4 Enterprise IT Takeaways from the OpenAI Saga

When a rocket explodes as it's taking off, it's always hard to look away. But as the drama at OpenAI unfolds, enterprise IT leaders need to be asking themselves what they should take away from it.

👋 Hi and welcome to The DX Report — the research hub of The DX Institute all about Digital Transformation, the Digital Experience, and the Digital Enterprise. I’m industry analyst, author, and speaker Charles Araujo, and I’m all about providing insights and analysis for enterprise IT leaders as you make the big bets about your organization’s future!

---

I'm always reticent to jump into the fray when some big, frothy piece of news like the OpenAI drama breaks. These types of events generate so many editorials and analyses, that I rarely see the point of adding yet another nuanced perspective.

But this time is different because I feel the perspective for enterprise IT leaders is missing from the conversation.

While there is plenty of talk about what all of this means to the burgeoning AI sector and its impact on the tech giants, there's been little discussion about how this will impact all of you — the enterprise leaders who are at various stages of applying this technology into your organizations.

In addition, I think that this debacle also offers up a handful of good old-fashioned leadership lessons that are worth calling out.

Contrarian Observations

Before I dive into what I think you should be taking away from all of this, let me start with a few observations that may be somewhat contrarian to what you're reading in the press.

Satya Isn't Winning as Big as Some Think

The prevailing wisdom is that Microsoft CEO Satya Nadella has emerged from this chaos as the big winner by hiring former OpenAI CEO Sam Altman and his co-founder Greg Brockman. Wired proclaimed, Microsoft Emerges as the Winner in OpenAI Chaos. Balaji Srinivasan, the former CTO of Coinbase gushed on X, "Satya wins. Reflexes of a startup CEO. Resources of a trillion dollar company."

Srinivasan went on to marvel at the fact that Nadella managed to pull it all together in only 48 hours. An incredible feat, no doubt. But the reason for the rapid reaction is that he really had no choice. He has inextricably tied Microsoft's fate to that of OpenAI's. Just last week, in an interview with the MIT Technology Review, he described their relationship as "co-dependent."

While bringing on Altman and Brockman (coupled with contractual arranagements that reportedly give Microsoft access to some OpenAI's IP) puts them in a much better position than if they were left out in the cold, the fact remains that Microsoft was — and is — extremely vulnerable. They need a serious AI play to be competitive and were significantly reliant on the OpenAI partnership to deliver it.

It may all work out in the end, but throwing a massive amount of resources at this problem after repeated layoffs is not going to do much to help morale in all the other parts of the company that deliver most of its revenue and account for most of its enterprise interactions. So, it may be a win. But lets keep it real, shall we?

The Hero Culture is Alive and Well

An associate of mine posted on LinkedIn that it was a testament to Altman's leadership that most of his company is willing to resign in protest. I'm not sure that's what I take from it.

First, short of Microsoft making some blanket employment offer, I'm skeptical that we'll see some massive abondoning of the ship. Paychecks have a funny way of keeping people tied to their seat.

But the bigger issue for me is that I think this speaks less to great leadership and more to the enduring power of hero worship — particularly when it comes to high profile CEOs. Anyone who's ever worked in any sizable organization knows that it takes a lot of people to make anything significant happen. It's never about just one person.

Altman has been brilliant in his ability to control the conversation and move the organization from its non-profit roots to where it is today. But that's also part of the problem. This chaos is a result of a disconnected vision within the company — or at least between the for-profit company and the non-profit board. One of a leader's primary jobs is to craft and sell his vision both publicly and internally.

I'm not saying his vision is right or wrong, just that the fact that this situation could happen at all hints at too much hero worshipping and not enough genuine leadership. True leadership is about creating an organization and culture that can take your absence in stride.

Things are Going to Get Much More Competitive

Regardless of how this plays out, there's no way to avoid it becoming a significant bump on the road in an already hyper-competitive space. The combination of the massive distraction and the inevitable talent poaching will create ample opportunity for OpenAI's competitors to make some serious headway.

I think this is actually a good thing for enterprise leaders, but it will complicate things in the shortrun as OpenAI will no longer be the obvious and safe place to start a GenAI initiative.

The press, however, seems to be painting it as a simple OpenAI or Microsoft conversation. The reality will be much more disruptive and colorful.

Enterprise IT Executive Takeaways

So, once you get past all the drama, what does all of this mean for the enterprise IT leader? I think there are four key takeaways that you should be considering as you develop and refine your GenAI strategy:

1. Be Wary of the Larger-Than-Life CEO. You need to be making long-term strategic investments that serve your organization's needs. While these sorts of CEOs can be alluring, you want to be investing in organizational cultures that are bigger than the CEO.

2. Hedge Your Bets. Until Friday, OpenAI seemed inevitable. This falsity has been laid bare — and with it, in my opinion, Microsoft's security blanket. There are already many competitors waiting in the wings and plenty of more traditional AI and enterprise tech companies attempting to scoop up talent from OpenAI. You are already facing and abundance of choice when it comes to where and how you employ AI technologies — leverage them, diversify your risk, and look for opportunities that the chaos provides.

3. Take Your Time. You wouldn't know it with all the drama and headlines, but most of this chaos has had very little impact on you. Despite all the hype, we're in the very early days of the AI era, and while the technology is developing at a breakneck pace, it's always the application of technology that takes time. In that regard, slow(ish)-and-steady always wins the race, so take your time and place your bets carefully.

4. Learn from the Communication Mistake. Regardless of how you feel about the actions of the OpenAI board, there is no question that their communication approach was an abject failure. Don't do that! Communicate often, clearly, and transparently. All digital transformation efforts — of which, any GenAI effort will be a significant one — require massive change. Change demands trust. And trust demands transparency. If anything ultimately kills OpenAI, it will have been the trust-schism this has created with its employees and customers.

I fully expect that the OpenAI soap opera will continue to entertain us for some time to come. Feel free to grab a tub of popcorn and enjoy it. Just make sure that you take the right lessons from the show. What do you think? Any lessons I've missed?