Make, Buy, or Automate

How The Intelligent Firm Wins In The AI Era

Hi there,

The rise of AI is creating firms that see their boundaries as a portfolio to optimise, not as walls to defend.

Firms used to exist to minimise transaction costs, but the disruption from APIs and AI drives transaction costs down. This new environment alters how firms structure and operate.

For example, Anthropic uses the agentic coding tool Claude Code to develop Claude Code and other tools, giving staff immense leverage.

If your developers aren’t using a tool like this, or if you aren’t enabling them to, you risk being outpaced by peers adapting to this change. For smaller tasks, with appropriate guardrails, an agent could manage bug fixes and minor features, while a senior engineer oversees code reviews as usual.

The New Cost Equation

The “theory of the firm” focuses on transaction costs. AI significantly lowers search, negotiation, and monitoring costs, reducing the cha…