabilities, not a hierarchy of departments.
That is the direction of travel.
But most enterprises are structurally nowhere near ready for that world.
Instead, they’ve layered tools and automations on top of:
legacy processes,
brittle data,
and organisational structures designed for a different era.
If you drop agents into that environment, you don’t get a post-firm enterprise.
You get faster chaos.
A post-firm enterprise isn’t “no firm”. It’s a firm that behaves as though the cost of coordination, decision-making, and execution is genuinely low, because it has done the hard work to reduce internal friction.
This is not a utopia pitch
This is where a lot of AI conversations lose people.
They imply that you should:
throw away how you operate today,
rebuild everything around agents,
and hope it all works out.
That’s not the argument.
You still need to run the business. You still need to deliver this year’s numbers. Nobody is asking you to switch everything off tomorrow and wait for agents to land.
This is not a “build it and they will come” story.
It’s much more pragmatic:
Reduce the internal friction that is silently taxing every transaction today.
Design work and data flows that an agentic environment can plug into tomorrow.
You don’t get ready for the agentic economy by buying an “agent platform”.
You get ready by making it easier for any agent, human or AI, to see what’s going on and act end-to-end.
2026: the year you either get ready – or lock in another cycle of debt
If you’re planning major investments in 2026, new core platforms, AI programmes, operating model redesign, this is the moment to stress-test them against this reality.
For every significant initiative, ask three questions:
Does this reduce internal friction, or hide it?
Are you genuinely simplifying workflows, approvals, and ownership – or just wrapping them in a prettier interface and a chatbot?Does this make it easier for agents (human or AI) to act?
Will a future agent be able to:understand state,
take decisions,
and execute actions end-to-end
using the data and processes you’re putting in place?
Are we increasing or decreasing our structural tech debt?
Are you adding another siloed platform with yet another integration layer, or are you consolidating and clarifying how work flows across the enterprise?
If the honest answers are “no, no, and… probably not”, there’s a good chance you’re pre-funding the stranded assets of 2027 and 2028.
Tech debt isn’t just code
We usually talk about tech debt as:
bad code,
old systems,
unfixed bugs.
Over the next five years, the most expensive tech debt will be:
operating models you can’t unpick,
platforms that can’t be easily orchestrated by agents,
governance models that assume a human in every loop, every time.
You can refactor code.
It’s much harder to refactor an organisation’s way of working once you’ve wrapped it in contracts, SLAs, and “this is how we do things here”.
A simple provocation to end with
Pick one high-value workflow in your business.
Map every step, decision, and handoff.
Label each step as Friction-creating or Friction-removing.
Then ask:
“If this had to run in a world where agents can see our data and act across our systems in real time, what would we strip out, what would we standardise, and what would we expose as clean capabilities?”
That’s the starting point of the post-firm enterprise.
Not shutting the firm down.
Not waiting for some AI utopia.
Just systematically reducing the internal friction that’s costing you today, and will decide whether you thrive or fall behind in the agentic economy tomorrow.