The landscape of work is undergoing a fundamental transformation, driven by advanced AI agents and robust intelligence infrastructure. Organizations poised to thrive in this new era are known as Frontier Firms, companies that are human-led and agent-operated. These firms are reinventing business processes, empowering every employee with an AI assistant, and amplifying impact through human-agent teamwork. The latest updates to Microsoft 365 Copilot are designed to help every customer evolve into a Frontier Firm.
Table of Contents
Defining the Frontier Firm Era
At Microsoft Ignite 2025, several key capabilities were introduced to accelerate the transition to agent-operated work. Major announcements included Work IQ, the intelligence layer that allows Copilot to deeply understand a user and their company; Agent Mode in the Office apps, enabling iterative content creation; and Agent 365, the specialized control plane for agent management and security.
To further research the impact of these changes, the Frontier Firm AI Initiative has been launched in collaboration with the Digital Data Design Institute at Harvard (D^3). This initiative is dedicated to researching human-AI collaboration and providing global C-suite leaders with the necessary skills to transform their organizations. Inaugural cohort participants include major global companies such as Barclays, Cigna Healthcare, DuPont, EY, and Nestlé.
Work IQ: The Intelligence Layer Powering Microsoft Copilot
The innovation underlying Microsoft 365 Copilot and agents is Work IQ. This intelligence layer helps Copilot understand the user, their role, and the company context. Work IQ is an AI-powered feedback loop woven into apps like Word, Outlook, and Teams, ensuring Copilot is always learning and delivering tailored experiences.
Work IQ operates through three core pillars
Data
This includes the rich knowledge contained within emails, files, meetings, and chats, which codifies how work gets done.
Memory
This encompasses a user’s style, preferences, habits, and workflows. It understands not only the organization’s org chart but also the user’s unique work chart.
Inference
This combines data and memory to make valuable connections, unlock insights, and predict the next best action. This function goes beyond what standard connectors can achieve.
To ensure the right tool is available for any task, Microsoft is rapidly bringing the latest AI models, tuned for work, to Copilot, including GPT-5, computer use (CUA), and Sora 2. Model choice is also expanding with the addition of Anthropic models.
Furthermore, organizations can now utilize Work IQ for custom agents. This allows users to tap into the intelligence layer to build agents tuned for specific business needs while ensuring secure grounding that respects existing permissions, compliance controls, audit, logging, monitoring, and policy enforcement. This is available within Copilot Studio or via API for pro-code agent development.
Transforming Productivity within Microsoft 365 Apps
New capabilities are enabling world-class Office artifact creation, whether starting in Copilot chat or directly within the applications.
Agent Mode
Agent Mode allows users to work iteratively with Copilot to produce high-quality documents, spreadsheets, and presentations.
– Agent Mode in Word is now generally available.
– Agent Mode in PowerPoint is available via the Frontier program.
– Agent Mode in Excel now gives users the choice between Anthropic and OpenAI reasoning models.
– New Word, Excel, and PowerPoint Agents also allow for the creation of high-quality content directly within Copilot chat (available via the Frontier program).
Voice and Mobility
Users can now talk to Copilot like a colleague with voice in the Microsoft 365 Copilot app. This allows users to ask, for example, “What are my top priorities for the day?” (generally available in December). Copilot in Outlook facilitates triaging of inboxes and calendars on the go using voice (in public preview) and offers new one-tap prompts, such as “summarize and reply,” for quickly managing emails and scheduling meetings (generally available).
Expanded Tools
Copilot Chat is offered as a secure AI chat for work and is available to every Microsoft 365 subscriber at no additional cost. It will soon include access to Agent Mode in chat and the Office apps. Sora 2 brings next-generation AI video creation for marketing or social content (available via the Frontier Program). Additionally, Edge for Business (Copilot Mode) functions as the world’s first secure enterprise AI browser, enabling multi-step workflows for users with a Microsoft 365 Copilot license.
Agent 365: The New Control Plane for Agent Governance
As agents become integral to work, IDC predicts there will be 1.3 billion AI agents by 2028. Governance is crucial. Agent 365 acts as the control plane for all agents. This system extends the existing trusted infrastructure for managing people to the management of agents.
Agent 365 helps organizations deploy, organize, and govern agents securely, regardless of whether they were created using Copilot Studio, Microsoft Foundry, open-source frameworks, or partner solutions like SAP, Workday, or ServiceNow.
Key capabilities of Agent 365 include
– A registry to serve as a single source of truth for all agents.
– Access control to limit agent access only to the specific resources required for tasks.
– Visualization through a unified dashboard and advanced analytics to monitor agent performance and behavior in real time.
– Advanced security features to protect agents from vulnerabilities and detect, investigate, and remediate targeted attacks.
To assist with deployment, the Microsoft Agent Factory helps organizations build and deploy agents using Microsoft Foundry and Copilot Studio anywhere with a single metered plan, avoiding upfront licensing and provisioning. Eligible organizations can also access hands-on support from top AI Forward Deployed Engineers (FDEs).
Agents Transforming Business Processes and Collaboration
Human-agent teamwork is becoming a reality through new collaborative agents. Teams Mode for Microsoft 365 Copilot transforms 1:1 Copilot chats into group chats within Microsoft Teams (in public preview). Every team and meeting can now utilize an AI teammate, such as the Facilitator agent in Teams, which manages the agenda, takes notes, keeps meetings on track, and handles resulting actions (generally available).
Agents in Teams Channels can now work with third-party apps and agents, including GitHub, Asana, and Atlassian (Jira), via Model Context Protocol (MCP) servers. This allows an agent to pull risks from Jira, for example, and then schedule a mitigation meeting with the team (in public preview).
Process transformation is furthered by autonomous agents
– The Sales Development Agent autonomously assists in building a pipeline, nurturing leads, and personalizing outreach, connecting to CRM tools like Salesforce and Dynamics 365 (Available in December 2025).
– The Workforce Insights agent provides leaders and managers with comprehensive, real-time insights across their organization to support data-driven workforce decisions.
– The App Builder and Workflows agent enable the easy creation and deployment of apps and automated tasks using natural language.
Platform Integration and Enterprise Security Updates
Windows is designed as an AI-centric platform. Ask Copilot on the taskbar serves as the instant entry point to Microsoft 365 Copilot, agents (like Researcher), and search, accessible by voice or text (in public preview). Furthermore, Windows 365 for Agents empowers makers to create and deploy enterprise-grade agents on secure, policy-controlled Cloud PCs streamed from the Microsoft Cloud.
In terms of security, there are now 12 new agents built into the workflow across Microsoft Defender, Entra, Intune, and Purview. To help organizations harness these capabilities, Microsoft Security Copilot will be included for all Microsoft 365 E5 customers.
Availability and Pricing for Small and Medium Businesses
In a commitment to helping every organization grow and scale, a new offer, Microsoft 365 Copilot Business, has been introduced. This plan is specifically designed for small and medium-sized businesses with fewer than 300 users. Microsoft 365 Copilot Business is available for $21 per user per month, starting in December.
Key Takeaways
– Frontier Firms: The focus is on creating “Frontier Firms,” which are human-led and agent-operated organizations utilizing AI to reinvent processes.
– Work IQ: This is the core intelligence layer providing Copilot with a deep understanding of a user’s job, data, memory, and next best action.
– Agent 365: This control plane manages, secures, and governs all agents within an organization, supporting deployment from various sources.
– Productivity Tools: Updates include Agent Mode in Word (GA), Anthropic model choice in Excel, voice interaction in the Copilot app, and Copilot Chat being available to all Microsoft 365 subscribers at no extra cost.
– Autonomous Agents: New autonomous agents, like the Sales Development Agent (December 2025) and the Facilitator agent in Teams (GA), are transforming sales and collaboration workflows.
– SMB Pricing: A new plan, Microsoft 365 Copilot Business, is available for small and medium businesses (fewer than 300 users) at $21 per user per month, starting in December.
Frequently Asked Questions
What is Work IQ and how does it improve Copilot’s performance?
Work IQ is the intelligence layer behind Microsoft 365 Copilot that understands the user, their role, workflow patterns, organizational context, and preferences. By combining data, memory, and inference, Work IQ enables Copilot to deliver more relevant, personalized, and context-aware results across apps like Word, Excel, Outlook, and Teams.
What is Agent Mode in Office apps and how does it work?
Agent Mode is a new capability that allows users to collaborate iteratively with Copilot directly inside Word, Excel, PowerPoint, and other Office apps. Users can refine content, request revisions, and generate documents with back-and-forth interactions—similar to working with a real assistant.
What is Agent 365 and why is it needed?
Agent 365 is Microsoft’s control plane for managing, governing, and securing AI agents across an organization. It provides a central registry of all agents, enforces access permissions, delivers monitoring dashboards, and protects agents from security threats, misconfigurations, or unauthorized access.
Can organizations build their own custom AI agents using Microsoft tools?
Yes. Organizations can build custom agents using Microsoft Copilot Studio, Microsoft Foundry, Azure AI services, or APIs. Work IQ can be applied to custom agents, enabling them to reason over enterprise data while respecting security, compliance, and permission controls.
What is Microsoft Foundry and how does it relate to agent creation?
Microsoft Foundry is an engineering platform that helps organizations build, optimize, and deploy production-grade AI agents. It provides tools, frameworks, and engineering support for scaling AI solutions, particularly through the Agent Factory and Forward Deployed Engineers (FDEs).
Is Microsoft 365 Copilot Business available for small and medium businesses?
Yes. Microsoft introduced the Microsoft 365 Copilot Business plan for organizations with fewer than 300 users. It is priced at $21 per user/month and includes access to Copilot features tailored for SMBs.
Microsoft Ignite Copilot Update: Transforming Work with Work IQ, Agent 365, and AI Agents
The landscape of work is undergoing a fundamental transformation, driven by advanced AI agents and robust intelligence infrastructure. Organizations poised to thrive in this new era are known as Frontier Firms, companies that are human-led and agent-operated. These firms are reinventing business processes, empowering every employee with an AI assistant, and amplifying impact through human-agent teamwork. The latest updates to Microsoft 365 Copilot are designed to help every customer evolve into a Frontier Firm.
Table of Contents
Defining the Frontier Firm Era
At Microsoft Ignite 2025, several key capabilities were introduced to accelerate the transition to agent-operated work. Major announcements included Work IQ, the intelligence layer that allows Copilot to deeply understand a user and their company; Agent Mode in the Office apps, enabling iterative content creation; and Agent 365, the specialized control plane for agent management and security.
To further research the impact of these changes, the Frontier Firm AI Initiative has been launched in collaboration with the Digital Data Design Institute at Harvard (D^3). This initiative is dedicated to researching human-AI collaboration and providing global C-suite leaders with the necessary skills to transform their organizations. Inaugural cohort participants include major global companies such as Barclays, Cigna Healthcare, DuPont, EY, and Nestlé.
Work IQ: The Intelligence Layer Powering Microsoft Copilot
The innovation underlying Microsoft 365 Copilot and agents is Work IQ. This intelligence layer helps Copilot understand the user, their role, and the company context. Work IQ is an AI-powered feedback loop woven into apps like Word, Outlook, and Teams, ensuring Copilot is always learning and delivering tailored experiences.
Work IQ operates through three core pillars
Data
This includes the rich knowledge contained within emails, files, meetings, and chats, which codifies how work gets done.
Memory
This encompasses a user’s style, preferences, habits, and workflows. It understands not only the organization’s org chart but also the user’s unique work chart.
Inference
This combines data and memory to make valuable connections, unlock insights, and predict the next best action. This function goes beyond what standard connectors can achieve.
To ensure the right tool is available for any task, Microsoft is rapidly bringing the latest AI models, tuned for work, to Copilot, including GPT-5, computer use (CUA), and Sora 2. Model choice is also expanding with the addition of Anthropic models.
Furthermore, organizations can now utilize Work IQ for custom agents. This allows users to tap into the intelligence layer to build agents tuned for specific business needs while ensuring secure grounding that respects existing permissions, compliance controls, audit, logging, monitoring, and policy enforcement. This is available within Copilot Studio or via API for pro-code agent development.
Transforming Productivity within Microsoft 365 Apps
New capabilities are enabling world-class Office artifact creation, whether starting in Copilot chat or directly within the applications.
Agent Mode
Agent Mode allows users to work iteratively with Copilot to produce high-quality documents, spreadsheets, and presentations.
Voice and Mobility
Users can now talk to Copilot like a colleague with voice in the Microsoft 365 Copilot app. This allows users to ask, for example, “What are my top priorities for the day?” (generally available in December). Copilot in Outlook facilitates triaging of inboxes and calendars on the go using voice (in public preview) and offers new one-tap prompts, such as “summarize and reply,” for quickly managing emails and scheduling meetings (generally available).
Expanded Tools
Copilot Chat is offered as a secure AI chat for work and is available to every Microsoft 365 subscriber at no additional cost. It will soon include access to Agent Mode in chat and the Office apps. Sora 2 brings next-generation AI video creation for marketing or social content (available via the Frontier Program). Additionally, Edge for Business (Copilot Mode) functions as the world’s first secure enterprise AI browser, enabling multi-step workflows for users with a Microsoft 365 Copilot license.
Agent 365: The New Control Plane for Agent Governance
As agents become integral to work, IDC predicts there will be 1.3 billion AI agents by 2028. Governance is crucial. Agent 365 acts as the control plane for all agents. This system extends the existing trusted infrastructure for managing people to the management of agents.
Agent 365 helps organizations deploy, organize, and govern agents securely, regardless of whether they were created using Copilot Studio, Microsoft Foundry, open-source frameworks, or partner solutions like SAP, Workday, or ServiceNow.
Key capabilities of Agent 365 include
To assist with deployment, the Microsoft Agent Factory helps organizations build and deploy agents using Microsoft Foundry and Copilot Studio anywhere with a single metered plan, avoiding upfront licensing and provisioning. Eligible organizations can also access hands-on support from top AI Forward Deployed Engineers (FDEs).
Agents Transforming Business Processes and Collaboration
Human-agent teamwork is becoming a reality through new collaborative agents. Teams Mode for Microsoft 365 Copilot transforms 1:1 Copilot chats into group chats within Microsoft Teams (in public preview). Every team and meeting can now utilize an AI teammate, such as the Facilitator agent in Teams, which manages the agenda, takes notes, keeps meetings on track, and handles resulting actions (generally available).
Agents in Teams Channels can now work with third-party apps and agents, including GitHub, Asana, and Atlassian (Jira), via Model Context Protocol (MCP) servers. This allows an agent to pull risks from Jira, for example, and then schedule a mitigation meeting with the team (in public preview).
Process transformation is furthered by autonomous agents
Platform Integration and Enterprise Security Updates
Windows is designed as an AI-centric platform. Ask Copilot on the taskbar serves as the instant entry point to Microsoft 365 Copilot, agents (like Researcher), and search, accessible by voice or text (in public preview). Furthermore, Windows 365 for Agents empowers makers to create and deploy enterprise-grade agents on secure, policy-controlled Cloud PCs streamed from the Microsoft Cloud.
In terms of security, there are now 12 new agents built into the workflow across Microsoft Defender, Entra, Intune, and Purview. To help organizations harness these capabilities, Microsoft Security Copilot will be included for all Microsoft 365 E5 customers.
Availability and Pricing for Small and Medium Businesses
In a commitment to helping every organization grow and scale, a new offer, Microsoft 365 Copilot Business, has been introduced. This plan is specifically designed for small and medium-sized businesses with fewer than 300 users. Microsoft 365 Copilot Business is available for $21 per user per month, starting in December.
Key Takeaways
Frequently Asked Questions
Work IQ is the intelligence layer behind Microsoft 365 Copilot that understands the user, their role, workflow patterns, organizational context, and preferences. By combining data, memory, and inference, Work IQ enables Copilot to deliver more relevant, personalized, and context-aware results across apps like Word, Excel, Outlook, and Teams.
Agent Mode is a new capability that allows users to collaborate iteratively with Copilot directly inside Word, Excel, PowerPoint, and other Office apps. Users can refine content, request revisions, and generate documents with back-and-forth interactions—similar to working with a real assistant.
Agent 365 is Microsoft’s control plane for managing, governing, and securing AI agents across an organization. It provides a central registry of all agents, enforces access permissions, delivers monitoring dashboards, and protects agents from security threats, misconfigurations, or unauthorized access.
Yes. Organizations can build custom agents using Microsoft Copilot Studio, Microsoft Foundry, Azure AI services, or APIs. Work IQ can be applied to custom agents, enabling them to reason over enterprise data while respecting security, compliance, and permission controls.
Microsoft Foundry is an engineering platform that helps organizations build, optimize, and deploy production-grade AI agents. It provides tools, frameworks, and engineering support for scaling AI solutions, particularly through the Agent Factory and Forward Deployed Engineers (FDEs).
Yes. Microsoft introduced the Microsoft 365 Copilot Business plan for organizations with fewer than 300 users. It is priced at $21 per user/month and includes access to Copilot features tailored for SMBs.
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