The role and significance of management, in the light of a leadership crisis at a start-up

The scenario

The board of directors of OpenAI, the start-up that created ChatGPT, suddenly removed Sam Altman, one of its co-founders and its chief executive, citing a break-down of communications. The decision caused a stir in the firm, and a majority of the employees then threatened to leave the company within two days. The episode shows that even a firm with a celebrated product can be thrown into crisis when management processes, governance, communication, leadership and coordination, fail. Technology and money do not run an organisation; people do, and management is what makes them work together.

What the episode shows about management

1. Governance and decision making. A board's decisions about leadership affect every stakeholder; they need sound process, clear reasons and consultation.
2. Communication. The board itself named a breakdown of communication as the cause. A decision that staff do not understand will not be carried out willingly: communication is how a manager turns a decision into shared action.
3. Leadership and followership. Employees' loyalty to a leader showed that leadership rests on followers' acceptance, not on position alone.
4. Human resources as the key asset. In knowledge firms the main assets are people; if they leave, the firm's value leaves with them.
5. Stakeholder management. A leadership dispute at such a firm touches investors, partners and customers as well as employees, so management must balance many interests.
6. Change and crisis management. Sudden change without preparation creates uncertainty that management must handle quickly and openly.

Role and significance of management in contemporary business

1. One aim for many people. Without management, each person pulls in a direction of his or her own; management points everyone at the same target.
2. Getting more from less. Well-managed work wastes less: when tasks are planned, staffed and checked, the same people and money produce more.
3. Leading and motivating people. Managers make it worth people's while to give their best, by tying pay, growth and recognition to the firm's results; in firms where talent is mobile this decides who stays.
4. Coordination. It synchronises the work of different departments so that their efforts serve common objectives.
5. Governance and ethics. Ethical conduct depends first on the open commitment of the chief executive and other senior managers; it sustains the trust of employees and investors.
6. Managing change. Markets, technology and rules keep moving. A firm whose managers see the shift early and retrain and reorganise in time stays ahead of rivals who react late.
7. Innovation. Deciding what to do next means imagining what does not yet exist, so the planning manager is also the one who brings new ideas into the firm.
8. Social responsibility. Management must also create value for society, for instance through environment-friendly production and employment.

Conclusion

The crisis demonstrates that management is not a background activity but the force that holds an organisation together. In contemporary business, fast-moving, knowledge-driven and closely watched, sound management of governance, communication, leadership and change is essential to survival and success.