Last year you were named one of TIME’s Most Influential People. President Obama invited you to be his Presidential Ambassador for Global Entrepreneurship. And your Net Worth was listed at $4.5 Billion. But today, you’re worth $0.00.
This is the reality that CEO Elizabeth Holmes is living through. This week, The Centers for Medicare and Medicaid Services, revoked Theranos Inc.’s certificate to run medical tests and banned CEO Elizabeth Holmes from owning or running a lab for at least 2 years. So, what are the leadership lessons for us?
Lesson 1: Don’t Read Your Own Press Releases
Just a month ago, at an internal presentation, Ms. Holmes claimed that the company had developed 304 tests using small volumes of blood. Although most of the employees in attendance knew that was not true, they followed Ms. Holmes’ lead because they wanted to believe.
Leaders have to deal with reality and facts. As soon as groupthink sets in, leaders should take corrective action. Instead, Ms. Holmes promoted groupthink and drove the company down the fantasy path to failure.
Lesson 2: Ask The Tough Questions
Should we be surprised by the headline of Theranos’ downfall and Elizabeth Holmes’ huge loss? Secrecy has been a hallmark of Theranos ever since Ms. Holmes founded the blood-testing firm, after dropping out of Stanford University in 2003. “At first, the secrecy was driven partly by Ms. Holmes’ deep admiration for Steve Jobs,” former Theranos employees said. Jobs was famous for keeping Apple’s products under tight wraps until he unveiled them at choreographed press events, Ms. Holmes kept a photo of the late Mr. Jobs on her desk and, until recently, wore the same uniform of black turtlenecks for which he was famous for.
The best leaders are willing to engage in debates with people who understand their core technology and their business. Steve Jobs had Steve Wozniak. Think of Robert Noyce at Intel; Paul Allen at Microsoft, David Filo at Yahoo, and Sergey Brin at Google. Think of the board members at these companies. Consider the culture where tough questions can be asked, not just in private, but at town hall meetings and in the media. Great leaders want to ask tough questions.
Lesson 3: Dissent is Not Treachery
Executives as well as employees were expected to fall in line. Ms. Holmes required the new advisers to sign strict non-disclosure agreements. Departments were separated from one another with keycards. Employees were discouraged from discussing their work with colleagues in other departments or questioning the progress made. As the company’s problems have compounded over the last year, Ms. Holmes tightened the control of internal and external messaging. Any dissension was treated as disloyalty.
$4.5 billion dollars are simply gone – wiped out, not by theft or technical failure, but by poor leadership. Speaking of failure, see what you can learn from failing at the olympics.