BOSTON — They say the only constant in business is change, and 2026 promises plenty. Issues such as artificial intelligence, climate change, diversity and trade present real challenges to working executives, to say nothing of an election that could change the political landscape.
To find out exactly what companies can expect in the next 12 months, we asked professors and staff at Harvard Business School and elsewhere at the university to tell us what’s coming. Colleen Ammerman, Lauren Cohen, Nien-hê Hsieh, Ebehi Iyoha, Shirley Lu, Krishna G. Palepu, Ethan Rouen, Benjamin Schneer, Debora Spar, Jen Stave, and Gunnar Trumbull all answered the call, explaining what’s ahead in their areas of expertise.
The result is a set of essays that highlights key management issues, forecasts both problems and opportunities, and clarifies complicated questions across a variety of subjects. Together, they map out some of the key changes ahead in 2026.
Leading in an era of tectonic shifts
In an era of accelerating structural change, organizations face a convergence of economic, technological, and sociopolitical forces that amount to tectonic shifts in the global operating environment.
We are confronting deglobalization, rising inequality, climate change, declining birthrates, loss of trust in institutions, and rapid advances in AI, robotics, genomics, and space technologies. These shifts — consequential, cross-border, continuous, and contested — are advancing faster than most strategic planning cycles can absorb. Although early signals are visible, incumbents often underestimate their velocity and interconnectedness, leaving firms exposed when pressures cross critical thresholds.
Effective leadership requires more than reactive agility; it demands institutionalized foresight, the ability to interpret weak signals, and the willingness to take principled risks before inflection points narrow strategic options. The failures of firms slow to adapt to decarbonization, deglobalization, and AI integration underscore the costs of strategic inertia. As capital markets, regulators, and societies raise expectations, early movers will shape ecosystems, standards, and rules that define competitive advantage.
Tectonic leadership calls for imagining alternative futures, cultivating organizational adaptability, and guiding stakeholders through uncertainty with clarity and moral authority. Leaders who understand the interdependencies among climate, technology, demographics, and trust will be best positioned to prepare their organizations for a future already unfolding beneath their feet.
—Krishna G. Palepu is the Ross Graham Walker Professor of Business Administration Emeritus, Baker Foundation Professor and Senior Associate Dean for Business in Global Society at Harvard Business School.
Human connection will become more important
We are living in a time of massive technological upheaval, when innovations such as artificial intelligence and quantum computing are promising — or threatening — to upend both our professional and personal lives.
Yet the advent of smart machines won’t mean the end of us. On the contrary, human connection is poised to become ever more valuable as we increasingly come to treasure things that can’t be easily or inexpensively produced by even the most sophisticated machines: things like connection and community. In short, the more machines can do, the more we’ll crave what they cannot.
It’s an important thought for executives. As AI is woven into our work lives, personal contact also has a place, whether that is in sales, education and training or customer care. Now more than ever, service is important. One day soon, it may be a primary differentiator, the reason we do business with one company over another. The further we slip into the world of AI, the more we’ll cherish interactions that remain fundamentally human.
—Debora Spar is the Jaime and Josefina Chua Tiampo Professor of Business Administration and the Senior Associate Dean for Faculty Development and Research at Harvard Business School.
Leaders will confront an ‘AI Satisfaction Gap’
As generative AI becomes embedded across workplace tasks, leaders will enter 2026 facing an unexpected tension: performance is rising, but satisfaction is falling.
Across early experimental and field studies, generative AI consistently boosts quality and efficiency, particularly for lower-skilled workers. Yet emerging cognitive and emotional research suggests a parallel and more complicated pattern. Employees retain less knowledge when working with AI, creativity converges rather than diverges, and people feel less satisfied with outcomes when they know AI produced them.
My prediction for 2026: the “AI Satisfaction Gap” will become one of the most important management challenges of the year and force leaders to quantify and optimize human emotion and culture in entirely new ways. Companies will discover that AI productivity gains are stymied without engagement, trust, and cultural cohesion.
As AI substitutes for aspects of collaboration and problem-solving, leaders will be forced to rebuild the apprenticeship systems, tacit knowledge pathways, and shared identity that technology can quietly erode.
—Jen Stave is executive director of the Digital Data Design Institute (D^3) at Harvard Business school.
Tailwinds and a reckoning ahead on climate change
Look for three climate-related trends in the New Year.
The first deals with renewable energy generation. Amid ongoing political deprecations, the economics of renewables will see tailwinds. Data centers will continue to need more electricity, driving a surge in demand that will boost wind, solar, and batteries. Rising power purchase agreement (PPA) rates will increase the profitability of new wind and solar projects. And interest rates will continue to decline. This favors renewable energy sources, for which the largest share of cost derives from the initial capital expenditure.
The second trend is that a corporate reckoning with ambitious 2030 greenhouse gas emissions targets will begin in earnest. Two-thirds of firms that have set 2030 targets are not on track to meet them. Look for three kinds of responses. For firms that are still “within range,” it’s time to lock in investments that will bring them to the finish line by 2030. Firms that have set “scope 3” (supply chain) targets will be putting more pressure on suppliers to pull their weight on decarbonization. Suppliers who have been preparing for this will begin to reap the rewards of those efforts. Firms that have given up on their targets will begin strategizing about how to pull back without incurring public or investor ire.
The third trend is a hope, rather than a prediction: with the global average temperature already hitting 1.5 degrees celsius above the pre-industrial average, it’s time for firms to get serious about assessing and addressing the risks they face from physical climate change.
—Gunnar Trumbull is the Phillip Caldwell Professor of Business Administration at Harvard Business School.
Emissions disclosure is unlikely to improve—but it can
For the past decade, corporate emissions reporting has resembled the “wild west.” Our analysis reveals that 74% of S&P 500 firms revised emissions data at least once from 2010 to 2020, with the vast majority of these errors understating the company's true environmental impact. Historically, these corrections — often buried in footnotes or ignored by third-party data providers — have allowed for a systemic lack of reliability in voluntary disclosures.
In 2026, we predict more of the same, given the shrinking interest in regulating these disclosures. As regulators in the U.S. and EU move away from mandatory, audited climate disclosures, we will continue to operate in a world of "consequence-free" revisions. Executives will continue to treat carbon accounting as a rough estimate, unless we see a regulatory shift that demands the same rigor for environmental metrics that is currently applied to financial statements.
Instead, we hope the year ahead will involve a governance overhaul — catalyzed by investors and executives. We found that firms with stronger governance improve emissions reporting. For 2026, the smart path for executives is clear: Professionalize your emissions data before the auditors arrive. Treat your carbon ledger with the sanctity of your general ledger. If and when we enter a new regulatory environment, accuracy will be the only safe harbor.
—Lauren Cohen is the L.E. Simmons Professor in the Finance & Entrepreneurial Management Units at Harvard Business School. Ethan Rouen is the Terrie F. and Bradley M. Bloom Associate Professor of Business Administration in the Accounting and Management Unit at Harvard Business School.
Companies and markets will drive climate solutions
Some say the purpose of business is to maximize profit. Our recent research shows that one way to do so is by developing and scaling climate solutions, which are products and services that help lower emissions, such as electric vehicles, biofuels, batteries, solar panels, and low-carbon steel and cement.
Using U.S. 10-K disclosures to identify companies selling climate solutions, we find that these firms experience higher revenue growth. Many are incumbent companies with stable businesses that are reinventing themselves to capture a growing market. By seeking profit, these public companies, made up of many of the brightest minds in society, innovate to identify new technologies that lower emissions more efficiently and new cost-reduction methods that enhance scalability.
But there is friction. These companies also hesitate. They ask: Will the market be there? Will policies be stable? Will supporting infrastructure be available? Will customers pay for these climate solutions? Looking ahead, the answer is yes. As the physical and economic risks of climate change become more concrete (for a great description of the science of climate change for business leaders, see Chapter 3 of Professor Gunnar Trumbull’s new book), our society will transform, and these climate solutions are the path to that transformation.
We already see some evidence: firms selling in regions with high transition risks have higher future profitability and higher market valuations. Venture capitalists are investing in these startups, signaling commercial potential for climate solutions markets that incumbent firms are beginning to follow. In other words, by maximizing profit in these markets, companies are also contributing positively to addressing climate change.
—Shirley Lu is an assistant professor in the Accounting and Management Unit at Harvard Business School.
Tariff volatility could become status quo
Trade policy uncertainty is likely to persist in 2026.
The Supreme Court is expected to rule on the scope of presidential tariff authority, but even limits on this authority are unlikely to reduce the frequency of tariff changes. The U.S. executive branch still has many ways to reshape trade relationships, including anti-dumping investigations and renegotiating trade agreements. At the same time, some companies, including Costco, are turning to the courts to seek relief from tariffs. All of this points to continued movement in U.S. trade rules.
Our research helps explain how firms are likely to respond in this type of environment. In our work on business expectations, small businesses told us that tariff swings create immediate planning and cash flow pressures. These pressures often show up in hiring, pricing, and investment decisions well before they appear in official data.
We also see evidence of how suppliers adapt when tariffs rise. In our study of trade rerouting in response to U.S. tariffs on China, some Chinese multinationals transshipped through third countries in order to circumvent tariffs. The recent U.S. trade deal with Vietnam, which levies additional tariffs on goods suspected to be transshipped from China, suggests that this type of activity is likely to come under more scrutiny in the coming year. U.S. importers need to know whether their supply chains are at risk of facing compliance issues and that country-of-origin certificates are valid.
Given these developments, a concrete tariff adjustment strategy will be more effective than one-off reactions to policy changes. Larger companies may be able to design more flexible procurement contracts that account for possible changes in tariff schedules. Smaller firms may benefit from investing in stronger customer relationships or local market visibility that gives them some room to pass on higher costs. For firms of all sizes, better data and technology to connect procurement, real-time tariff exposure and pricing decisions can support quicker adjustments and may reduce the need to hold excess inventory.
As uncertainty becomes a structural feature of the business environment, firms that build resilience in a way that fits their business models will be better prepared to navigate these dynamics.
—Ebehi Iyoha is an Assistant Professor of Business Administration in the Entrepreneurial Management Unit at Harvard Business School.
A shift toward ‘quiet DEI’ is underway
When it comes to corporate diversity initiatives, the uncertainty and upheaval companies have faced throughout 2025 is unlikely to abate.
Legal cases for and against DEI programs will continue to make their way through the courts. Organizations will continue to evolve and shift their practices. And the national conversation about what fairness and equality really mean will persist. It seems unlikely that this conversation will become more constructive, despite the best efforts of many leaders to build bridges in these polarized times, though I hope this prediction is incorrect.
However, some insights will crystallize in 2026, as more and more companies sort themselves into three primary categories: those significantly cutting DEI practices; those quietly maintaining them in whole or part; and those taking a vocal stance about staying committed.
Few companies will pursue the last approach, which is, alone, a sea change compared to five years ago, when many companies were loudly proclaiming where they stand. Far more will maintain their programs, without any fanfare. Over time we’ll learn what effects this shift toward “quiet DEI” has on outcomes like women’s representation in leadership, the racial wealth gap, board diversity, and other measures of how fair our organizational and economic systems are.
It will be years before we understand how 2025’s abrupt regulatory changes are shaping the workplace, but 2026 will provide some early clues.
—Colleen Ammerman is director of the Race, Gender & Equity Initiative at Harvard Business School.
Employee ownership may gain ground
Broad-based employee ownership can do many things: motivate employees, improve efficiency, share wealth, and allow company founders to preserve their legacies when retiring.
It exists in many forms, including employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), equity appreciation for workers in private equity portfolio companies, and worker cooperatives. Yet, it remains relatively unknown.
That could change in the year ahead. On January 1, a new law will take effect in Slovenia, making it the fourth country to pass trust-based employee ownership legislation. Canada passed legislation in 2024 and the UK 10 years before that. The first such legislation was passed in the U.S. in 1974. Today, there are more than 6,500 ESOPS in the United States involving roughly 14.9 million participants and $1.8 trillion in assets.
Whether the passage of new legislation continues to accelerate remains to be seen. Plans are underway to establish laws similar to Slovenia’s in other European countries. For proponents of broad-based employee ownership, such laws are important. They provide tax incentives to owners and companies to extend the economic benefits of ownership to employees. In the U.S., the American Ownership and Resilience Act (AORA) was introduced in both the House and Senate to provide government loan guarantees to support licensed private investment funds in expanding employee ownership. It has bipartisan support.
While legislation progresses, one of the biggest developments in 2026 may be for owners, companies, and employees to learn about employee ownership and evaluate whether it is right for them.
—Nien-hê Hsieh is the Kim B. Clark Professor of Business Administration in the General Management Unit at Harvard Business School.
The election will dominate the national conversation
Looking forward to 2026, I believe the year will be defined not so much by the November election as by anticipation of it.
If Democrats retake the House, it would divide control of Congress. What happens when one party (in this case, Republicans) can reasonably expect to lose power within a year?
For one, it becomes harder to enforce discipline and consolidate support. For example, Indiana Republicans recently defied efforts to redraw congressional districts, despite threats from the president. We could see more of that.
Don't expect a wave of new legislation from Congress. Legislative productivity is likely to remain extremely low, and the status quo of governing by executive order also has limitations. The Supreme Court will determine the durability of executive actions when it decides cases on birthright citizenship, tariffs and other issues this summer.
Of course, there is no guaranteed outcome whenever Americans go to the polls. But Republicans may try to lock in policy wins in case their congressional majority slips away. Whether the threat of impending electoral losses ultimately unifies or divides Republicans, only time will tell.
—Benjamin Schneer is an Assistant Professor of Public Policy at the Harvard Kennedy School.