OPENAI: BOARDROOM BATTLES
CASE STUDY SOLUTION
SYNOPSIS
OpenAI Inc., a prominent artificial intelligence (AI) research company headquartered in San Francisco,
California, found itself at a defining moment following the controversial termination of its chief executive
officer (CEO) Sam Altman by the board of directors on November 17, 2023. The decision, citing a lack of
transparency, disagreements over the firm’s direction, and concerns about Altman’s management style and
alleged “history of manipulative behavior,” ignited a backlash from the public, employees, and investors
who put pressure on the board to reinstate him.2 Over 700 employees signed a letter demanding Altman’s
reinstatement, threatening to leave if their demands were not met. Key investors like Microsoft Corporation
also worked behind the scenes to reinstate Altman.
Founded in 2015 as a non-profit research lab aimed at developing safe and beneficial AI, OpenAI restructured
as a capped-profit company in 2019 to compete effectively against its competitors. Under Altman’s leadership,
OpenAI celebrated breakthroughs like the popular ChatGPT model, released in late 2022. However, there
were tensions between the founding mission of developing safe and beneficial AI and the financial pressures
to commercialize its technologies. Following stakeholder pressure, Altman was reinstated as CEO in
November 2023. A new board was appointed, led by chair Bret Taylor, which now had to navigate the fallout
from Altman’s termination and rebuild trust with stakeholders. The board faced difficult choices about how
to reform OpenAI’s governance, balance the company’s founding mission with the realities of
commercialization, and maintain its leading position in the fiercely competitive AI landscape.
OBJECTIVES
• understand the challenges of balancing a company’s founding mission with the pressures of
commercialization and staying competitive in a rapidly evolving industry;
The Case Solution Starts From page 4
,• assess the role of stakeholders such as employees, investors, and the public in influencing board
decisions and shaping a company’s direction;
• develop strategies for rebuilding trust and reforming corporate governance structures in the wake of a
leadership crisis; and
• examine the ethical considerations surrounding the development and commercialization of
transformative technologies like AI.
The Case Solution Starts From page 4
, ASSIGNMENT QUESTIONS
1. Evaluate the decision of the OpenAI board to terminate Altman. What factors likely influenced this
decision and what are the potential consequences for the company?
2. Discuss the ethical considerations surrounding OpenAI’s pursuit of breakthrough AI technologies while
also striving to ensure their safe and responsible development. How can the company balance these
potentially competing priorities?
3. Discuss the role of stakeholders such as employees, investors, and the public in shaping the future
direction of OpenAI. How should the board consider and manage these different stakeholder interests?
4. Recommend a course of action for the OpenAI board. How can it reform the company’s governance
structure, reaffirm its commitment to AI safety and ethics, and position the company for long-term
success in a competitive industry?
ANALYSIS
1. Evaluate the decision of the OpenAI board to terminate Altman. What factors likely influenced
this decision and what are the potential consequences for the company?
Some students might argue that the termination was an overreaction,
highlighting Altman’s instrumental role in OpenAI’s successes, including the development of breakthrough
technologies like ChatGPT. Others may emphasize the necessity of strict governance and ethical leadership
in AI development, supporting the board’s decision as a move toward reinforcing OpenAI’s commitment
to its founding principles.
The decision to terminate Altman was likely influenced by several factors, including the growing cultural
divide within the company and the board’s concerns about his leadership style and lack of transparency.
Altman was leaning toward the profitable aspects of the business, which put him at odds with the board’s
dedication to prioritize public safety in AI development. This misalignment of priorities, coupled with the
board’s perception that Altman was not consistently candid in his communications, eroded trust and
ultimately led to the decision to remove him as CEO.
Moreover, specific concerns were raised by key figures within the company regarding Altman’s
The Case Solution Starts From page 4
CASE STUDY SOLUTION
SYNOPSIS
OpenAI Inc., a prominent artificial intelligence (AI) research company headquartered in San Francisco,
California, found itself at a defining moment following the controversial termination of its chief executive
officer (CEO) Sam Altman by the board of directors on November 17, 2023. The decision, citing a lack of
transparency, disagreements over the firm’s direction, and concerns about Altman’s management style and
alleged “history of manipulative behavior,” ignited a backlash from the public, employees, and investors
who put pressure on the board to reinstate him.2 Over 700 employees signed a letter demanding Altman’s
reinstatement, threatening to leave if their demands were not met. Key investors like Microsoft Corporation
also worked behind the scenes to reinstate Altman.
Founded in 2015 as a non-profit research lab aimed at developing safe and beneficial AI, OpenAI restructured
as a capped-profit company in 2019 to compete effectively against its competitors. Under Altman’s leadership,
OpenAI celebrated breakthroughs like the popular ChatGPT model, released in late 2022. However, there
were tensions between the founding mission of developing safe and beneficial AI and the financial pressures
to commercialize its technologies. Following stakeholder pressure, Altman was reinstated as CEO in
November 2023. A new board was appointed, led by chair Bret Taylor, which now had to navigate the fallout
from Altman’s termination and rebuild trust with stakeholders. The board faced difficult choices about how
to reform OpenAI’s governance, balance the company’s founding mission with the realities of
commercialization, and maintain its leading position in the fiercely competitive AI landscape.
OBJECTIVES
• understand the challenges of balancing a company’s founding mission with the pressures of
commercialization and staying competitive in a rapidly evolving industry;
The Case Solution Starts From page 4
,• assess the role of stakeholders such as employees, investors, and the public in influencing board
decisions and shaping a company’s direction;
• develop strategies for rebuilding trust and reforming corporate governance structures in the wake of a
leadership crisis; and
• examine the ethical considerations surrounding the development and commercialization of
transformative technologies like AI.
The Case Solution Starts From page 4
, ASSIGNMENT QUESTIONS
1. Evaluate the decision of the OpenAI board to terminate Altman. What factors likely influenced this
decision and what are the potential consequences for the company?
2. Discuss the ethical considerations surrounding OpenAI’s pursuit of breakthrough AI technologies while
also striving to ensure their safe and responsible development. How can the company balance these
potentially competing priorities?
3. Discuss the role of stakeholders such as employees, investors, and the public in shaping the future
direction of OpenAI. How should the board consider and manage these different stakeholder interests?
4. Recommend a course of action for the OpenAI board. How can it reform the company’s governance
structure, reaffirm its commitment to AI safety and ethics, and position the company for long-term
success in a competitive industry?
ANALYSIS
1. Evaluate the decision of the OpenAI board to terminate Altman. What factors likely influenced
this decision and what are the potential consequences for the company?
Some students might argue that the termination was an overreaction,
highlighting Altman’s instrumental role in OpenAI’s successes, including the development of breakthrough
technologies like ChatGPT. Others may emphasize the necessity of strict governance and ethical leadership
in AI development, supporting the board’s decision as a move toward reinforcing OpenAI’s commitment
to its founding principles.
The decision to terminate Altman was likely influenced by several factors, including the growing cultural
divide within the company and the board’s concerns about his leadership style and lack of transparency.
Altman was leaning toward the profitable aspects of the business, which put him at odds with the board’s
dedication to prioritize public safety in AI development. This misalignment of priorities, coupled with the
board’s perception that Altman was not consistently candid in his communications, eroded trust and
ultimately led to the decision to remove him as CEO.
Moreover, specific concerns were raised by key figures within the company regarding Altman’s
The Case Solution Starts From page 4
