Written by: Shama Hyder
The most revealing number the Hyder Index has produced is one that ***didn’t ***move.
Last month I signed off with a cliffhanger. August was the first month companies started closing their Change-Response Gap, the distance between how fast their industry is changing and how fast they’re responding. I asked whether companies had learned to keep pace or had simply caught their breath before the gap opened wider.
I had a prediction. September would reopen the gap. Companies would slow back down. I wrote it down and made you wait a month.
I was wrong.
The September Hyder Index held at 69. Companies accelerated. The world accelerated by exactly the same amount. Every extra step disappeared into the pace of change. Bruh.
That’s the treadmill. Everyone runs harder to stay in the same place. If your company moved faster this year than ever before and the results look about the same, you’re already on it.
A 46-year-old warning explains why a number that refuses to move is dangerous. In 1980, Michael Porter warned that a company could get “stuck in the middle” when it competed on price and distinction without owning either. Boards nodded and mostly ignored him because being stuck in the middle was a slow way to lose. You had a decade, sometimes two. Sears spent nearly thirty years sliding before it filed for bankruptcy in 2018. Companies have far less time now. This month, two different measurements produced the same shape.
The first is KPMG’s September Economic Compass, which calls this the donut economy. Growth is running near 2%. The stock market is fine. Unemployment remains low. And the middle of the economy is emptying out anyway. Affluent households keep spending. Other households save less, borrow more, or trade down. Consumer confidence fell in August while spending rose. CEO pay is roughly 281 times typical worker pay, up from 21 times in 1965. The top 1% owns more than half of equities and mutual funds. Corporate profits hold a record share of the economy while labor’s share sits at a record low.
KPMG found the donut in the economy. The Hyder Index found the same shape inside companies.
What held at 69 actually means
The Index scores 15 industries each month on two measures. The Change Score tracks how fast each industry is moving through the Six Signals: customers, talent, money, incentives, culture, disruption. The Response Score tracks what companies say on earnings calls, who they hire, where capital goes, what they ship, and how quickly. The distance between the two is the Change-Response Gap.
August’s drop, the first in the Index’s history, came because response sped up while change held steady. September could have reversed that progress. Instead, the Response Score rose 2.1 points, from 33.6 to 35.7, and the Change Score rose by the same amount, from 70.8 to 72.9. The Change-Response Gap held at two to one for a second month.
Media and Entertainment sits in the Red Zone at 81.
Technology and AI is at 80.
Legal and Professional Services crossed into Red at 76, the first new industry to do so since the Index began. Insurance posted the biggest response gain, from 33 to 37, after carriers put AI numbers in front of investors. Ten of the fifteen industries stayed in place.
The score of 69 is one average for all 15 industries. That average hides what is really happening. A few leading companies are moving fast. And, ahem…so are the businesses selling them AI tools. Most other companies are still testing tools without changing who they hire, which customers they serve, or how work gets done. That creates the donut: lots of movement around the edges and very little in the middle.
The next three sections show where it happens: jobs, customers, and AI.
The middle of the org chart is being skipped
Start with Legal, this month’s mover. NALP reported on August 5 that firms with more than 500 lawyers hired 7.5% fewer new graduates, the first decline since the Class of 2014. That same month, Thomson Reuters released a legal agent designed to plan and execute work at the level of a senior associate. Google Cloud launched Gemini Enterprise for Legal with several major firms as early adopters. Legora said it plans to grow from 700 to 1,500 employees by year-end. Law firms shrank the entry class while legal AI companies expanded.
I told the New York Post this month that AI makes inefficiency much more visible. Work that once took twenty hours can now be completed in five. Clients won’t keep paying for twenty, and the junior hours that disappear were also the apprenticeship.
Legal is the clearest case of something wider. Stanford’s Digital Economy Lab tracks payroll records from 3.5 to 5 million workers a month. Its June report found that employment in AI-exposed occupations among 22-to-25-year-olds was contracting at 3.8% a year, while employment in the least-exposed occupations grew 2%. The divergence fades among older workers.
TL;DR = Companies are preserving experienced talent while hiring fewer juniors.
That is the donut drawn on an org chart. The senior layer holds. The bottom rung gets removed. The middle, the layer that is supposed to be filled from below, is being starved without anyone deciding to starve it. A firm that hires no first-year associates in 2026 has no fifth-year associates in 2031. It happens one decision at a time, each one defensible, each one signed off by someone who will have moved on by the time the bill arrives.
The executives I work with describe this without having a name for it. AI now handles the work that used to be the apprenticeship: the first draft, the first pass through a contract, the first version of a model. Senior people learned judgment by doing that work badly and having someone correct them. Remove the bad first drafts and you remove the mechanism that produces people who can tell a good one from a plausible one. The question I hear most from senior leaders is, “Who is going to be able to eventually take my place?” Most don’t have an answer. Their organization’s hiring practices are making sure they never will.
The middle of the market is where brands go to be ignored
Retail and CPG held at 68 this month. Walmart says shoppers who use Sparky, its AI shopping assistant, have an average order value 35% higher than other shoppers. At the same time, Walmart’s US sales growth slowed. The customers engaging with the tool spend more. The average hides the split.
The same split appeared in brand results. Coach grew 24% last year and added roughly 11 million new customers, about 35% of them Gen Z. Kate Spade, owned by the same company, fell 10%. Lululemon then cut its full-year forecast after Americas comparable sales fell 12%. These brands live in the middle, the zone where a purchase is a small decision instead of a habit or a milestone. What separates them is whether the customer can say, in one sentence, why this and nothing else. Coach made that reason easy for a 24-year-old to repeat. Lululemon’s reason grew fuzzy while Alo and Vuori made theirs sharper. Kate Spade sat in the middle of the middle.
The household donut and the brand donut meet at checkout. ( I know that sounds like the start of a bad joke, but please hang with me!) The affluent customer wants something specific. The middle customer is trading down. A brand caught between them loses from both directions. Moody’s Analytics estimates that the top 10% of earners now account for about 45% of consumer spending. That customer can afford almost anything. She still needs a reason to choose you. “Pretty good at a fair price” gives her none.
“Mid” isn’t an insult. It’s a harbinger. When that word starts showing up around your product or your service, it is an early reading of the same erosion that shows up in comparable sales a year later.
The middle of the AI curve is where most companies are parked
The third donut shows up in AI. Let me put it simply: Companies selling AI tools are moving fast. Most companies buying those tools are moving slowly. Caterpillar posted its first $20 billion quarter as demand from data centers grew. Legal AI companies raised their revenue forecasts. Manufacturers reported little change on factory floors, and large law firms kept the same pricing model. The tools are moving faster than the businesses using them.
My Applied AI Business Playbook has three stages: Assistant, Partner, and Operator. Assistant gives people quick wins, such as answering questions, analyzing data, or writing a first draft. Partner helps teams spot patterns and make decisions. Operator runs entire parts of the business on its own. Most companies are still at Assistant. They bought licenses and ran pilots. A few employees work faster but hiring, pricing, and daily operations have stayed the same.
KPMG calls the AI buildout “unusually hard to track.” The same problem exists inside companies. Counting licenses and pilots shows who has access to AI. It does not show whether the business changed. The Hyder Index looks for harder proof: where companies spend money, who they hire, what they ship, and what results they report.
Use Strategic Urgency to choose an edge
Porter argued that a company has to win on price or give customers a clear reason to choose it. He was right. But, the biggest difference right now is how much time you have to act on that advice. AI gives companies less time to make that choice. Across talent, customers, and AI, the same pattern keeps showing up. The companies at the edges are making clear moves. The middle is waiting. Every month it waits, it falls further behind.
This is where Strategic Urgency earns its name. Use See/Interpret/Act. See where the middle is hollowing out. Interpret what that means for your company. Act while you still have an edge to choose.
So the Monday move is an audit, and it takes about an hour. Find the middle in each of the three places. On the org chart: how many people did you hire in the last twelve months who are within three years of starting their career, and who is your senior layer in 2031 if that number is zero? On the customer base: what does your middle customer say about you in one sentence, and is the word “fine” in it? On the AI curve: what AI number could you report at your next board meeting that a competitor could not also report?
Then choose an edge. Hire the juniors on purpose and redesign the apprenticeship around the tools instead of pretending the tools didn’t take it. Make the one-sentence reason sharp enough for a 24-year-old to repeat to a friend. Move one workflow from Assistant to Operator before the October Index comes out.
Growth will provide cover for a while. KPMG expects about 2% this year and slightly less next year. Those numbers can make the economy look steady while talent, customers, and AI keep moving. The companies at the edges are making choices and changing how they work. The middle is waiting. Every month it waits, it has less time to catch up. AI has turned Porter’s slow warning into a countdown.
Related: AI Is Making Marketing Faster. Is It Actually Making Marketing Grow?
