OpenAI storm: Flawed board or star syndrome?

The firing and subsequent reinstatement of its CEO shows the scope of private sector boards is limited in addressing broader social concerns

The board fires a CEO. The principal investor reinstates the CEO, who then fires the board. So, who is accountable to whom? Recent events at OpenAI, a company at the cutting edge of technology, are a story of corporate governance gone horribly wrong.

Most commentators seem to think that the problem was the flawed structure of OpenAI, one that combined profit and non-profit entities. OpenAI was set up as a non-profit to foster research in artificial intelligence (AI) in ways that are safe and would benefit humanity. Such research needs lots of capital, which wasn't readily forthcoming. So, OpenAI created for-profit subsidiaries to attract capital and generate surpluses that could go to the parent after investors had been paid their share.

This structure, the argument goes, created a conflict at OpenAI that was unresolvable. Commercialising AI requires developing products that the market will lap up. This objective was bound to come into conflict with concerns about safety and the larger interests of humanity.

Is this true? Corporate organisations are said to require a laser-like focus on maximizing shareholder wealth. However, in recent years, the expectation has also sprung up that they should be socially responsible in various ways. In India, companies are required to set aside a portion of profits for "corporate social responsibility".

Sustainability in relation to climate change is very much in. Corporate boards today do have multiple objectives that need to be balanced. Likewise, the board of OpenAI could very well have found ways to balance its core objectives as a non-profit with commercial objectives.