TheChek News Flow

Stockpickers: Smaller asset managers shun the investment crowds

Niche funds are good for divestment, but not without risks

Trillions of pounds worth of assets are managed by London’s listed investment houses. Their purpose is to deliver financial security for clients by growing and preserving the value of their capital.

Larger managers, such as Legal & General, Aberdeen, M&G and Schroders, offer access to a wide range of asset classes and geographies, can handle the largest mandates and tend to focus on mainstream markets.

Smaller players offer distinctive investment approaches and niche and specialist options for diversification, often catering to wealthy individuals with an appetite for impact investing or risk, or who carry tax burdens that are suitable for easing through venture capital trusts and enterprise investment schemes. These enable investors to earn tax breaks in return for providing capital to young British companies. 

Among these smaller managers are Polar Capital, whose offering includes technology, scientific and financial funds. Foresight specialises in infrastructure and private equity opportunities that can help tackle climate change, and Liontrust with its range of funds focused on sustainability. A clue as to what makes Mercia Asset Management stand out is in the name of its range of VCTs: Northern.

This manager steers clear of overfished London and south-east England, preferring to find opportunities in regional towns and cities — 80 per cent of its investment activity is outside south-east England — where it can identify and support high-growth, ambitious businesses on attractive valuations, and which meet its impact and socially responsible requirements. 

Investing in niche areas and cutting-edge smaller companies is not without its risks, and while there is demand in the market for differentiation and diversification in terms of strategies and processes, good performance is essential to keeping fund flows and management fees coming in. 

BUY: Mercia Asset Management (MERC)

Inflows accelerated in the final quarter, writes Mark Robinson.

Mercia Asset Management slipped back into the black at its March year-end, as the specialist asset manager increased its cash margin. Performance was aided by economies of scale, and evidenced by a 390 basis point rise in the adjusted margin to 22.1 per cent.

It’s too early to judge whether this vindicates the “Mercia 27”, a 100 per cent growth target, as it was only outlined a year ago. But the scaling of the fund management business is under way, and it wouldn’t be fanciful to suggest that Mercia has already made strides to meet its Ebitda target of £10mn by full-year 2027.

The group realised a fair-value loss of £300,000 in the period, against a £4.5mn gain in the previous year, though fair-value movements strengthened appreciably in regard to unrealised assets. In contrast to many industry peers, Mercia increased its third-party funds under management (FUM) by around 10 per cent on an organic basis to £1.8bn, with no redemptions recorded. Venture FUM rose by 1.6 per cent to £928mn.

Meanwhile, the direct investment portfolio’s fair-value assessment stood at £126mn, against £117mn last time around. Management intends to offload about 70 per cent of these direct investments over the next couple of years, so exit activity is set to rise in the near term. Some mandates are moving into the realisation phase within its equity and debt funding businesses.

The bulk of the inflows were recorded in the final quarter of its financial year. They reflected both existing mandates and new fund management contracts. The period also saw successful Venture Capital Trust and Enterprise Investment Scheme fundraisings. Given the timing, it is unlikely that the related impact of the inflows on revenues is fully reflected in these figures.

Mercia’s ability to rejig its business focus is aided by an unencumbered balance sheet. And a number of funding rounds were completed following the period end. The group carries no debt and exited full-year 2025 with £39.3mn in net cash. This has underpinned a 5 per cent increase in the proposed final dividend, along with the commencement of an annual share buyback policy of up to £3.0mn.

It’s a niche offering for investors: venture capital funding, private equity and debt finance to high-growth regional UK small and medium-sized enterprises. Consequently, sell-side coverage is limited, but Mercia trades on a 45 per cent discount to the consensus target price, and by 23 per cent to net assets, giving rise to a price/book ratio of 0.7 times. We maintain that Mercia is undervalued, or maybe unfairly overlooked.

BUY: Currys (CURY)

The electronics retailer’s turnaround strategy is paying off despite ongoing cost pressures, writes Valeria Martinez.

Currys is showing why it was the right call to push back against Elliott Management’s takeover approach last year. The once-struggling retailer has turned a corner, with chief executive Alex Baldock’s turnaround plan starting to deliver. A sharp rise in free cash flow and profits has allowed the group to reinstate its dividend after a two-year break. 

While the company is still dealing with cost pressures, from high inflation to rising national insurance contributions, it has done a decent job of managing them so far. Another £32mn in annual costs is expected from last year’s Autumn Budget, but Currys plans to offset this by cutting central costs and automating and offshoring parts of the business.

Helpfully, demand has been resilient despite the wider economic backdrop. UK and Ireland like-for-like sales rose 4 per cent in the year to May 3, with operating profits up 8 per cent to £153mn. Margins held steady at 2.9 per cent.

A growing focus for Currys is more profitable revenue streams, such as credit, repairs and connectivity services. These so-called “solution” sales rely less on one-off product purchases and tend to deliver better margins. Revenue from these areas rose 9 per cent to £814mn last year, and Panmure Liberum estimates they now make up 28 per cent of UK and Ireland revenue. 

Net cash stood at £184mn at the year end, excluding leases and pensions. When accounting for a £103mn pension deficit, the net position is now £81mn, which Panmure Liberum analyst Wayne Brown said is £901mn better than six years ago. “The prospects for buybacks this year are very real,” he said, though they are likely to hinge on the outcome of the pension triennial review due later this year.

The shares are up more than 70 per cent over the past year, yet still trade at just 11.4 times forward earnings. That’s well below their five-year average of 31.7 times.

HOLD: Wynnstay (WYN)

Firm farm gate prices underpin the agricultural supplier’s interims, writes Julian Hofmann.

Good farm gate prices this year for all agricultural products has meant a decent profit harvest for suppliers to the industry. Feed and equipment supplier Wynnstay has reaped the benefit, reporting the same amount of profit in its first-half results as it managed for the whole of last year.

The half-year results are typically the highest point in the company’s annual working capital cycle as it stockpiles products in advance of the spring planting season. This meant the company’s business segments in fact reflected the vagaries of the preceding season.

For instance, feed and grain revenue more than doubled to £900,000, but grain trading was down 13 per cent as the poor harvest in 2024 worked its way through the supply system. In the meantime, the company sold off its Twyford mill and has outsourced milling for its poultry feed.

Arable profits tripled to £1.4mn on the back of better fertiliser prices and favourable spring planting conditions. Meanwhile, the company’s network of 51 stores generated a higher profit of £3.1mn with both footfall and margins remaining stable.

The company is midway through project Genesis, which is its plan to simplify the business and improve returns on capital consistently across the group and to invest where supply is constrained — Wynnstay’s investment in a new fertiliser facility in Avonmouth is part of this strategy.

Wynnstay’s shares have started to recover after a rocky couple of years. The price/earnings ratio of 13.6 for this year reflects its gradual reorganisation. However, until there is evidence of margin improvement, we remain cautious.

Warning was handed to EU trade commissioner at Washington meetings

The US has threatened to hit EU agricultural exports with 17 per cent tariffs in a twist to its trade conflict with Brussels, three people briefed on the discussions said.

The eleventh-hour move, which EU officials characterised as an escalation of the transatlantic dispute, came ahead of a July 9 deadline to agree a deal between the two trading giants.

US President Donald Trump imposed a 20 per cent “reciprocal”  tariff in April but reduced it to 10 per cent until July 9 to allow for talks.

Until recent days, EU officials had been expecting that talks with the US would hold duties at the baseline rate.

It was unclear if the 17 per cent on foodstuffs would be in addition to the other tariffs announced by Trump or instead of them.

Trump has demanded that Brussels give American companies wide-ranging exemptions from regulations and cut its trade surplus with the US, but EU officials have rejected Washington’s latest proposals on any such exemptions and food tariffs.

The EU is trying to secure its own carve-outs for some products. One Brussels official said aircraft parts and spirits are among goods for which the bloc is seeking exclusions.

They added that the two sides were working on a five-page draft “agreement in principle”, but this currently has very little agreed-upon text in it.

Ursula von der Leyen, the European commission president, said on Thursday that she hoped for an agreement in principle that would allow the sides to keep talking pending a final deal. 

However, Washington is pushing countries to agree binding deals by Trump’s deadline. 

Maroš Šefčovič, the EU trade commissioner, was warned of the proposed 17 per cent duties on agrifood on Thursday during meetings in Washington. The 27 member-state ambassadors were informed on Friday.

The value of EU agrifood exports to the US, including products such as wine, totalled €48bn last year. 

Šefčovič has repeatedly characterised the changing of EU regulations to suit the US as a red line. However, the EU is also on a deregulatory drive, weakening some environmental laws.

EU countries are divided between accepting some higher tariffs in return for a period of certainty and those who wish to retaliate to put pressure on the US to compromise.

Friedrich Merz, chancellor of Germany, the EU’s biggest and most export-dependent economy, has been pressing the commission, which runs trade policy, to settle for a quick deal. He is anxious for exemptions from Trump’s sectoral tariffs of 25 per cent on vehicles and 50 per cent on steel.

However, several ambassadors intervened in Friday’s meeting to press for stronger action against Washington, according to two people briefed on the meeting. 

Two EU diplomats said they had been told that the US had sketched out three scenarios for July 9: Countries with an “agreement in principle” would keep the 10 per cent tariffs, with possible further tariff relief at a later stage; for countries that failed to reach such an agreement, the tariffs would return to the level announced in April until a deal was struck; higher tariffs would be applied to countries that the US believes are not negotiating in good faith.

As the EU prepares its possible retaliation for US duties on its products, member states have already approved counter-tariffs on €21bn of annual US exports from July 14. The commission is assembling a package of €95bn more, including on aircraft and food.

A commission spokesperson said: “The EU position has been clear from the outset: we favour a negotiated solution with the US, and this remains our priority . . . At the same time, we are preparing for the possibility that no satisfactory agreement is reached.”

The White House has yet to respond to a request for comment.

On-board helpers, bad-weather suspensions, but no crashes. WIRED asked experts to grade Tesla’s Austin autonomous taxi service—and, crucially, how to know if the system is safe.

Whether due to consumer backlash or an aging EV lineup, or both, Tesla sales have again seen a global plunge, this time 13 percent last quarter compared to the previous year—proof that the electric automaker hasn’t yet turned around a dismal year that saw public opinion of controversial CEO Elon Musk plummet. It could mean Tesla faces a second straight year of falling sales.

And yet: Tesla is still the world’s most valuable automaker by market capitalization, worth some $990 billion. At least some of that market confidence is likely traced to the happenings of June 22, when Tesla finally began allowing paying passengers to ride its autonomous vehicle service in Austin, Texas.

The service rollout has been fairly smooth. If the metric for success is “no crashes,” mission accomplished: There have been no public reports of crashes or fender-benders involving the robotaxis. The select few riders who have been allowed inside them have praised the service online, which for now costs just $4.20 a ride. (The price seems to be a weed joke.)

But there are plenty of caveats. For one thing, the program’s “early riders” appear to be Tesla influencers, online content creators who have financial stakes in the company or who run media businesses that tend to cheerlead for Tesla and/or electric vehicles. Tesla has not said when it will open the service to members of the public. (The company, which disbanded its PR team in October 2020, did not respond to any of WIRED’s questions.) For another, Tesla’s area of operations is notably smaller than Alphabet subsidiary Waymo’s, which began offering robotaxi service in the city through the Uber app in March.

For one more, there are plenty of humans involved in this driverless service. Tesla has a safety monitor in the front passenger seat of its robotaxis, who, according to online videos, seems poised to intervene if the technology makes a mistake. And Tesla has been less than transparent about its use of human teleoperators, who can either remotely drive or remotely assist its driverless technology. (The former is likely much safer than the latter, experts say, but Tesla hasn’t said which approach it uses.)

Missed Milestone

“Tesla has what I call the trifecta of babysitting going on right now,” says Missy Cummings, who researches autonomous vehicles at George Mason University, and has herself been the subject of Musk’s displeasure. The human contributions likely make Tesla’s service much safer, she says—something for which the automaker should be praised. In fact, keeping babysitting humans in the drivers’ seat is exactly what rivals Waymo and Zoox did in the early phases of their testing. (Waymo now offers robotaxi service in five cities; Zoox has said it will start service in Las Vegas this year.) “I want to encourage them to keep doing that,” she says.

But, for Cummings, the choice is likely evidence that Tesla is behind its competitors. “If learning to deploy a self-driving car system was grades K through 12, Tesla is in first grade,” she says. “Everything we're seeing in Texas suggests significant immaturity in self-driving operations.”

This means, too, that Tesla hasn’t hit the milestone Musk promised back in January, when he told investors that the company would launch “unsupervised full self-driving as a paid service in Austin in June…no one in the car.”

“This is a demo or test using safety drivers—it’s not an [autonomous vehicle] deployment,” says Bryant Walker Smith, a law professor at the University of South Carolina who studies autonomous vehicles. “Tesla is splashing around in the kiddie pool and everyone is asking where it’s going to place in the Olympic swim competition.”

Bloopers and Sensors

Tesla has kept quiet about many of the particulars of its technology. And it’s hard to reach definite conclusions about its tech from social media posts uploaded by riders. But some of those posts appear to show less-than-smooth rides. In one video, a robotaxi attempting to make a left turn appears to cross a double yellow line into oncoming traffic. In another, a robotaxi apparently fails to detect a UPS truck stopping and reversing to park, and the front seat safety monitor has to intervene to stop the car.

One YouTuber uploaded a video showing a robotaxi “phantom braking”—suddenly coming to a stop for no apparent reason—a phenomenon that’s also been flagged by hundreds of users of Tesla’s less-advanced Full Self-Driving (Supervised) feature and investigated by the federal government. Unlike actual self-driving technology, Full Self-Driving (Supervised) requires users to keep their eyes on the road.

The service pauses for bad weather, according to Tesla’s website. One YouTuber had their ride halted for a rainstorm; the robotaxi dropped the rider in an Austin park as the wind began to whip around them. Minutes later, according to a video, the same Robotaxi picked the creator up to continue their ride. However, contradicting the above, one poster has reported the cars perform “FLAWLESSLY” in heavy rain.

The early bloopers aren’t surprising, experts say. Full Self-Driving (Supervised) requires a human driver to intervene when needed, and it appears robotaxi is the same right now, says Philip Koopman, a professor at Carnegie Mellon University who studies autonomous vehicle safety. The slip-ups the robotaxis have made are not unlike what human drivers do on the road, he says. But autonomy’s value add is supposed to be safety, so it makes sense that the videos—and the tech’s “rough edges”—are making people nervous.

Camera Quandary

The launch has reopened public debates about a core tenet of Tesla’s technology: its use of cameras alone to perceive and “make decisions” as it drives. Musk and his company have long argued that artificial intelligence, supplemented by the data collected by cameras, is sufficient to operate a safe, driverless car. The CEO has promised that all of its cars can become autonomous without any modifications, with a simple push of updated software (though Tesla also quietly reneged on this claim). Other companies see more expensive sensors, including radar and lidar, as important validators and support. (Lidar has dramatically dropped in price; many Chinese automakers are now including the sensor on every car that they sell.)

Advances in large language models have convinced some in the auto industry that Musk’s approach is the right one. In a podcast interview published this week, Kyle Vogt, the former CEO of General Motors AV unit Cruise, argued that images from multiple vehicle-mounted cameras plus advanced models can be “really accurate.” (Vogt stepped down from Cruise after one of its driverless vehicles hit and dragged a pedestrian. The company was not transparent with regulators about the incident, a report later found.)

For Cummings, the reports out of Austin have confirmed her beliefs that cameras alone aren’t enough to operate a car autonomously. “There is no robotic system that exists that is safety critical—meaning people can die [using it]—that has ever been successful on a single sensor strain,” she says. “It's unclear why Tesla thinks that they can do what has never before been done.”

One metric that might reveal Tesla’s internal success: how quickly it expands. Musk boldly said in May that Tesla will have hundreds of thousands—and perhaps up to a million—autonomous vehicles on the road next year. The company seems motivated. According to a job posting, Tesla is hiring for additional vehicle operators, who are paid to drive cars around Austin to collect data. But, of course, Musk is no stranger to deadlines unmet.

The French luxury group is also the owner of Paris Match, Le Parisien and Les Echos.

: LVMH Moët Hennessy Louis Vuitton is continuing to expand its media footprint with the acquisition of French media group Bey Médias.

Financial details of the deal were not disclosed.

The luxury group was already a minority shareholder of the company, which publishes daily newspaper L’Opinion and financial news website L’Agefi.

It has bought the stakes of founder Nicolas Beytout as well as those of other shareholders including Théthys, which is owned by L’Oréal’s Bettencourt founding family; American businessman Ken Fisher, and Dow Jones, the group owned by media titan Rupert Murdoch.

According to sources with knowledge of the matter, the acquisition was done through the group’s Ufipar subsidiary. L’Opinion and L’Agefi will be in an entity distinct from the Les Échos – Le Parisien group.

It is understood that the publications’ editorial structures and teams would remain in place. Beytout will continue to serve as the media group’s president as well as president and publishing director of L’Opinion, with Rémi Godeau remaining as editor in chief. Meanwhile, Alexandre Garabedian is staying as editorial director of L’Agefi.

L’Opinion and parent company Bey Médias were created in 2013 by Beytout, former president of Les Echos – purchased by LVMH in 2007 – and former editorial director of Le Figaro. At the time, they received financing from the French luxury group to launch.

Known for its liberal and pro-European stance, it has a partnership with Dow Jones-owned Wall Street Journal, allowing it to translate and publish articles drawn from the American publication.

In 2019, Bey Médias acquired L’Agefi, a 114-year-old publication then owned by Artémis, the Pinault family’s holding company.

Last year, the media group entered unsuccessful negotiations with Czech billionaire businessman Daniel Kretinsky. Prior to that, it was in talks with French-Lebanese global transport tycoon Rodolphe Saadé, who owns several media including business news site La Tribune and TV channel BFMTV.

LVMH also owns French people magazine Paris Match, acquired in October, and has owned daily newspaper Le Parisien and its national counterpart, Aujourd’hui en France, since 2015.

It is the latest decision in favor of the Sandro and Maje parent company.

PARIS – SMCP will get its shares back.

The Singapore High Court has ruled that Dynamic Treasure Group must return the 15.5 percent stake it holds to European TopSoho, the parent company of SMCP, which had been transferred illegally.

The court ordered that Dynamic Treasure Group has one week to return the shares, or appeal the decision. In a statement, the company said it will “keep the market informed about the effective completion of the return of this stake.”

This is the latest twist and turn in a case stemming from 2021, when 15.5 percent of the share capital of Sandro, Maje and Claudie Pierlot parent company SMCP “disappeared” from France and reappeared in the British Virgin Islands two-and-a-half months later.

This follows a similar decision by the English High Court in July 2024, which canceled the sale of the shares to Dynamic Treasure Group.

It’s also the second ruling in the case within a month as it winds through courts and regulators in multiple jurisdictions.

In June, French regulatory body Autorieté des Marchés Financiers (AMF) fined the company and its shareholders for a series of irregularities.

First, the regulatory body sanctioned former majority shareholder European TopSoho, director of European TopSoho Chenran Qiu and Dynamic Treasure Group, which received the shares, for disclosure violations and market manipulation.

The shares were moved from Luxembourg to the British Virgin Islands without notifying the authorities. They effectively “went missing” until they reappeared in the accounts of Dynamic Treasure Group, also controlled by Qiu, weeks later. European TopSoho had sold them to DTG for a symbolic one-euro price.

In the interim, European TopSoho also issued a press release denying Qiu was involved in Dynamic Treasure Group, misleading the market.

As a result, the AMF issued a series of fines. Qiu was sanctioned with 1 million euros, European TopSoho 400,000 euros, and Dynamic Treasure Group 300,000 for a total of 1.7 million euros.

Separately, the AMF fined SMCP 20,000 euros for an unrelated leak of their financial information in 2021, when it accidentally published quarterly results on its website before market close.

The London-based GLAS is the trustee for European TopSoho creditors including BlackRock, Carlyle, Anchorage, Boussard and Gavaudan that united to save the group with the issuance of bonds, and effectively SMCP’s largest shareholder. They announced last year their intention to offload 37 percent of the group’s shares.

That move could trigger a mandatory takeover action under French law if a single purchaser snaps them up.

SMCP has been on the road to recovery as it seeks to replace the market share it lost in China by expanding into new regions in Asia, including the Philippines, Indonesia and India.

It recruited former Loewe executive Kleine Tan to take up the role of chief executive officer of SMCP Asia in April, tasked with implementing the company’s “strategic road map in the region, notably our network optimization in China,” she said in a statement shared first with WWD at the time.

Strikes by Ukraine and Israel show modern militaries need to blend military tech old and new.

When Ukrainian drones struck deep inside Russia last month and damaged strategic bombers once considered untouchable, it sent shock waves through military circles. Operation Spider’s Web was more than a display of technological ingenuity; it challenged longstanding assumptions about modern warfare. An outgunned but nimble force using off-the-shelf drones disrupted a far larger adversary. Speed, asymmetry and creativity outmatched legacy systems.

Weeks later, Israel’s strike on Iranian nuclear facilities offered a sharper, more enduring lesson: The future of warfare isn’t about drones replacing jets—it’s about integration. While Ukraine revealed how smart, agile tactics can disrupt an adversary, Israel put on a masterclass in modern warfare by blending conventional and new battlefield technologies.

In Israel’s opening strike, more than 200 aircraft dropped 300 precision munitions on 100 Iranian targets, according to the Israel Defense Forces. Simultaneously, Israeli quadcopters launched from a clandestine drone base inside Iran destroyed missile launchers aimed at the Jewish state. Using vehicles reportedly smuggled into Iran, Israeli operatives deployed weapons systems and precision missiles to destroy antiaircraft batteries. Acting on intelligence collected over decades, Israel targeted and killed dozens of Iranian military and nuclear officials. Human intelligence, cyber operations, unmanned systems and manned air power operated in the pre-emptive strike—it was a feat of modern military orchestration.

The lesson is clear: Successful military operations no longer depend only on overwhelming firepower or technological novelty. They now require synthesis—air and ground, legacy and next-generation, human and machine.

Israel’s opening strike redefined how the IDF thinks about conflict. According to a former IDF general I spoke with days after the operation, Israeli military leaders accelerated their planning cycles from five years to five months. The pace of technological change, the blurring of operational environments and the shifting tactics of adversaries demanded the faster timeline. To stay ahead on the battlefield, there is no longer time for slow adaptation.

This is a warning to democracies, especially the U.S. The wars of the 21st century won’t be won by choosing between drones and jets, analog and digital, artificial intelligence and human intuition. They will be won by militaries that combine them—creatively and continuously.

Ukraine’s drone campaign exemplifies adaptation. Facing a vastly superior military, Kyiv equipped commercial drones with explosives and software. Ukraine destroyed more than 40 Russian aircraft hundreds of miles from the front for a fraction of the cost of a single fighter jet.

But while cheap drones represent the tip of the spear, they aren’t the spear itself. Israel’s air assault required a blend of stealth and brute force, AI and human judgment, unmanned systems and pilots. This was military doctrine catching up to technology.

That distinction is where the U.S. military faces its most serious challenge. America’s legacy weapons platforms—tanks, ships, aircraft—remain formidable, but they are often disconnected from one another and from the networked, AI-enabled architecture that defines modern conflict. Innovation is bolted onto outdated hardware rather than built into the organization’s DNA. AI enhances precision targeting but rarely informs strategy. Interoperability between old and new remains patchy, held back by legacy procurement and bureaucratic stovepipes.

Meanwhile, competitors are rapidly advancing. In 2021 China stunned U.S. officials with a hypersonic missile test that circumnavigated the globe. Gen. Mark Milley, then chairman of the Joint Chiefs of Staff, testified that it was “very close” to China’s Sputnik moment. The real shock was the integration behind the weapon: space-based guidance, hypersonic propulsion and precision targeting functioning in coordination. Beijing rewired its military around how that capability fits into the broader strategy.

By contrast, the U.S. often treats technological upgrades as plug-ins rather than catalysts for larger transformation. This leaves critical gaps—against China, and even against ragtag adversaries in Afghanistan and Iraq who showed they can outmaneuver American forces with cheaper tech and ingenuity.

To close this gap, democracies must embrace the entrepreneurial power of the private sector. Venture-capital firms and startups are increasingly driving battlefield innovation. In Silicon Valley and Tel Aviv, small companies often push the edge of what’s possible faster than traditional defense contractors. But for this innovation to translate into strategic advantages, defense establishments must connect emerging technologies with military requirements. That means rethinking procurement, creating incentives for experimentation, and making startup integration the norm.

If the U.S. can’t reconcile its industrial-age forces with digital-age demands, even a massive defense budget won’t guarantee superiority. AI and unmanned systems must be treated as integral components of training, war-fighting culture, and objectives. A truly modern military trains every commander to think with drones, and it writes AI into the rules of engagement. Integration is a continuous process of aligning tools, talent, and tactics with the future fight.

That future fight is here. Hypersonic weapons, cyberattacks, and autonomous swarms are already operational. Militaries must move faster—on the ground and especially in their thinking. What will separate winners from losers in this new era will be the creativity and coherence with which militaries combine their assets. Ukraine’s battlefield improvisation and Israel’s strategic integration both underscore this point: Tools matter, but how you use them matters more.

The U.S. military can either lead this transition or risk being overtaken by forces quicker to adapt. Democracies, constrained by public accountability and limited by budgets, have no choice but to do more with less—and to do it smarter. They must lead this evolution not only with brute force, but with imagination.