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Daily analysis of AI liability, regulatory enforcement, and governance strategy for the C-Suite. Hosted by Shelton Hill, AI Governance & Litigation Preparedness Consultant. We bridge the gap between technical models and legal defense.
innovation moves at the speed of code
liability moves at the speed of law
welcome to the AI Governance Brief
we bridge the gap between technical models
and legal defense here is your host
litigation preparedness consultant Keith Hill
welcome to the second part of the Anti Silo series
I'm Keith Hill for over 20 years
I've taught communication
studies and organizational psychology
at the university level
I've coached championship debate teams
I've helped executives
navigate the human dynamics that determine
whether their initiatives succeed
or die quiet deaths
in the middle of their organizations
this series is about one thing
why AI governance initiatives fail
and it has nothing to do with policy
today's episode is a wake up call
it's called you don't know your own organization
let's begin
here's a number that should concern you
according to Gartner's 2025 research
75% of HR
leaders report that managers in their organizations
are overwhelmed and not equipped to lead change
that's three out of four
now before you think that's a middle management problem
I want you to consider something uncomfortable
your managers aren't failing
because they're incompetent
they're failing because they're operating
inside an organization
they and you don't actually understand
you think you know your organization
you approve the org chart
you signed off on the value statement
you receive the quarterly reports
you sit in the executive committee meetings
but here's the research from C E
I B s
in 2025 by the time information reaches the CEO
it is no longer an authentic reflection of events
it's data that has been reinterpreted multiple times
it's been filtered softened
and customized to cater to superiors'expectations
the researchers
have a term for what happens to information
as it moves up your hierarchy
they call it interpreting upwards
at each level information is processed
not to convey facts more accurately
but to align with the preferences of superiors
more safely in other words
the higher you go the less you actually know
CEO World magazine calls it the permafrost
a frozen middle layer where information stops flowing
truth is softened and innovation stifles
you're not leading the organization
you think you're leading
you're leading the organization
people want you to believe exists
and that organization is fiction
let me be direct about what this means for your AI
governance initiative
you can't move an organization you don't understand
and most C sweet
executives
have been insulated from the actual organization
for years you see filtered information
managed interactions curated feedback
you think you know your culture
because you approve the value statement
social network analysis research
and I'm drawing the line here
from the foundational work of Krackhardt and Hanson
at the Harvard Business Review
demonstrates that the org chart is a legal fiction
a beautiful legal fiction
sure necessary for compliance and reporting purposes
but it tells you almost nothing
about how actual work gets done
the real organization runs on informal networks
unwritten rules and influence
patterns that most executives never mapped
here's what
organizational psychologists have documented
the 80 20 reality 20% of people in your organization
do 80% of the real work influence and decision making
but here's the part that should keep you up at night
these aren't always the people with titles
they're not always on your leadership team
they're not always in your
succession planning documents
in many cases they're people you've never met
network scientists call them the hubs
or central connectors
individuals with disproportionate influence
through their direct connections
if these people leave
your organization doesn't just lose an employee
it loses a node that connects multiple networks
it loses institutional knowledge
it loses the person everyone actually goes to
when they need to get something done
research from Alsufina Consulting in 2025
found that with just 20 influential employees
identified through organizational network analysis
companies can reach 70% of the entire organization
through informal networks
20 people 70% reach
do you know who these 20 people are
in your organization because if you don't
and most executives don't
then you are launching your AI
governance initiative
without understanding the actual transmission system
that will determine whether it succeeds or fails
there's a parallel body of research
that should concern you even more
66% of employees primarily hide aspects of themselves
from senior leaders and direct supervisors
not some employees not disengaged employees
66% of employees and it gets worse the higher you go
Mackenzie found that 80% of C suite executives cover
meaning they hide aspects of themselves
with almost everyone around them
including HR including their direct reports
including their own teams
everyone is hiding
and the person with the least information
about what's actually happening
is sitting in the corner office
now at this point
some executives will say this is an HR problem
this is a culture problem
let me delegate this to someone who handles people
issues no
this is a leadership problem
it's your problem and delegation won't solve it
here's why Harvard Business Review
published research from Howl Jurgensen titled
Busting Out of the CEO Bubble
in it Walt Bettener
the CEO of Charles Schwab
identifies the CEO bubble as his No. 1 challenge
his words
his words for his No. 1 challenge
people telling you what they think you want to hear
and people being fearful to tell you
things they believe you don't want to hear
that's not a feeling of your people
that's the natural consequence of hierarchical power
people don't lie to you because they're dishonest
they filter information because it's rational
it's survival wisdom
they've Learned explicitly or implicitly that honest
negative feedback carries career risk
when someone reports to you
they have a strong incentive to manage
your perception of them
every interaction is at some level a performance review
so who do they tell when there's a problem
not you they tell their peers
they tell the informal influencers
they tell the person who actually
knows how to get things done
without triggering management scrutiny
the problem compounds at each level
by the time something reaches you
it's been filtered through multiple layers of
interpreting upwards
each layer removes
information that might reflect poorly on the messenger
you're getting abstract data points
not ground truth
you cannot delegate your way out of this
you can't hire someone to tell you the truth
the structure of power prevents it
the only way to understand your actual organization
is to build systems that bypass the hierarchy entirely
and that requires you to personally invest
in understanding how your organization
really works
let me be clear about what happens if you don't
your AI
governance initiative will probably and predictably arc
you'll announce it with great fanfare
you'll get initial compliance
people will attend the trainings
they'll fill out the forms and then slowly erosion
the policy stays on the books
but nobody actually follows it
governance becomes theater
the gap between policy and practice becomes a cynical
open secret why
because you launch the initiative
through formal channels targeting formal authority
without understanding the informal systems
that actually determine what people do
on a day to day basis so what do you do
how do you actually see your organization
not the org chart not the value statement
the actual organization
this is where organizational network
analysis becomes essential
and I don't mean as a one time consulting engagement
I mean as a leadership competency
you need to develop
let me walk you through the framework
first
you need to understand the typologies of informal power
there are at least seven distinct types
1 expertise based power
technical knowledge organizational memory
specialized skills that others depend on
2 reputational power
built through track record
reliability and consistent delivery
3 relational power
access to key people ability to make introductions
accumulated social capital
4 cultural gatekeeping
control over how things are done
here
these people onboard new employees into unwritten rules
5 information brokerage position
bridging disconnected groups
access to diverse information streams
6 resource control
informal control over budgets
headcount tools or access
and 7 positional proximity
physical or organizational closeness to decision makers
executive assistants often have more informal power
than middle managers
none of these map to your org chart
all of them determine whether your governance
initiative succeeds
second you will need to understand network position
there are specific metrics that matter
for example degree centrality
how many direct connections does someone have
high degree centrality
means they can spread information
or resistance quickly
betweenness centrality
how often does someone act as a bridge
between otherwise disconnected groups
these are your brokers
Ronald Bert's structural holes theory
shows that brokers
gain power by connecting people who wouldn't otherwise
connect they have the best perspective
on what aspects of change
will work because they see across silos
n vector centrality
is someone connected to other highly connected people
this indicates systemic influence
the ability to mobilize networks of networks
when you map these metrics
you'll find the real 20%
the people who actually determine
whether change happens
third and this is critical
you need to develop alternative channels
for organizational intelligence
skip level meetings
direct conversations
two to three levels down the hierarchy
about their work and their experience
but here's the problem
if you just show up and start asking questions
you'll get the same filtered information you always get
people will tell you what they think you want to hear
so you need psychological safety protocols
this means establishing explicit norms
no retaliation no attribution
genuine curiosity it means asking questions like
what's the one thing about how work actually gets done
here that you think
I don't know
it means creating spaces where the information flow
isn't tied to performance evaluation
there's a case study from Innovisor
that illustrates this beautifully
Logistic
Co had a poor track record of implementing changes
top down approaches had consistently failed
so they used organizational network analysis
to identify their 20 most influential employees
not the most senior the most influential
they called them change ambassadors
then they created what they called fireside chats
informal trustful conversations
between the change ambassadors
and the company president
the result an informal governance structure emerged
that actually engaged the networks
changes started to stick
the lesson stop broadcasting through formal channels
to formal authority start engaging informal influencers
through informal channels
let me give you another case study that
demonstrates the cost of not understanding
your informal organization
Mars the company that makes candy and pet food
conducted
social network analysis across their divisions
and discovered something alarming
their New Jersey and Los Angeles divisions
weren't communicating at all
not just formally these divisions had no meaningful
informal network connections
when Mars leadership saw the network map
they restructured their performance reviews
to explicitly include informal networking activities
they made cross divisional relationships
building a measured behavior
the formal
org chart said these divisions should be connected
the network analysis showed that they weren't
only by seeing the actual network
could leadership intervene
here's the contrast case Wells Fargo
fraudulent account scandal
Boeing 7 37 Max fatal flaws
in both cases executives were the last to know about
serious problems
that employees on the ground were fully aware of
the pattern is identical
information gets sanitized at each level
interpreting upwards
creates customized messages that deviate from facts
by the time critical
safety or integrity information reaches the C suite
it's been diluted into meaninglessness
these aren't failures of character
they're failures of information architecture
the executives at Wells Fargo and Boeing
didn't wake up and
decide to ignore fraud and safety issues
they literally didn't know
the system
they relied on for organizational intelligence
were filtering out the most important signals
Google's Project Aristotle
found that psychological safety was the single most
important factor in high performance teams
teams with high psychological safety had lower turnover
more diverse ideas more
revenue and were twice as likely to be rated effective
but psychological safety doesn't happen by accident
it requires deliberate design
when you understand your informal networks
you can identify where psychological safety exists
and where it doesn't
you can see where information flows freely
and where it gets blocked
you can intervene at the structural level
not just the individual level
I wanna give you three specific actions you can take
in the next seven days day one through 3
map one network
choose a single question to ask to 15 people
across different levels and functions
the question when you need to get something done
that's not in the normal process
who do you go to not who should they go to
not who's responsible who do they actually go to
write down the names look for patterns
whose name keeps coming up
those are your informal influencers
days 4 and 5 schedule 3
skip level conversations
go to three levels down make the meeting informal
coffee lunch
a walk and ask one question
what's something about how work actually happens here
that you don't think I know
then listen don't solve
don't defend don't explain
just listen and take notes
Day 6 and 7 identify one gap based on what you Learned
identify one place where the organization
you thought you had is different from the organization
you actually have
maybe it's a team that's more siloed than you realize
maybe it's a person with far more
influence than their title suggest
maybe it's an information flow that's broken
document it that gap is where your governance
initiative will succeed or fail
this is the beginning of an organizational intelligence
not reports not surveys
actual understanding of how power
influence and information move through your company
let me close with the stakes
if you're about to launch
or you've already launched
an AI governance initiative
that will touch every part of your organization
it will necessarily change how people work
it will create anxiety about jobs
it will require new skills
new processes and new ways of thinking about risk
and you're launching it into an organization
you don't actually understand
you're launching it through formal channels
that reach formal authority
but miss the 20% who actually determine
what happens in your organization
you're launching it with filtered information
from direct reports
who have every incentive to tell you
what you want to hear
your organization is blind
and that blindness will kill your governance initiative
before it starts
the solution isn't another framework
it isn't another policy document
it isn't another consultant's recommendation
the solution is seeing your organization
as it actually is informal networks
unwritten rules
influence patterns that your org chart can't capture
until you can see these systems
you can't move them and until you can move them
your governance initiative is theater
next episode we'll tackle another uncomfortable truth
nobody understands what you're saying
you think you're communicating
you're actually just creating noise
I'm Keith Hill and this is the AI Governance brief
thank you for listening
and if you need help with these issues
or if you have a comment feel free to put it below
we love to read those
and find out more about what's actually going on
see to your organization see it from the inside out
only then can you take on something as critical as AI
governance have a wonderful day
that's the brief for today
remember if you can't explain your governance to a jury
in plain English you don't have governance
you have exposure don't wait for the deposition
book a first witness
stress test for your compliance team
at verbal
alchemist at Gmail dot com
this is Keith and I'll see you tomorrow