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Many mid-size companies are facing a turning point. Their old business models might still bring in money, but the ideas behind them are starting to fall apart. AI is changing how customers make purchases, how products are made, how value is judged, and how quickly expectations shift.

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This leaves founders, board members, and investors with a tough question: Is this a period of adjustment, or does the company need a bigger change? Often, it is not enough to make small tweaks. The company may need a full rebuild. When that happens, it is hard to avoid asking if a new CEO is needed.

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A quote from James (Jim) Citrin that was shared in a LinkedIn post by Lynn Wu, struck me as the crux of the current situation: “We’re in a new environment, and someone who’s going to replay the playbooks of the past is not necessarily right”.

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The pressure is structural

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People often talk about AI as a tool, but for many companies, it is now a major force shaping the business. It is changing costs, customer habits, product design, and how teams are organized. The challenge is bigger than adding AI features or making things run smoother inside the company.

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Mid-size companies are especially exposed here. They are large enough to have legacy systems, entrenched habits, and investor expectations, but not always large enough to absorb disruption easily. They may not have the cash reserves, talent depth, or pricing power that larger enterprises can lean on. When the ground moves under them, they feel it quickly.

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That is why so many boards are now asking a harder question than they were a few years ago: Is the business still sound, or is the business model becoming obsolete?

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SaaS feels it first

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SaaS companies are among the clearest examples of this pressure. For years, the standard model was straightforward: sell access, scale subscriptions, and grow through expansion, retention, and upsell. AI is making that model less comfortable.

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Customers now expect software to handle more tasks for them. They want automation, insights, and clear results. In many areas, value is shifting from selling seats to delivering outcomes. This puts new pressure on pricing, packaging, product design, and customer support.

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This also creates a challenge for the product itself. Sometimes, the current platform was designed for a different time. AI might mean the product needs a complete overhaul, not just some new features. That can mean reworking workflows, interfaces, data systems and the revenue model itself.

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A CEO who only understands growth in the old model may not be the right person to lead that kind of reinvention. The company may need a leader who can decide what to keep, rebuild, and abandon.

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Semiconductors and datacenters are not immune

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This challenge is not just for SaaS companies. Semiconductor and datacenter businesses are also being drawn into the AI shift, even if the pressure looks different for them.

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In semiconductors, AI changes what customers need, how products are prioritized, and where investment has to go. The stakes are high because design cycles are long and capital requirements are significant. A company that misreads where demand is heading can lose years, not quarters.

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Datacenters have their own serious challenges. AI changes how much power and cooling they need, how their systems are built, and how customers use their services. Old ideas about capacity and service may no longer work. Leaders now have to rethink how they grow, who they partner with, and which customers they serve.

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AI is not only changing software. It is also changing the economics of businesses that rely on heavy infrastructure. Leaders need to spot these changes early and act before the company gets stuck in the wrong model.

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The organization may need rebuilding

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When the product changes, the organization has to change with it. AI often exposes structures that were built for a different operating model. Teams that once worked well may now be too slow, too layered, or too disconnected from the market.

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Some roles will need to be redesigned. Some will disappear. Others will need more scope and authority. Decision-making may have to move closer to the front line. Product, engineering, finance, sales, and customer success may all need a new rhythm. That can be uncomfortable, especially in companies that have grown through a series of successful years and are used to the old ways.

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This is where many leadership teams get stuck. They know change is needed, but they try to manage it with small steps. They might start some AI projects, create a task force, or tweak their strategy. But if the company’s way of working no longer fits, small changes will not be enough.

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A real rebuild takes a CEO who is willing to make hard calls. Not every strong operator can do that. Not every respected incumbent wants to.

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McGraw Hill appointed Philip Moyer as CEO after Simon Allen retired, with Allen remaining as chair. Moyer had been CEO of Vimeo, where he launched an AI-first video strategy, and before that served as Global VP of Applied AI Engineering and Business Development at Google Cloud - a clear fit for McGraw Hill's technology-led transition.

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Recursion Pharmaceuticals made a similar move. Co-founder and CEO Chris Gibson stepped into the chairman role, and the board promoted Najat Khan to CEO. Khan is an AI-native R&D leader the company had recruited from Johnson & Johnson, where she'd been Chief Data Science Officer. Two different industries, the same structural pattern: a chair-and-CEO arrangement that preserves continuity while putting an AI-fluent operator in charge of the rebuild.

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When a new CEO makes sense

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There are moments when replacing the CEO is not an admission of failure. It is a recognition that the company has entered a new phase.

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That usually becomes clear when the business needs more than execution. It needs a new perspective. The board may see that the company must rethink its revenue model, reshape its product architecture, or simplify its organization. If the current CEO is attached to the old playbook, the company can lose valuable time.

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A new CEO can offer several benefits at once. They can reset expectations with investors, question long-held assumptions, and make tough decisions without being tied to the old structure. They also send a clear message that the company is ready to move forward, not simply hold on to the past.

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That message matters. During big changes, teams pay close attention to leadership. If the board is serious about transformation, the choice of CEO must reflect that ambition.

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What boards should look for

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The right CEO now is not always the most polished or traditional candidate. Boards should look for someone who can anticipate change and also act with discipline.

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They need commercial judgment, especially around pricing and customer value. They need enough technical fluency to understand how AI changes the product and the business model. They need the confidence to challenge legacy thinking, and the calm to lead through uncertainty without freezing the organization. And they need a tolerance for chaos. Reinvention is not a tidy process, and leaders who need everything mapped before they move tend to stall at exactly the wrong moment.

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They also need to earn trust from both investors and employees. Boards and investors want honest answers about what is broken and how to fix it. Teams want a leader who can make tough calls without creating constant crises. The best candidates can do both.

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At AnuPartha, we've spent 30 years finding the leaders who thrive in this kind of moment - the mavericks and risk-takers, not the status-quo stars. Mid-size companies at a turning point rarely need a safe pick. They need someone who can lead a reset with conviction and speed.

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The board’s real responsibility

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Boards sometimes wait too long, hoping the current team will adapt. Sometimes that works, but often it does not. The risk is that by the time change is clearly needed, the company has already lost time, profit, talent, or market share.

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The board’s job is not to keep things comfortable. It is to protect the company’s future. That means asking tough questions early. Can this CEO lead a rebuild, or are they better at maintaining the status quo? Can they make the decisions needed in an AI-driven market, or will they fall back on old habits?

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For founders, this question can be even tougher. The person who built the company may not be the right leader for the next stage. That's not a criticism of the past. It means the next phase calls for a different kind of leadership.

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Investors should care about this, too. A company that tries to preserve an outdated model while the market changes around it risks losing relevance. By the time the problem is visible in the numbers, fixing it may be much harder.

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The question worth asking now

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AI is forcing many companies to face a hard truth: what worked before does not guarantee success in the future. For some mid-size companies, the answer will be a new pricing model, a redesigned product, and a reorganized team. For others, it may also mean bringing in a new CEO.

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That decision should not be made lightly, but it should not be avoided. When the business needs to be rebuilt, the board must ask if the current leader is the right person to guide that change.

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Companies that face this question honestly will be better positioned to move forward. Those who delay may find the market has already decided for them.

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In my work with enterprises big and small, I have seen how easy it is to stay attached to what once worked. That is human. But AI has changed the pace and shape of change itself, pushing leaders to ask harder questions sooner. Boards and investors who face those questions honestly will be the ones who give their companies a better chance of succeeding in the future.

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If you're a founder, board member, or investor weighing this question for your own company, I'd be glad to help. Feel free to message me here on LinkedIn.

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