Lessons from OpenAI saga, coming soon to an IIM near you

Sam Altman briefly joined Microsoft. (Reuters)
Sam Altman briefly joined Microsoft. (Reuters)

Summary

  • The OpenAI whirlwind started on Friday with the abrupt dismissal of the company' co-founder and CEOAltman, who enjoys a cult-like status in the technology world

The tumultuous story of Sam Altman’s ouster from OpenAI and his triumphant return in five days could make it to business school curricula, offering valuable lessons on leadership, loyalty and valuations.

The OpenAI whirlwind started on Friday with the abrupt dismissal of co-founder and chief executive officer (CEO) Altman, who enjoys a cult-like status in the technology world. President Greg Brockman quit as well, prompting hundreds of employees to threaten resignation, and triggering an outcry to bring Altman back. After briefly joining Microsoft, and much public back-and-forth over social media, Altman was back at OpenAI on Wednesday.

“The conclusion of this boardroom battle will be interesting. One can teach how two stakeholders—OpenAI and Microsoft—had their differences played out; how corporates and leaders create an image and position themselves on social media; and how boardroom opinions are managed and perceptions created, which show employee loyalty," said Nishant Uppal, a professor of organizational behaviour and human resource management at the Indian Institute of Management (IIM), Lucknow.

The dismissal was led by OpenAI’s chief scientist Ilya Sutskever, who later went on to express his regret on X, formerly Twitter. Meanwhile, the company board, which went through two interim CEOs during the chaos, reached out to Altman.

“The OpenAI case offers rich insights for business schools, emphasizing the critical aspect of balancing innovation with stability in boardroom dynamics. It underscores the importance of teaching future business leaders the art of navigating such delicate equilibrium," said Himanshu Rai, director, IIM-Indore. Rai said B-Schools should “prioritize curricula that delve into adaptable strategies, focusing on transparent communication and the significance of aligning leadership goals—a reflection of the negotiations witnessed in OpenAI’s context with Sam Altman."

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The story took a twist when Satya Nadella, CEO of Microsoft, the largest investor in OpenAI, offered Altman and Brockman jobs in Microsoft to open a new AI lab. Finally, on Wednesday, a new board was created at OpenAI, along with the return of Altman and Brockman, bringing the curtains down on the drama.

While reports on the behind-the-scenes developments at OpenAI are still trickling out, Ganesh N. Prabhu, a professor of strategy at IIM Bangalore, noted that one needs to study the ways not-for-profit organizations like OpenAI are governed differently from for-profit companies.

“Right now, we have just 20% of the information, and once there is closure, we need to know why Altman was asked to go," Prabhu said. According to him, investments such as Microsoft’s without a board position and social media commentary by top executives of non-profits without requiring usual regulatory processes are also worth studying.

At IIM Calcutta, students may be taught about the conflict between a board, executive leaders and employees using this case.

“What happens when the personal equity and contribution of the leaders in building a company are larger than the equity of the rest of the board can be taught to the students," said Prashant Mishra , a professor of marketing at IIM Calcutta.

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