the health strategist
institute for strategic health transformation
& digital technology
Joaquim Cardoso MSc.
Chief Research and Strategy Officer (CRSO),
Chief Editor and Senior Advisor
November 21, 2023
One page summary
What is the message?
OpenAI, a pioneering organization in the field of artificial intelligence, has recently encountered significant governance issues that have brought its operational stability into question.
The unexpected termination of CEO Sam Altman, a decision that was met with considerable public outcry and internal dissent, has underscored the importance of sound corporate governance, particularly in the rapidly evolving tech industry.
The fallout from this decision, including the potential mass departure of employees and the subsequent appointment of Altman to Microsoft, a major OpenAI investor, has further highlighted the governance missteps.
These events serve as a stark reminder of the potential consequences of poor governance and provide an opportunity for other organizations to learn and improve their own governance structures.
What are the key points?
Sam Altman, the CEO of OpenAI, was abruptly fired last week, sparking a weekend of public outcry and dramatic news developments. The decision to fire Altman was made by the OpenAI board, which has been criticized for its lack of transparency and governance. The firing has also raised concerns about the future of OpenAI and the role of the markets in funding AI development. Here is what went wrong:
Error 1: Lack of transparency
The OpenAI board’s decision to fire Altman was made without consulting with major investors or employees. This lack of transparency led to confusion and anger among those who were affected by the decision.
Error 2: Failure to consult with major investors
Microsoft, OpenAI’s largest investor, was reportedly surprised by the decision to fire Altman. The board’s failure to consult with major investors showed a lack of respect for their interests and damaged the company’s credibility.
Error 3: Poor timing of the announcement
The announcement of Altman’s firing was made on a Friday afternoon, which is typically a time when people are winding down for the weekend. This timing made it difficult for employees and investors to process the news and led to a negative public reaction.
Error 4: Lack of a clear explanation for the firing
The OpenAI board initially cited a lack of “candor” as the reason for Altman’s firing. However, this explanation was vague and did not satisfy employees or investors. The board eventually released a statement saying that Altman’s firing was not due to “malfeasance or anything related to our financial, business, safety, or security/privacy practices,” but was instead due to a “breakdown in communications between Sam Altman and the board.” This explanation did little to clear the air and left many people wondering about the true reasons for Altman’s firing.
Error 5: Failure to follow a clear and orderly process
The OpenAI board’s handling of Altman’s firing was chaotic and unprofessional. The board did not follow a clear and orderly process, and it failed to communicate effectively with employees and investors. This lack of professionalism damaged the company’s reputation and made it difficult for stakeholders to trust the board.
Statistics
- OpenAI has received $13 billion in funding from Microsoft and other major investors.
- The company has around 770 employees.
- Altman is a 38-year-old entrepreneur who has been involved in several high-profile tech ventures.
Conclusion
The OpenAI board’s firing of Sam Altman has raised serious concerns about the company’s governance and the future of AI development.
The board’s lack of transparency and its failure to consult with major investors have damaged its credibility and raised questions about its ability to lead the company effectively.
The firing is also likely to have a significant impact on the ongoing debate about how best to oversee the safe development of AI.
What are the key points?
DEEP DIVE
This summary was written based on the article “OpenAI made 5 huge governance missteps — here’s what boards can learn from its error”, published by Fortune and written by Lila MacLellan on November 20, 2o23.
To read the original publication, access https://finance.yahoo.com/news/openai-made-5-huge-governance-200942348.html
