How Microsoft Scored Big in the OpenAI Chaos

I hope this article finds you well after the Thanksgiving break. I, too, took advantage of the holiday to embark on a family trip, returning home seven days later. As I returned to work, little did I anticipate the whirlwind awaiting me in the tech world, particularly the upheaval within OpenAI - a company estimated in $90 billion valuation.

After going through all the news (i.e. and press releases, it's evident to me that this tale is a showcase of sharp strategy and resilience, with Satya Nadella at the center of an unexpected and chaotic situation. Certainly, he couldn't catch the Cricket World Cup final clash between India and Australia because he was knee-deep in another game at the OpenAI HQ.

A summary of the Five Days of Chaos

• The chaotic weekend kicked off on November 17, 2023, with the abrupt firing of Sam Altman, OpenAI's co-founder and CEO. Despite 微软 holding a substantial 49% stake in OpenAI, Satya surprisingly got wind of the board's decision almost at the same time as the rest of us, the public. In a strategic move, Altman immediately turned to Satya. In the announcement, OpenAI stated that Mira Murati, Chief Technology Officer (CTO), will take on the role of interim CEO.
• As of November 19, Emmett Shear was named as the new interim CEO of OpenAI. Few hours later, Satya announced that Microsoft's commitment to the partnership with OpenAI remains unwavering. While Microsoft initially hoped for Sam Altman's return as CEO of OpenAI, Satya, Sam Altman, and Greg Brockman (former president of OpenAI) reached an agreement for Altman and Greg to lead a new AI Research Team within Microsoft, with the option to open the doors for any OpenAI's engineers to join them. Swiftly navigating the chaos, Satya ensured that Microsoft's substantial investment ($13 billions) in OpenAI remained intact. This strategic move showcases agility, a lack of bureaucracy, and a profound understanding of the significance of AI in the future.

• On November 20, a letter was submitted to OpenAI's Board by 702 employees expressing their concerns regarding recent decisions. The letter called for the resignation of the board and the reinstatement of Sam Altman and Greg Brockman. In the event of non-compliance, the OpenAI's employees threatened to move to Microsoft to join the mentioned newly AI division. It was interesting to see the signatures of Mira Murati (CTO) and Ilya Sutskever (OpenAI's Chief Scientist). More information at The New York Times.

• On November 21, after five days of intense negotiations, Sam Altman was reinstated as the CEO of OpenAI, with Satya Nadella playing a pivotal role as he acknowledged the day after via a post on X (aka "Twitter").

According to Satya Nadella's statement on November 21, Microsoft was encouraged by the latest changes to the OpenAI board. He believes this is a first essential step on a path to more stable, well-informed, and effective governance.

My Top Four Takeaways

The storyline is captivating, and perhaps, in the near future, we might witness it unfold in a Netflix series. However, until then, I'd like to highlight the following key takeaways.

1. The first key takeaway for me is the significance of having a robust succession strategy and leadership plan in place for any organization. The OpenAI story has highlighted the detrimental effects of the absence of solid leadership structures and a dynamic succession strategy prepared to navigate changes. This reinforces one of my seven leadership rules: "Prepare and Empower the next Leader". You can learn more about it in my article at Forbes.
2. Another lesson I've gleaned from this is the value of communication backed by a clear plan for employees, stakeholders, and the market (the organization's audience). It's crucial for people to comprehend the reasons behind the change, the risks of not adapting, and to assist each individual in understanding what's in it for them. Considering the reaction from OpenAI's employees and investors, along with the negative impact on the brand, it's a lesson we should all keep in mind. Personally, I highly recommend adopting methodologies such as Prosci's Change Management and the ADKAR tool.
3. Third, this narrative also demonstrates Microsoft's dedication to AI, intending to sustain the Generative AI revolution sparked by OpenAI, whether within Microsoft or seamlessly integrated into the company via a strong partnership. The possibility of assimilating OpenAI's talent without a full acquisition underscores Microsoft's astuteness, particularly given the prevailing global reluctance toward significant acquisitions.
4. My final (for now) insight is the power of leading without authority—a distinct capability to influence and mobilize individuals not directly under your control. By welcoming the OpenAI team into Microsoft, Satya enhanced Sam Altman's chances of reclaiming his position, especially as OpenAI's board was experiencing an exodus. Satya achieved what he wanted through five intense days of negotiations, securing Sam Altman's reinstatement. This serves as a free MBA-like master class in negotiation skills, showcasing the effectiveness of leading without solely relying on the power derived from owning 49% of OpenAI.

Four days after the Cricket World Cup final, India secured a victory against Australia in the first T20 cricket match. In the midst of the craziest week in AI, according to The Wall Street Journal (WSJ), Satya emerged as the unexpected winner.