• Skip to content
  • Skip to primary sidebar

Right Attitudes

Ideas for Impact

A Real Lesson from the Downfall of Theranos: Silo Mentality

February 4, 2021 By Nagesh Belludi Leave a Comment

The extraordinary rise and fall of Theranos, Silicon Valley’s biggest fraud, makes an excellent case study on what happens when teams don’t loop each other in.

Theranos’ blood-testing device never worked as glorified by its founder and CEO, Elizabeth Holmes. She created an illusion that became one of the greatest start-up stories. She kept her contraption’s malfunctions and her company’s problems shockingly well hidden—even from her distinguished board of directors.

At the core of Holmes’s sham was how she controlled the company’s flow of information

A Real Lesson from the Downfall of Theranos: Silo Mentality Holmes and her associate (and then-lover) Sunny Balwani operated a culture of fear and intimidation at Theranos. They went to such lengths as hiring superstar lawyers to intimidate and silence employees and anyone else who dared to challenge their methods or expose their devices’ deficiencies.

Holmes had the charade going for so long by keeping a tight rein on who talked to whom. She controlled the flow of information within the company. Not only that, she swiftly fired people who dared to question her approach. She also forcefully imposed non-disclosure agreements even for those exiting the company.

In other words, Holmes went to incredible lengths to create and maintain a silo mentality in her startup. Her intention was to wield much power, prevent employees from talking to each other, and perpetuate her deceit.

A recipe for disaster at Theranos: Silo mentality and intimidation approach

'Bad Blood' by John Carreyrou (ISBN 152473165X) Wall Street Journal investigative reporter John Carreyrou’s book Bad Blood: Secrets and Lies in a Silicon Valley Startup (2018; my summary) is full of stories of how Holmes went out of her way to restrain employees from conferring about what they were working on. Even if they worked on the same project, Holmes made siloed functional teams report to her directly. She would edit progress reports before redirecting problems to other team heads.

Consider designer Ed Ku’s mechatronics team responsible for designing all the intricate mechanisms that control the measured flow of biochemical fluids. Some of his team’s widgets were overheating, impinging on one another and cross-contaminating the clinical fluids. Holmes wouldn’t allow Ku and his team to talk to the teams that improved the biochemical processes.

Silo mentality can become very problematic when communication channels become too constricted and organizational processes too bureaucratic. Creativity gets stifled, collaboration limited, mistakes—misdeeds in the case of Theranos—suppressed, and collective objectives misaligned.

Idea for Impact: Functional silos make organizations slow, bureaucratic, and complicated

Innovation hinges increasingly on interdisciplinary cooperation. Examine if your leadership attitude or culture is unintentionally contributing to insufficient accountability, inadequate information-sharing, and limited collaboration between departments—especially on enterprise-wide initiatives.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Tumblr (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Pocket (Opens in new window)
  • Click to email this to a friend (Opens in new window)

Related

Wondering what to read next?

  1. Let’s Hope She Gets Thrown in the Pokey
  2. The Dramatic Fall of Theranos & Elizabeth Holmes // Book Summary of John Carreyrou’s ‘Bad Blood’
  3. Your Product May Be Excellent, But Is There A Market For It?
  4. Creativity by Imitation: How to Steal Others’ Ideas and Innovate
  5. Why Your Judgment Sucks // Summary of Daniel Kahneman’s Thinking, Fast and Slow (2011)

Filed Under: Business Stories, Leadership, Mental Models Tagged With: Biases, Critical Thinking, Entrepreneurs, Ethics, Leadership Lessons, Psychology, Thought Process

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Popular Now

Anxiety Assertiveness Attitudes Balance Biases Books Coaching Conflict Conversations Creativity Critical Thinking Decision-Making Discipline Emotions Entrepreneurs Etiquette Feedback Getting Along Getting Things Done Goals Great Manager Leadership Leadership Lessons Likeability Mental Models Mentoring Mindfulness Motivation Networking Parables Performance Management Persuasion Philosophy Problem Solving Procrastination Relationships Simple Living Social Skills Stress Thinking Tools Thought Process Time Management Winning on the Job Wisdom Worry

About: Nagesh Belludi [hire] is a St. Petersburg, Florida-based freethinker, investor, and leadership coach. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isn’t compromised by a lack of a big-picture understanding.

Get Updates

Signup for emails

Subscribe via RSS

Contact Nagesh Belludi

RECOMMENDED BOOK:
The Effective Executive

The Effective Executive: Peter Drucker

Management guru Peter Drucker's insightful perspective and suggestions for making executives more effective managers of both themselves and others.

Explore

  • Announcements
  • Belief and Spirituality
  • Business Stories
  • Career Development
  • Effective Communication
  • Great Personalities
  • Health and Well-being
  • Ideas and Insights
  • Inspirational Quotations
  • Leadership
  • Leadership Reading
  • Leading Teams
  • Living the Good Life
  • Managing Business Functions
  • Managing People
  • MBA in a Nutshell
  • Mental Models
  • News Analysis
  • Personal Finance
  • Podcasts
  • Project Management
  • Proverbs & Maxims
  • Sharpening Your Skills
  • The Great Innovators
  • Uncategorized

Recently,

  • Manage Your Own Career—No One Else Will
  • Be Open to Being Wrong
  • Things Will Look Up Soon
  • Can You Be Terminated for Out-of-Work Conduct?
  • Inspirational Quotations #989
  • The Hidden Influence of Association
  • Managerial Lessons from the Show Business: Summary of Leadership from the Director’s Chair

Unless otherwise stated in the individual document, the works above are © Nagesh Belludi under a Creative Commons BY-NC-ND license. You may quote, copy and share them freely, as long as you link back to RightAttitudes.com, don't make money with them, and don't modify the content. Enjoy!

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.