2025 Work Trend Index Highlights the Rise of Frontier Firms—Here’s Why SMBs May Have the Advantage

The 2025 Work Trend Index is here—and it signals a profound shift in how businesses will operate and grow. The report reflects insights from organizations of all sizes, and this blog takes a deeper look into what the data reveals specifically about small and medium-sized businesses (SMBs).

We are entering a new reality—one in which AI can reason and solve problems in remarkable ways. For businesses of all sizes, this unlocks a powerful opportunity to scale faster, move with greater agility, and create value in ways we’ve never seen before. The data and insights point to the emergence of a Frontier Firm, one that’s built around intelligence on-tap, human-agent teams, and a new role for everyone: agent boss. Within the next 2 to 5 years, every organization will begin its shift toward becoming a Frontier Firm—and SMBs are especially poised to lead, with 81% of their leaders calling this a pivotal year to rethink strategy and operations.¹ 

Just as early internet adopters reshaped entire industries, SMBs today have a similar opportunity to reshape the future of business. The ones leaning in—especially with AI —are setting a new pace for growth, agility, and resilience.

Below are key SMB insights from the Work Trend Index report and what it means for its leaders.

You can buy intelligence on tap

As economic uncertainty puts more pressure on small businesses, AI intelligence that’s becoming an essential durable good: abundant, affordable and scalable on-demand—offers a powerful new lever for growth. The report pointed to a capacity gap: 53% of SMB leaders say productivity must increase, but—both employees and leaders—say they’re lacking enough time or energy to do their work. AI that can reason and plan will help bridge that gap between what SMBs need to get done—and what their lean teams can sustainably do.

The democratization of intelligence is making AI accessible to companies of all sizes. Nearly half of SMB leaders (45%) say expanding team capacity with digital labor is a top priority in the next 12 to 18 months—second only to upskilling their existing workforce (46%). It’s not just about saving time. It’s about unlocking the kind of capabilities that were previously out of reach.

With agents that provide on-demand, expert-level intelligence and functional support, it’s now possible for a five-person team to operate with the scale and sophistication once reserved for companies ten times their size. A recent example of this is Industrialized Construction Group, a small startup that uses AI for everything from construction simulations to market research—boosting margins by 20%. 

Human-agent teams will upend the org chart

The report also highlights a major shift—not just in how we work, but how companies are structured. As agents expand what employees can do, traditional org charts may give way to dynamic “Work Charts,” where teams form around outcomes, not departments. It’s a model borrowed from Hollywood—flexible teams assembled for a task, then disbanded. With agents acting as research assistants, analysts, or creative partners, companies can move faster, scale expertise, and adapt on demand.

The good news? SMBs might already have the upper hand. With leaner orgs, fewer silos, and a bias for action, SMBs are built for agility. And we’re already seeing them embrace this new way of working with 24% of SMBs using agents today, and an impressive 79% planning to implement them within the next 12 to 18 months.  For example, Supergood, an AI-first agency where teams are flatter, faster, and more fluid—thanks to an AI platform that puts decades of strategic ad research at every employee’s fingertips.² As co-founder and Chief Strategy Officer Mike Barrett says, “ We don’t need a strategist on every brief—everyone at Supergood has access to that expertise via our platform”.

Every employee becomes an agent boss

In the coming years, employees won’t just use AI—they’ll manage it. Anyone can become an agent boss: delegating to and managing agents to amplify their impact—working smarter, scaling faster, and taking control of their career in the age of AI.

It’s a shift in mindset—from doing everything yourself to delegating to agents with confidence. Employees will gain leverage, scale their output, and free up time to focus on higher-impact work. In small businesses especially, that kind of empowerment isn’t just helpful, it’s transformational.

Already, 24% of SMBs are considering hiring AI Workforce Managers to lead hybrid teams of people and agents, and 29% plan to hire AI Agent Specialists to design, develop, and optimize them within the next 12-18 months. Within five years, SMB leaders expect their team’s scope to include redesigning business processes with AI (30%), building multi-agent systems to automate complex tasks (34%), training agents (33%), and managing them (26%).

In this new model of work, being an agent boss isn’t about doing less—it’s about doing more of what matters most.  

Agility is the small business advantage

From solo founders to five-person teams, AI isn’t just for big companies —it’s fueling a surge in small, fast-moving companies. On LinkedIn, the most prominent startups have grown headcount by 20.6% YOY—nearly twice the pace of Big Tech (+10.6%). Much of that talent is flowing out of large companies and staying in the startup world, where the speed to build and adapt is unmatched. Like the early days of the internet, we’re seeing the rules of growth and competition rewritten in real time. The takeaway for SMBs? Now’s the time to act—because in this new era, agility is a superpower.

Learn how you can unlock value and capacity across every business process with Copilot and agents

• If you are not already using Microsoft 365, explore how Microsoft could help you with your business and find out how Microsoft 365 Copilot and agents can help your employees scale. 
• Connect with a Microsoft Cloud Solution Partner to discuss best practices for adopting AI. 
• For the latest research insights on the future of work and generative AI, visit WorkLab.

Footnotes

1. Methodology

The findings published in this blog are based on a subset of data from Microsoft’s 2025 Work Trend Index research, published here. These findings focus specifically on small and medium-sized businesses (SMBs) and are drawn from the responses of 23,744 SMB employees across 31 countries. In this year's sample, insights from SMBs were closely aligned with the global results.

The full 2025 Work Trend Index is based on research conducted by Edelman Data x Intelligence, which surveyed 31,000 full-time employed or self-employed knowledge workers across 31 markets between February 6 and March 24, 2025. The 20-minute online survey was conducted in English or translated local languages, with 1,000 full-time workers surveyed per market. In the U.S., an additional sample of 4,500 respondents was collected across nine metro areas.

In addition to the survey, Microsoft conducted qualitative interviews with scientists, academics, customers, business leaders, and startup founders across a range of industries and company sizes. These conversations helped shape the broader findings in both the report and this blog.

2. The company Supergood grew out of an agency called Supernatural AI.