Nov 30, 2023 - Business

OpenAI’s saga highlights dangers of communication failures

Animated illustration of the OpenAI logo falling apart and crashing to the floor.

Illustration: Brendan Lynch/Axios

No corporate mishap has highlighted the need for communications quite like the recent firing — and rehiring — of OpenAI CEO Sam Altman.

Why it matters: By not communicating clearly with employees, investors or the media, OpenAI's former board of directors almost imploded the company.

Catchup quick: Altman, who co-founded the ChatGPT parent company and has since sparked an AI boom, was abruptly ousted for not being "consistently candid in his communications with the board."

  • The nonprofit board's decision, which dropped on a Friday afternoon, caught employees and key investors like Microsoft by surprise, and its vague explanation didn't sit well.
  • Microsoft quickly hired Altman to lead a new research unit.
  • Meanwhile, 95% of OpenAI employees signed a letter threatening to quit unless the board members resigned.
  • By the following Tuesday, Altman was reinstated as CEO and a new board is currently being formed.

Between the lines: Board members fired Altman for his lack of candor and communication, so it's ironic that the same infractions led to their own fate.

Yes, but: Silicon Valley's culture clash over the risks and rewards of commercialized AI tools is a legitimate one.

  • And we will never know if board members' rationale for Altman's firing was just due to their lack of communication.

What they're saying: Part of good governance is thinking through the unintended consequences, says Megan Shattuck, vice chair and global managing partner of Diversified Search Group's corporate practice.

  • "Boards should never be igniting chaos — if anything, they should be the steady hands guiding a company through the chaos."
  • "Any big decision like this one needs to be grounded in really sound reasoning, and that sound reasoning needs to be communicated clearly to all audiences," Shattuck told Axios.

The big picture: Miscalculating employees' sentiment and underestimating their influence can stain a company's reputation.

  • "We saw previews of this trend when many employees left following Elon Musk's takeover of Twitter and after Disney hesitated to join other companies in condemning Florida's noxious Don't Say Gay bill," says Brian Ellner, One Strategy Group president.
  • "But we've never seen it on this dramatic scale, and every company should see this as a wake-up call to really understand what motivates their teams and factor them into key decisions."

The bottom line: There was a clear disconnect between the board members and their stakeholders, and that chasm was only made wider by their continued lack of communication compared to Altman's consistent outreach throughout the transition.

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