Microsoft’s latest Work Trend Index report, 2025: The Year the Frontier Firm is Born, explores what’s next for the modern workplace as AI moves from a tool to digital labor. The report, based on global surveys, economic analysis, and insights from Microsoft 365 and LinkedIn, introduces a new kind of organization: the Frontier Firm. Companies that aren’t just using AI but are reshaping how work gets done with it.
A Frontier Firm is an organization that’s developing processes to make AI work side-by-side with people. From developing AI agents to investing in educating their existing workforce to manage their new “digital colleagues”, Frontier Firms are more agile, more productive, and better positioned to lead in the burgeoning AI era.
What Sets Frontier Firms Apart?
- In these companies, 71% of employees say their organization is doing well, compared to just 37% globally.
- AI agents help with everything from summarizing meetings to managing supply chains. These aren’t just digital assistants, they’re full-on collaborators.
- Work is measured by impact, not input, and teams are finding new ways to balance what people do best with what AI does best.
- 21% of Frontier Firm employees fear losing their jobs to AI, versus 38% globally.
Journey to the Frontier Firm
The report outlines a clear evolution for AI in the workplace:
- AI as Assistant – Helping with routine tasks so employees can focus on more important work.
- AI as Collaborator – Working in tandem with humans to co-create, problem-solve, and move faster.
- AI as Autonomous Agent – Taking over full workflows, with humans guiding strategy and oversight.
But, the report notes, that this is not always a linear progression, and many organizations may experience these stages running simultaneously.
A critical aspect that Frontier Firm leadership will have address is dialing in the correct human to agent ratio. When creating teams, understanding the balance between overwhelming employees with agents to manage and underutilizing AI for each project or role will be imperative.
“As AI democratizes access to expertise and intelligence, we’ll see the rise of Intelligence Resources departments—much like how HR and IT evolved into core functions. These new divisions will be essential for managing the interplay between humans and AI agents, emerging as a critical source of competitive advantage in the AI-enabled enterprise.”
Karim R. Lakhani
Chair of the Digital, Data, and Design Institute at Harvard, and Dorothy and Michael Hintze Professor of Business Administration at Harvard Business School
What This Means for Your Business
Becoming a Frontier Firm isn’t just about having the right tools, it’s about changing how your organization defines teams and operates. Companies are already hiring for AI-focused roles and building upskilling programs to prepare their teams for the future. The key to success is embracing an AI-integrated way of working while keeping people at the center of it all.
Even if this may all seem far off for your industry or organization, understanding how the next era of work is shaping will help you prepare and be able to adopt when new advances are made. Check out the full report to learn more and be sure to explore the resource guide at the end as it has a wealth of valuable content to stay on top of trends and AI-focused skill building.
If your organization is looking to add AI into your Microsoft 365 environment, our Modern Workplace experts are here to help. Contact us to set up a free planning session to explore the possibilities.
