OpenAI and open wounds: What New Zealand boards can learn

When OpenAI’s board fired chief executive Sam Altman in late 2023, it triggered a spectacle more suited to a Silicon Valley soap opera than a strategic leadership transition. A weekend later, the board was disbanded and Altman reinstated (more than 700 of the company’s 770 employees signed a letter threatening to resign if he wasn’t brought back). A collapse in trust, control and clarity played out in real time across global headlines.  

For boards in New Zealand, the cautionary tale is clear: governance is only as good as the board’s grip on purpose, process and power. 

OpenAI’s mission – to ensure artificial general intelligence benefits humanity – was always going to invite tension between commercial speed and ethical restraint. But even by Silicon Valley standards, the sequence of decisions (and reversals) was extraordinary. 

The board fired Altman without informing key stakeholders, including Microsoft, its largest investor. Rumours abounded from concerns over Altman’s ambition and transparency, to allegations of psychological abuse in a toxic work culture. 

A forthcoming book, The Optimist: Sam Altman, OpenAI, and the Race to Invent the Future by Keach Hagey, claims the final trigger was a whistleblower’s report to the board. 

The fallout was swift. Directors were ousted, trust in governance was eroded and regulatory interest piqued. Yet for New Zealand directors, it is not the drama but the structural failures that deserve attention. 

Five lessons for New Zealand directors 

1. Purpose without alignment is combustible 

The OpenAI board was meant to prioritise long-term human benefit, not quarterly profits. But when its members were divided over how to balance ethics and ambition, decision-making stalled. This is a reminder that boards must regularly test alignment to purpose, not just among themselves but with management and major stakeholders. 

2. Board process is not a private matter 

The Altman dismissal lacked due process: no prior notice, unclear communication and little-to-no engagement with investors or executive leadership. This eroded the board’s authority. In New Zealand, good governance relies on transparency and consistency of process, especially when facing critical decisions. 

3. Boards must be psychologically safe, and safe from psychological harm 

Some of the commentary on the saga highlighted disturbing patterns of leadership behaviour labelled as “psychologically abusive”. Under New Zealand law and with some regulator focus, directors and boards need to ensure health and safety obligations extend beyond physical wellbeing to psychological safety, sometimes called “mentally healthy work”. This includes setting culture at the top and acting decisively on concerns raised through proper channels. 

4. Whistleblowing frameworks must be robust and respected 

Reporting on the new book about Altman suggested a whistleblower disclosure to the board was a key trigger for Altman’s firing. That raises serious questions. In New Zealand, the Protected Disclosures (Protection of Whistleblowers) Act 2022 provides strict obligations on how disclosures must be handled. Given this, boards need to ensure there are clear, trusted processes and disclosures are taken seriously regardless of the seniority of those involved. 

5. Crisis reveals capability gaps 

Perhaps most telling was the board’s inability to manage the crisis. Directors resigned. Staff revolted. Investors panicked. Boards in Aotearoa must ask: are we crisis-ready? Are succession plans live? Do we understand stakeholder expectations in high-stakes environments? As governance grows more complex – especially in tech, AI and climate – boards must develop new competencies. This also points to having an increasingly wider range of experiences, skills, expertise and worldviews around the board table. 

Final word: governance must be grounded 

The OpenAI board saga is not just about AI, ethics or Silicon Valley politics. It is about a governance failure that unfolded in public view and undermined trust in board oversight. For New Zealand directors and boards, the lesson is not to avoid risk or conflict, but to govern with discipline, clarity and courage. Because when governance falters, so does purpose and, possibly, the future of the company or organisation.