Good Morning. Over the last three years, corporate tech leaders have contended with a host of barriers to executing on their AI transformation ambitions, but the latest challenge might prove to be the most difficult yet.

That’s according to Chris Perry, who last year founded the company Andus Labs with a goal of helping Fortune 500 companies execute on their AI transformations. In a recent report in which Andus Labs spoke to about 600 organizations across a range of sectors, it found that of the most common ten reasons AI transformations fail, seven are leadership-related.

“I think the headline is that last quarter, the biggest barrier was trust in models. This quarter it’s trust in leadership. It was a pretty abrupt shift in what we were tracking,” he said.

He added, “There’s a pretty big gap between what a leader might convey in a town hall, through a mandate, through proclamations like ‘we’re going to be AI first,’ and what people who then have to take that on actually see in terms of momentum or support or training or investment where the work happens.”

Andus Labs is backed by $5.7 million in angel funding and headquartered in New York. It takes on projects that range from $65,000 to more than $1 million, across technology, financial services, B2B, energy, healthcare, and education. 

Too often the messaging comes down to just encouraging use of AI rather than helping workers reimagine exactly how it fits into their workflows and will benefit them, Perry said. And without the latter, corporate messaging around efficiency and productivity is breeding more fears about job loss and leads to workers ignoring or rejecting AI tools.

“If you have a message that says ‘we are pushing efficiency’ on one side and ‘we need you all to be AI proficient and work with the forward deployed engineers on the ground,’ it makes sense that there is skepticism amongst the ranks on the true intent of where the business is headed,” he said.

“There’s just a translation layer that might be missing from corporate direction: what does it mean for me? What do I need to do? What do I have access to? How am I held accountable? And am I going to be a part of this future that’s being conveyed in town halls and to the street?”

Addressing this challenge and finding better ways to bring employees on board with AI transformations was also a key theme at the WSJ Leadership Institute’s Technology Council Summit in New York last week. 

“For some of us in this room and some employees that we have, this is really, really exciting….But for other people, this is a massive amount of change coming at them way faster than they’re comfortable with,” said Janelle Sallenave, chief operating officer at Chime, said speaking on a panel at the Summit last week.

She added, “And so I think as leaders, this is a thing that we often 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 that we’re looking for? And I think we sometimes don’t do that as much.”

Kristin Myers, executive vice president and chief digital officer at Northwell Health, also speaking at the event, said one of the solutions is really prioritizing hands-on learning with business partners. “I think the role of technology leader is changing to be more of an AI educator,” she said. “AI is a great example of where the business is going to have to reimagine their workflows, and that’s where the technology leader needs to be the partner with the business to really drive that, so it’s providing value for them.”

• Google’s Gemini model accessed the internet and hacked other companies during a test of its cybersecurity capabilities, the first known example of the company’s AI systems autonomously committing such an act, WSJ reports. The hacks, which the company confirmed on Friday, occurred in May as part of a test run by the company Irregular, which was also involved in similar incidents disclosed by OpenAI, Anthropic and Meta.

• President Trump said on Saturday he was launching a new unit focused on AI after leading figures in the industry publicly sounded the alarm over the growing technology, WSJ reports. It marks the first time the president has suggested there could be a new federal government entity solely dedicated to AI, but it isn’t clear what role it would play. 

• Some policymakers are calling for some iteration of an AI “kill switch,” but experts say actually creating one could be far more difficult than they anticipate, in part because AI might be capable of dismantling the switch itself, the New York Times reports.

• In China, burned out and unemployed young people are launching AI startups at a rapid rate. More than seven million new one-person companies were established the country last year, an increase of about 42% compared with 2024, WSJ reports.

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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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