Big changes are likely coming for businesses and government. Harvard Business School faculty highlight some of the major trends leaders might face in 2025 and share insights from their research to help navigate them.
Few events portend major change in 2025 more than the incoming presidency of Donald J. Trump.
Trump has promised to upend the very regulatory and policy structure of the United States, from education and finance to climate, health, and tax policy. Beyond the political landscape, many companies will continue to seek ways to leverage artificial intelligence (AI). Some are also reconsidering their diversity, equity, and inclusion efforts.
Harvard Business School faculty share trends leaders can expect in the new year—and offer advice on how to navigate potentially dramatic shifts, harnessing insights from their research.
George Serafeim: Climate solutions and business action
The number of US companies working on climate solutions, products, services, and technologies that reduce greenhouse gas emissions such as solar panels, electric vehicles, energy-efficient appliances, and carbon-capture systems, has grown dramatically in recent years.
Without these incentives, the pace of innovation could slow, allowing Chinese companies ... to further dominate the sector.
George Serafeim; Charles M. Williams Professor of Business Administration
However, this progress faces uncertainty. If the Trump administration rolls back the Inflation Reduction Act (IRA), which has spurred investments in clean energy, fewer companies will invest in commercializing climate solutions. Without these incentives, the pace of innovation could slow, allowing Chinese companies—already global leaders in solar, wind, and battery technologies—to further dominate the sector.
Conversely, maintaining the IRA and reducing regulatory burdens could accelerate US adoption of climate solutions. This would position American businesses to compete globally, fostering job creation and technological leadership.
The policy choices of 2025 will profoundly influence whether the US cements its role as a leader in technologies that enable human prosperity in a low-carbon economy or cedes ground to global competitors.
George Serafeim is the Charles M. Williams Professor of Business Administration.
Jesse Shapiro and Scott Duke Kominers: AI will make social media worse—and better
Even as social media platforms take heat from all sides for their failures to stem misinformation online, trends on the horizon threaten to make the problem worse. Experts expect new Large Language Models (LLMs) and image generators to fuel an explosion of misinformation online.
It's already starting. Will the platforms be able to keep up?
In fact, that kind of content moderation can even be counterproductive: every blocked or flagged post is an opportunity for someone to conclude that the platforms are in on a conspiracy to prevent them from learning the truth. Trying to filter out falsehoods can, therefore, fuel the very misbeliefs the platform is aiming to prevent.
As a result, unless users have absolute and complete trust in the process, efforts to protect them from misinformation are bound to fail, no matter how hard the platforms try. And, as the fakes get deeper, the problem is just going to get worse.
Targeted moderation can help
But this doesn’t mean that content moderation is pointless. Our research also shows that moderation can be very effective when it removes content that’s directly harmful, or that can be used to commit harm.
For example, when a platform stops a user from “doxxing” someone by posting their address or other personal information online, the platform is preventing the harm that results from other users getting access to the information. And that works well irrespective of whether users trust the platform’s motives—after all, even if people believe it was wrong for the platform to hide the information, they still can't show up at someone’s house without the address.
AI to the rescue?
Here’s where AI can be helpful: by making it easier for platforms to detect the kind of content that enables harm, and thus to stop it from spreading.
So, in 2025, despite the urging of governments and activists around the world—and in the face of a growing array of tools to propagate misinformation—you can expect social media platforms to struggle to curate what is and is not true.
On the other hand, with the right tools, and maybe with some help from AI, platforms can make us safer by focusing on moderating content that directly enables harm.
Scott Duke Kominers and Jesse Shapiro are the Sarofim-Rock Professor of Business Administration and the George Gund Professor of Economics and Business Administration, respectively.
Jaya Wen and Ebehi Iyoha: Get granular with tariff and trade policy
As the incoming Trump administration pushes sharply increased US tariffs, it is critical for business leaders and policymakers to understand how these policies shape trade and firm activity.
During the 2018-2019 US-China trade war under the last Trump administration, some firms adapted to higher US tariffs on Chinese goods by rerouting through third-party countries, such as Vietnam, effectively sidestepping the levies.
In our analysis, we match customs data to individual firms by leveraging data on millions of international transactions. This method allows us to observe which individual Vietnamese companies were importing a fine-grained product from China and then exporting the same product to the US.
For example, aggregate product-level measures suggest that by 2021, 16 percent of Vietnamese exports to the US—valued at $15.5 billion annually—were rerouted from China, a 5.9 percentage point increase since 2018. Yet firm-level rerouting measures stood at just 1.8 percent of exports annually, or $1.7 billion, a mere 0.22 percentage point increase since 2018.
Chinese-owned firms operating in Vietnam played a key role in this increase. Between 2018 and 2021, the number of Chinese-owned firms that likely rerouted rose an astonishing 318 percent. Existing ties to China may have offered a strategic advantage in adapting.
For business leaders, the true extent of rerouting has major implications for the competitive landscape. If products can still reach US consumers after a brief detour through third-party countries, tariffs may not significantly mute competition from Chinese exports. Yet if rerouting is relatively limited, firms outside China may face new opportunities in the US market.
For policymakers, it’s critical to understand rerouting when assessing tariff impacts and crafting international responses. Indeed, punitive measures might be unnecessary. Punishment may risk disrupting the value-added production that fuels economic development and employment opportunities in Vietnam and other targeted third-party countries. It may also hurt US consumers' pocketbooks.
As the world responds to rapidly changing US trade policy, we expect that granular trade data and improved methods will offer increasingly valuable insights to these audiences.
Jaya Wen and Ebehi Iyoha are assistant professors in the HBS Business, Government, and International Economy and Entrepreneurial Management Units, respectively.
Marco Tabellini: Immigration changes are coming, but not the right ones
President-elect Trump has promised to crack down on both documented and undocumented immigration, vowing to implement the “largest domestic deportation operation in American history.”
How will this affect the US economy, in both the short and the long run? What can history teach us?
Since 2020, immigration has been key to sustaining the recovery of the US economy, filling vacancies in a tight labor market, and keeping inflation under control.
While labor markets have cooled off since the peak in 2023, there is still significant demand for immigrant labor. Immigrants are thus unlikely to displace US-born workers (both in high skilled and in unskilled sectors).
Restricting documented immigration will put upward pressure on wages. This may be good for some US-born workers, but will drive up prices, implying higher inflation and higher costs for consumers.
In many sectors (e.g., agriculture, dairy, hospitality, healthcare), it will simply not be possible to replace immigrant workers quickly. This will likely lead to firm closures and, in turn, job losses even among US-born workers.
At best, inflation will surge. At worst, many goods will disappear.
The US has imposed stringent immigration restrictions in the past. These policies often harmed the overall economy and did not bring the intended benefits to US-born workers.
This time, the effects of immigration restrictions on the economy will be negative. But these will be nothing compared to those of the deportation plans Trump promises (not to mention the immeasurable human costs).
Firms will suddenly be unable to find workers, and will not be able to quickly replace immigrant workers with US-born workers.
Prices will increase, as demand will vastly surpass supply. At best, inflation will surge. At worst, many goods will disappear.
Many US-born workers will lose their jobs, too.
It is possible that, over time, the US economy will adjust and US-born workers will eventually earn higher wages. But there is no guarantee.
Like many other countries in the world, the US population is aging fast. Without immigrants, it will begin to decline quickly. Fiscal burdens linked to the welfare and the pension systems will become unsustainable.
Change is needed. But restricting immigration and deporting immigrant workers is not the solution to the problems the US economy faces.
Joseph Fuller: Expect a pivotal year for skills-based hiring
Skills-based hiring represented one of the major trends in human resource management over the last several years. Dozens of large companies foreswore requiring job applicants to hold a college degree to apply for employment, pledging to rely on skills rather than academic credentials to judge candidates. Between 2014 and 2023, graduation requirements were removed from tens of thousands of roles.
Companies considered the asymmetry in college graduation rates by race as a major principle when embracing skills-based hiring. Prior to COVID-19, for example, graduation rates for African Americans were slightly more than half the rate for Asian Americans and 60 percent lower than white students. Removing degree requirements was viewed as a way to accelerate diversity efforts and combat occupational segregation.
The Supreme Court’s June 2023 decisions obliged companies to revisit their commitment to diversity, equity and inclusion (DEI). Numerous firms subsequently eliminated or substantially curtailed programs. It looks unlikely that more companies will embrace DEI-based policies.
The coming year will be pivotal for skills-based hiring
More importantly, there is mounting evidence that skills-based hiring has had a very modest impact. That’s a pity, because the impact of skills-based hiring on workers and their employers are tangible.
The non-degreed workers who were hired into previously unavailable roles enjoyed 25 percent higher wages. And, they rewarded their employers with loyalty.
The non-degreed workers who were hired into previously unavailable roles enjoyed 25 percent higher wages. And, they rewarded their employers with loyalty. Their two-year retention rate is 20 percent higher than traditional hires, generating a material savings for their companies that avoided the high costs of turnover.
Managers need tangible tools
How can 2025 become a year when skills-based hiring gains momentum? Explicit diversity goals may have to be set aside. But opening opportunities to better-paid positions to candidates of all types remains a noble goal.
Achieving higher levels of conversion will require companies to develop practices that improve skills-based hiring, such as training managers how to evaluate candidates skills first and improving onboarding programs. Such changes can allow companies to move beyond trumpeting the virtue of skills-based hiring and start realizing its promise.
Joseph Fuller is a professor of management practice and co-leads the Managing the Future of Work initiative.
Willy Shih: Prepare for a volatile year in trade
Trade in 2025 promises to be unpredictable and more “transactional” as a new administration takes charge in Washington. The historic post-World War II, US-led consensus on the benefits of free and open trade is now broken. We can look forward to an era of volatility until we reach a new equilibrium.
President-elect Trump’s announced desire to apply tariffs to allies Canada and Mexico signals the opening shot in the renegotiation of the US-Mexico-Canada Agreement (USMCA), already scheduled for a joint review in 2026. It is interesting that he picked our closest allies and two of our largest trading partners to start, along with China, of course.
This signals a priority focused on the size of respective bilateral trade deficits more than strict geopolitical rivalry. That’s perhaps a little different than many expected. US-China trade is already in flux as companies seek to diversify sourcing and build more resilience into their supply chains.
Firms are already front-loading imports
Companies are signaling their concerns by front-loading imports in preparation for new tariffs to come into effect as soon as Trump takes office. There is a huge surge on the Transpacific trade lane as firms try to beat new levies. This will inevitably lead to a slowdown after the Lunar New Year, contributing further to negative sentiment in the Chinese manufacturing sector.
We can’t bring high-paying jobs back to the US and not accept measures that will increase labor productivity, such as automation, without facing higher costs and the prospect for more inflation.
Willy C. Shih; Robert and Jane Cizik Baker Foundation Professor of Management Practice in Business Administration
Interestingly, we can foresee which other countries will face the new administration’s ire based on the size of their deficit. Close allies like Japan, South Korea, and Germany, as well as Vietnam and Malaysia will face increased scrutiny.
At some point, we will have to face some of the contradictions in what we say we want and what is possible. We can’t bring high-paying jobs back to the US and not accept measures that will increase labor productivity, such as automation, without facing higher costs and the prospect for more inflation.
Costs get passed along to the consumer
The International Longshoremen’s Association dispute with East and Gulf coast ports is a microcosm of this battle. The main issue is automation to increase productivity, which the ILA wants to roll back. Port operators need to improve their operational efficiency, as there is no US port that is in the Top 50 for productivity worldwide.
Trump declared that foreign container lines should pay the higher costs resulting from less automation (there are no US container lines in the top 10 by revenue globally), but those carriers will simply pass along those costs to US consumers. And less automation will mean lower productivity for domestic truck drivers who pick up the loads.
The golden age of globalization has passed. But there will be new opportunities for those who can figure out how to take advantage of the changes in trade flows in the year ahead.
Willy Shih is the Robert and Jane Cizik Professor of Management Practice in Business Administration.
Jacqueline Lane: Reimagining innovation with AI
The ability to generate novel ideas was long considered uniquely human. Now, as AI can produce thousands of ideas in seconds, organizations must fundamentally rethink their innovation processes. Our research at the Laboratory for Innovation Science at Harvard reveals how AI is reshaping not just ideation but the entire journey from problem identification to execution.
In studying AI's impact on creative problem-solving, we conducted a global challenge seeking sustainable business ideas in the circular economy. The results were illuminating: AI-generated solutions matched human creativity while demonstrating distinct strengths.
The human role is evolving from problem solver to knowledge synthesizer, fundamentally redefining creativity itself.
Human participants excelled at novel solutions, while AI consistently produced ideas rated more valuable by evaluators. Remarkably, AI accomplished this in 5.5 hours at $27, compared to the substantial resources typically required for human crowdsourcing.
AI assistance improves evaluation quality—regardless of expertise
This efficiency is transforming innovation landscapes. At MIT Solve, an entrepreneurship platform for social impact innovations, we observed a 2.2-fold increase in idea submissions following ChatGPT's release.
To handle this surge, we developed AI decision support systems for idea screening. Our field experiments revealed that AI assistance improved evaluation quality regardless of evaluator expertise, effectively democratizing both ideation and evaluation capabilities.
As we look toward 2025, the implications extend far beyond mere idea generation. Organizations must reimagine their entire innovation workflow—from choosing which problems to solve through final execution. The human role is evolving from problem solver to knowledge synthesizer, fundamentally redefining creativity itself. Success will belong to organizations that can dynamically adapt, leveraging AI while pushing the boundaries of what's possible.
Jacqueline Lane is an assistant professor in the Technology and Operations Management Unit.
Image by Mike Kononov for Unsplash.
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