OpenAI: Power vs Authority

The OpenAI board teaches us all the difference between formal and informal authority.

When I read last night that Sam Altman would be returning to OpenAI as CEO, I scrolled into the comments and this one struck me: the board at OpenAI “got confused between authority and power.”

It’s absolutely true.

I have taken (and taught, actually) a couple of university courses that teach a theory of leadership called Adaptive Leadership, which draws a distinction between leadership and authority: in particular, the idea that you don’t need to be in a position of authority to practice leadership, and that being in a position of authority does not make you a leader.

The literature around Adaptive Leadership also calls out the difference between formal and informal authority, as Ronald Heifetz does in Political and Civic Leadership (emphasis mine):

Formal authority is the authority granted by election or selection to a position. For example, politicians win elections and are granted formal authority to serve their constituents from within the government. With their authority, they are given specific powers and resources defined by the laws and rules of the institution in which they serve, for example, the legislature, court, or executive office.

…

Yet as many scholars have studied, including Richard Neustadt in Presidential Power and the Modern Presidents and Joseph S. Nye, more recently, in Soft Power: The Means to Succeed in world Politics, a critical source of power to get things done does not come from the powers granted through formal authorization. It comes from the power of one's informal authority: the degree to which people look to someone with trust, with admiration, and with respect to provide a service or represent a value and point of view they hold dear. For example, the formal powers of the president of the United States rarely change during a 4-year term; they are set by the Constitution and legislation. But the real power to govern fluctuates: as the president's informal authority--approval rating, professional respect, moral standing--waxes and wanes. His influence relies as much on informal as on formal authority.

When you look at the letter from the team at OpenAI to the board, you can see how the board of directors lost the trust, admiration, and respect of the team:

Your actions have made it obvious that you are incapable of overseeing OpenAI. We are unable to work for or with people that lack competence, judgement and care for our mission and employees.

In the letter, over 90% of the employees of OpenAI threaten to move, wholesale, to Microsoft and continue their work under Sam Altman.

The whole thing reminds me of a question posed in Sapiens by Yuval Noah Harari, which I’ll paraphrase as: if you woke up tomorrow, and every single person who worked at Amazon no longer worked there, and instead a new person was in each of those roles, would the company still be Amazon?

I don’t understand why the prior OpenAI board chose to fire Sam Altman last Friday, and maybe we will never really know, but it’s clear that they believed their formal authority to take the action meant that they also had the power (informal authority) to lead the company under a new CEO without having to explain their actions. And they were wrong.