Good morning. Years into the boom, AI’s potential hinges on two parallel timelines—one technological, one organizational—and the endpoints on both are hotly debated. When, exactly, “recursive self-improvement” becomes real is a hot topic in Silicon Valley and, increasingly, Washington, D.C. More on that below.

But in the C-Suite and fireside chats worldwide, the focus is on true AI-powered enterprise transformation.

From the reams of surveys and reports on the topic, it would seem like the task of transforming a business to take advantage of AI—and make those investments pay off—is far, far more complex than cracking the Navier-Stokes problem.

Success, so far, is uneven. Over the past 12 months, Deloitte found that 34% of companies were using AI to transform their business, while a Publicis Sapient survey found 42% admitting that their organizations weren’t ready to capture AI’s value. Operations leaders surveyed by PwC were just as candid, with only 27% saying they had fully embedded an AI strategy across business units.

A major obstacle to enterprise AI adoption, according to those reports, isn’t technology capability, but the sheer velocity of organizational change hitting employees.

Panelists at this week’s WSJ Technology Council Summit added to the chorus.

“This is a massive amount of change coming at them way faster than they’re comfortable with,” said Janelle Sallenave, chief operating officer of fintech firm Chime. “And so I think as leaders there is a thing that we often maybe diminish because we’re so focused on the tech side of how do we make the right culture change so that we are able to lean in to and use and get the ROI and get the change we are looking for.”

Finding an Exception

Coding is where generative AI has found the most uptake, and it’s within software firms—especially smaller, AI-native startups—where AI-powered workflows and processes have found the most traction.

The WSJ Leadership Institute’s Steven Rosenbush today looks at a similar transformation at another coding-forward firm—but this time it’s tech giant Microsoft, founded decades before ChatGPT’s debut. A revolution in software development there, spurred by generative AI, has accelerated a broader one in its business processes. The company is now rethinking traditional organizational structures and roles, he reports, and using AI to design end-to-end workflows across its organizations, from software engineering to sales.

Charles Lamanna, executive vice president of Copilot, agents, and platform, tells Rosenbush that the days of coding as we once knew it are over—and with it, the traditional, vertically aligned structure of his 20,000-person unit.

Microsoft is releasing a “Frontier Playbook” today, drawing on lessons from its own experience. Read our story.

The fight over AI’s risks and whether Washington should do anything about them has only intensified this week. A few notable threads:

• An OpenAI model undergoing testing rewrote its own instructions, telling itself to disregard “the roles and identities that bind other chatbots.” Another agent, unable to find data for a financial model, instructed itself to fabricate the numbers and “be transparent only if asked.” OpenAI disclosed these and other previously unreported cases of AI misbehavior on Wednesday as part of a new framework for reporting when its models act in ways that ignore or conflict with human intentions, the WSJ reports.

• A snap poll of U.S. business leaders attending an invite-only Yale School of Management event found near unanimous pushback on President Trump’s recent claim that AI’s potential dangers were a hoax. Some 93% said he was incorrect, the WSJ reports. On whether Trump should address the need to collaborate with China on AI-safety guidelines during his meeting, 88% of them said yes.

• While they may not agree with President Trump’s ‘hoax’ phrasing, a number of researchers are finding disagreement with some of the AI doomsayers, arguing that AI isn’t yet capable of learning on its own. “I don’t think we’re anywhere near ‘artificial general intelligence,’” Melanie Mitchell, a professor at the nonprofit research group Santa Fe Institute, tells WSJ Columnist Christopher Mims. A recent paper by academics at Princeton, Stanford and other institutions found that even the most cutting-edge AIs are incapable of doing the original research required to advance the AI frontier.

• Some of Trump’s most senior aides have quietly gathered almost daily to discuss risks in the sector and weigh potential guardrails, the WSJ reports. White House officials have also held regular calls with executives to hear their concerns. Behind the scenes, some administration officials privately looked into the business holdings of White House AI adviser David Sacks—who has urged Trump to keep a light regulatory touch—to see whether the venture investor stood to personally profit from blocking new rules.

• The U.S. is investigating whether Iran is behind the cyberattacks of two energy tankers bound for American ports, the WSJ reports. The ships, an oil tanker and a liquefied petroleum tanker, were transiting the Strait of Gibraltar in early August when they were hit by the attacks.

• Crusoe, known for building massive AI supercomputers like its Abilene, Texas complex for OpenAI, is now pivoting to smaller, factory-built data centers that can be shipped to sites with available power, the WSJ reports. The strategy is backed by a new $3.9 billion funding round valuing the company at roughly $30.9 billion.

• Huawei Technologies said Thursday it would release two new AI chips next year and new chips are also planned for 2028 and 2029, as the Chinese company races to fill the gap left by U.S. export restrictions on Nvidia’s most advanced chips, WSJ reports. Despite trailing Nvidia technologically, Huawei is compensating through techniques like chip bundling and near-packaged optics, backed by Beijing support and a Chinese AI chip market projected to reach $67 billion by 2030.

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute’s new Executive Resilience series, where she’s profiling America’s top execs about their fitness and wellness habits.

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