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CEO

OpenAI’s 3-CEO weekend: A cautionary tale for leadership transitions

Transparency throughout a chief executive change is key.

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Altman and Brockman were chosen to lead a new advanced AI research team at Microsoft.
OpenAI’s estimated valuation has reached $86 billion.
51% of boards of directors lack a written CEO succession plan.

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Over the past weekend, OpenAI, the pioneering company behind the widely used generative artificial intelligence, ChatGPT, found itself in the midst of a series of rapid developments. The board of directors made headlines by removing the then-CEO, Sam Altman, citing a lack of consistent transparency in his communications, which they deemed detrimental to the board’s ability to fulfill its responsibilities. In the wake of Altman’s departure, the board appointed Mira Murati, the company’s chief technology officer, as interim CEO. However, this interim leadership arrangement was short-lived, as Emmett Shear, the former CEO of Twitch, was swiftly named as the new interim CEO.

Simultaneously, Microsoft, a key investor in OpenAI, seized the opportunity to recruit Altman, along with Greg Brockman, the co-founder and former president who was also removed from his position as chairman of the OpenAI board. Together with other former OpenAI colleagues, Altman and Brockman were chosen to lead a new advanced AI research team at Microsoft. In response to these changes, more than 700 OpenAI employees, nearly the entire workforce, conveyed their dissatisfaction to the board in a letter on Monday. The letter threatened a mass exodus to Microsoft unless the board resigned and Altman and Brockman were reinstated.

In summary, OpenAI experienced three different individuals assuming the role of CEO within a short span, leading to unrest among employees who are now considering leaving the company due to actions taken by the board of directors.

This public upheaval over leadership changes at OpenAI serves as a valuable lesson in CEO succession and the importance of smooth transitions, according to insights from Alexander Kirss, a senior principal of research in the Gartner HR practice. Kirss emphasizes the critical nature of the relationship between the board and the CEO, highlighting the need for shared expectations and a high level of trust. He stresses the importance of transparent communication from both sides, advocating for a two-way street where CEOs keep the board informed about organizational progress.

Since the launch of ChatGPT in November 2022, OpenAI’s estimated valuation has reached $86 billion, reflecting the company’s significant growth. Kirss advises CEOs not to be caught off guard by the board’s evaluation of their performance, emphasizing the mutual responsibility of transparent communication.

Kirss suggests that CEO succession planning should commence well in advance, ideally involving collaboration between the CEO, the chief human resources officer, and the board. This collaborative effort should establish a comprehensive plan covering roles and responsibilities, candidate identification, recruitment strategy, and the desired skills and competencies of a new CEO. Effective CEO succession plans should also incorporate strong communication elements, both internally and externally, recognizing the unique relationship employees often have with their CEO.

Highlighting a common pitfall, Kirss notes that 51% of boards of directors lack a written CEO succession plan, emphasizing the importance of having such a plan in place to ensure the long-term viability of the organization. In times of CEO succession, transparent and competent actions, along with thorough communication, are crucial for maintaining confidence among employees and stakeholders.

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