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LEADING WITHOUT TRUE NORTH
Without a moral compass, you will swim in chaos.
—James Burke, former CEO, Johnson & Johnson
In the first two chapters, we explored the role that your life story and your crucible have in discovering your True North—your moral compass. In this chapter, we explore the risks and consequences of trying to lead if you haven't discovered your True North.
As a young leader, there are great risks in trying to get ahead too fast, as I know from my own experience. This is especially true if you jump into major leadership roles without first knowing who you are. You are subject to being driven by external gratification—money, fame, and power—and these great tempters can control you and your decisions, even if you aren't aware of their impact. In this chapter, four of the leaders we profile are young leaders who tried to lead without a moral compass: Mark Zuckerberg, Adam Neumann, Travis Kalanick, and Elizabeth Holmes. Each of them wound up way off track.
Before you move too fast to get ahead, take the inner journey to know who you are by understanding your life story. Why do so many leaders avoid grounding themselves in their life stories? They may fear vulnerability or lack close friends who can help them reflect on their experiences. They try to bury their past and put on a new mask. Or they get caught up in chasing the world's esteem by trying to accumulate money, fame, and power rather than pursuing their intrinsic motivations.
The consequence of denying or repressing your life story and your crucible can be severe. This can magnify your shadow side—the dark parts of your personality you find less desirable and try to repress. While the shadow operates hidden from view, it shapes your behavior. Many leaders with great potential lose their way because they do not face their shadow side and find themselves off course from their True North.
Mark Zuckerberg: Leading without a Moral Compass
Facebook founder Mark Zuckerberg publicly touts the company mission of “giving people the power to build community and bring the world closer together,” but Mark's actions contradict that noble goal.
Mark founded Facebook as a 19‐year‐old amid controversy that he stole the idea from Divya Narendra and brothers Cameron and Tyler Winklevoss. In instant messages, Mark describes intentionally stalling his work on their website to secretly develop his own competitive site, writing to one confidant, “Yeah, I'm going to f— them.” He later settled a lawsuit with his one‐time cofounders for $20 million in cash and $65 million in Facebook stock. In a mediation meeting with the Winklevoss twins, Mark rationalized his actions by claiming that he had done nothing wrong in copying their idea.
A year later, Mark pushed out cofounder and chief financial officer Eduardo Severin. Eduardo's father provided Mark's initial funding for Facebook, in exchange for significant ownership. Ultimately, Mark settled with Eduardo for a reported $5 billion in Facebook stock.
When I first saw the movie The Social Network, I was inclined to cut Mark some slack as an inexperienced 19‐year‐old. As he grew more powerful and continued similar behaviors, I realized this pattern was just a prologue. Today Mark continues his deceptive and unethical behavior—now with global consequences. In 2016, Facebook executive Andrew Bosworth's internal memo rationalized the company's aggressive growth tactics as the price of winning:
The ugly truth is that anything that allows us to connect more people more often is justified. All the questionable contact importing practices, the subtle language that helps people stay searchable by friends. The best products don't win. The ones everyone uses win. Growth tactics are how we got here.
Increasingly, Facebook's efforts to win came at higher costs. In March 2018, voter‐profiling company Cambridge Analytica revealed it harvested private information from more than 50 million Facebook users without their permission. Facebook knew about this in December 2015 but concealed it from users and regulators.
In 2018, the Wall Street Journal revealed that Facebook's task force studying user behavior found its “algorithms exploit the human brain's attraction to divisiveness. If left unchecked, the platform would feed users more and more divisive content to gain user attention and increase time on the platform.” Mark's response? He ignored the research and axed efforts to recalibrate the platform.
For example, in August 2020 Facebook refused to remove an adulterated video of Nancy Pelosi that was slowed down to appear she was intoxicated. In early 2021 when the Wall Street Journal reported a Mexican drug cartel used Facebook to recruit and pay hit men, the company took no action to stop the cartel from posting. In the Middle East, human traffickers recruited women for sex work under false pretenses. In Ethiopia, armed militants advocated violence against ethnic minorities. Other misuses included organ harvesting and pornography.
Former employee Frances Haugen says Facebook prioritized growth over safety because “Facebook realized if they change the algorithm to be safer, people will spend less time on the site, they'll click on less ads, they'll make less money.”
Wall Street Journal's investigative report “The Facebook Files” revealed:
Documents show in the U.S. and overseas Facebook's researchers have identified the platform's ill effects, including teen mental health, political discourse, and human trafficking. Despite congressional hearings, its own pledges, and numerous media exposés, the company didn't fix them.
Following the release of “The Facebook Files,” Facebook executives were somber: “We created the machine, and we can't control the machine.”
In testimony to Congress about the Capitol riot, Mark denied claims that the platform's advertising‐driven business model amplified polarizing speech, taking no responsibility, and instead blaming the company's issues on “a political and media environment that drives Americans apart.”
Mark claims he is pursuing a more connected world—yet his actions focus on promoting a more valuable stock price. He has ignored the dangerous realities of the social infrastructure he created, feigning optimism and naivety to the darker side of the platform and explaining away issues to factors outside his control.
In early 2022, Mark's flawed business model finally bit the company, when Facebook lost 200 million users in the prior quarter, causing its stock to decline $230 billion (26 percent) in a single day—the most in American history. Mark blamed Apple CEO Tim Cook, who strongly advocates user privacy, for enabling Apple users to “opt in” to have your personal information sold to advertisers or “opt out” to deny its use. In Facebook's case, 74 percent of Apple users opted out of Facebook targeting.
The tragic reality is that Mark Zuckerberg has no True North to follow in making decisions, leaving Facebook swimming in chaos.
Why Leaders Lose Their Way
Ask yourself, “Could this happen to me? Am I vulnerable to being seduced by money, fame, or power? What blind spots do I have that might cause me to lose sight of my True North? Do I have a moral compass guiding my actions?” These questions trouble every authentic leader.
People who lose their way do not start off as bad people, yet somewhere along the way they get pulled off course. Little by little, they get caught up in their own success and are emboldened to push the limits even further. Eventually, they overstep, and it all falls apart.
What motivates you to lead? If your honest answers are power, prestige, and money, you are at risk of derailing. If you have a deeper desire to serve something greater than yourself, eventually these rewards will come to you without seeking them. Sole pursuit of extrinsic rewards can never completely fulfill you because you will always want more, and you will be pulled further from your True North.
Even Abraham Lincoln acknowledged his extrinsic motivations in his 1858 Senate campaign, stating simply, “I claim no extraordinary exemption from personal ambition.” He had the moral principles necessary to keep him focused on his True North and his purpose to combat “a powerful plot to make slavery universal and perpetual.” Lincoln transcended desire for external gratification by devoting himself to a noble cause that ultimately cost him his life.
Leaders who focus on external gratification instead of inner satisfaction have trouble staying grounded. They reject the honest critic who holds up a mirror and speaks the truth. Instead, they surround themselves with sycophants—supporters telling them what they want to hear. Over time, they lose perspective and capacity for honest dialogue, and people learn not to confront them.
Derailing: Fearing Failure yet Craving Success
Underlying these tendencies may be a fear of failure. Many leaders advance by imposing their will on others and stepping on their competitors. By the time they reach the top, they are paranoid that someone is waiting in the wings to knock them off their pedestal. Underneath their bravado lies the fear they aren't qualified for such leadership roles and that someone is going to unmask them.
To overcome their fears, some leaders drive so hard for results that they lose touch with reality and become incapable of acknowledging their weaknesses. Confronted with their failures, they try to cover them up or rationalize that problems aren't their fault. Often, they look for scapegoats to blame, either within their organization or outside. By combining power, charisma, and charm, they convince others to accept their distortions, causing their organizations to lose touch with reality. In the end, their organizations suffer the greatest harm.
The fear of failure's other side is an insatiable craving for success. Most leaders want to do a good job, gain recognition, and be rewarded accordingly. Achieving success, they enjoy added power and prestige, which can go to their heads and breed entitlement. At the height of their power, their success creates a deep desire to keep it going, so they are prone to pushing the limits, thinking they can get away with it.
Former Novartis' CEO Dan Vasella describes this process:
Being successful is intoxicating, but it creates a pattern of celebration leading to belief, leading to distortion. When you achieve good results, you are celebrated, and you begin to believe that you are at the center of all that champagne toasting.
Five Archetypes of Derailing
In observing leaders who have derailed, we identified five archetypes of leaders who lead without their True North (Figure 3.1).
Can you see yourself in any of these archetypes? Could these patterns of derailment pull you off track?
Imposters
Imposters rise through the organizational ranks with a combination of cunning and aggression. They understand the politics of getting ahead and let no one stand in their way. They are often unabashed students of Machiavelli, determining every angle to advance as they execute their game plan. They are the ultimate political animals, adept at figuring out who their competitors are and then eliminating them one by one. They have little appetite for self‐reflection or developing self‐awareness.
| Archetype | Pattern of Derailment | Antidote |
| Imposters | Lack self‐awareness and self‐esteem | Build self‐awareness (Chapter 4) |
| Rationalizers | Fail to establish and uphold clear values, then self‐deceive with a story about why it's okay | Establish clear values (Chapter 5) |
| Glory seekers | Motivated by the world's acclaim | Seek intrinsic meaning in your work (Chapter 6) |
| Loners | Fail to build personal support structures, lack the grounding of an integrated life | Build trusted relationships that ground you (Chapter 7) |
| Shooting stars | Build shallow foundations and keep moving to the next thing | Commit to an enduring purpose that makes a difference in the world, and measure progress against that purpose (Chapter 9) |
Figure 3.1 Five Archetypes of Derailing
Abraham Lincoln once said, “If you want to test a man's character, give him power.” Having acquired power, Imposters lack confidence about how to use it. They are beset with doubts about their leadership and are often paranoid that underlings are out to get them.
Prior to founding WeWork in 2010, Adam Neumann sold high‐end baby clothing. His insight about New York real estate was that Millennials would accept higher density commercial office space in exchange for better perks. Adam pushed this idea to the max, raising $10.4 billion in the following decade, largely from tech investor Masayoshi Son of SoftBank.
WeWork grew rapidly and so did Adam's ego. The Cult of We by Eliot Brown and Maureen Farrell describes Adam's behavior as CEO, as he installed an ice plunge pool in his personal office, acquired a $63 million corporate jet, put friends and family in executive roles, and engaged in outrageous self‐dealing. The most ridiculous example is trademarking the term, “We,” then selling it to his company for $5.9 million.
Adam alienated colleagues through dehumanizing antics. Adam often asked employees to ride in his chauffeured $200,000 luxury car when he was going to a meeting. Once Adam was done speaking with them, he dropped them off and told them to take alternative transportation to their destination.
When WeWork attempted to go public in 2019, Adam's behavior as CEO and his controlling position came under fire. The Wall Street Journal's investigative journalism portrayed Adam's darker sides—drug use, shirking work for surfing, and his erratic management style. When the IPO failed, Adam negotiated an eye‐dropping $185 million consulting fee for himself as part of an even larger exit package. Existing employees and shareholders were left with huge losses as WeWork announced thousands of job cuts.
A charismatic pitchman, Adam succeeded at selling visions of transforming the real estate industry, but his model never proved financially viable. When he departed a billionaire, everyone else was left with the remains of a broken business.
Rationalizers
Rationalizers always appear on top of the issues. When things don't go their way, they blame external forces or subordinates. Masters of denial, they rarely take responsibility themselves. As they advance and face greater challenges, they transmit pressure to their subordinates instead of modulating it. When pressuring subordinates fails to produce the numbers, they try to hit financial expectations by cutting funding for research, growth initiatives, or organization building. Eventually, these short‐term actions catch up with them. Then they borrow from the future to make today's numbers look good, or stretch accounting rules, rationalizing that they can make it up further down the road.
Unfortunately, their actions only make the future worse. Then they turn to more aggressive schemes, such as reporting future revenue streams in quarterly sales or filling customer warehouses with inventory. When these short‐term actions fail to stem the tide, they resort to desperate measures that often cross into illegal actions. Ultimately, they become victims of their rationalizations, as do their depleted organizations.
The misdeeds of rationalizers have become all too apparent in recent years. Pressures from shareholders caused many executives to play the game of meeting stock market expectations while sacrificing the long‐term value of their companies. Even years later, many rationalizers cling to denial, unwilling to take responsibility for problems they caused. As Warren Bennis said, “Denial and projection are the enemies of reality.”
Rajat Gupta was a close professional colleague of mine. We served together on three boards: Goldman Sachs, World Economic Forum USA, and Harvard Business School Board of Dean's Advisors. Rajat was also a board member of Procter & Gamble and American Airlines. He was one of the world's most accomplished leaders—intelligent, savvy, and well connected with the most prominent people.
Rajat was the first worldwide managing partner of McKinsey born outside America. He built a global powerhouse during 9 years at the helm, growing McKinsey's revenue by 280 percent to $3.4 billion. Rajat led philanthropically as well, chairing the Global Fund and founding the Indian School of Business. For the Indian community, he was a role model of the American dream fulfilled, a symbol that an Indian immigrant could make it to the top in America.
On October 24, 2012, Rajat was sentenced to 2 years in federal prison. He was convicted on four criminal counts for providing inside information to Galleon Fund founder Raj Rajaratnam. He shared privileged information he learned at Goldman board meetings during 2008, which Rajaratnam used to make insider trades. In the crucial board meeting to approve Warren Buffett's $5 billion investment in Goldman, Rajat called Rajaratnam at 3:52 p.m., just 16 seconds after the board meeting ended, to advise him the transaction was approved. Rajaratnam then bought $90 million in stock before the market's 4:00 p.m. closing.
How could such an exceptional leader at the peak of his success fall so far, so fast? We may never know the full story since Rajat still denies his misdeeds, but his life story offers clues. Rajat's father was a journalist and freedom fighter jailed by the British when India was fighting for independence. Young Rajat faced a crucible when he was orphaned as a teenager as his father died when he was 16, and his mother passed away 2 years later. With no money to live on, he took responsibility for raising his two younger siblings. Despite these challenges, he gained admission to the famed Indian Institute of Technology and immigrated to America to attend business school before joining McKinsey in 1973.
What caused Rajat to cross the line to provide Rajaratnam with inside information? On paper, Rajat had it all—talent, wealth, power, and respect—but apparently none of this was enough.
As a Goldman Sachs director, I was subpoenaed by the U.S. government to testify in his trial. Throughout the trial, Rajat maintained his innocence, suggesting he was a victim of Rajaratnam, who had already been sentenced to 11 years in prison. Although his net worth was $120 million, Rajat seemed to have an unquenchable thirst for more. A 2013 article in New York Times magazine speculated, “Teaming up with Rajaratnam seemed to be his plan for a spectacular career finale—to establish himself in the elite circle of billionaires.”
Rajat reflected on this weakness in a 2005 speech at Columbia University, saying, “When I look at myself, yeah, I am driven by money,” adding:
When I live in this society, you do get fairly materialistic. I am disappointed. I am probably more materialistic today than I was before. Money is very seductive. You have to watch out for it, because the more you have it, you get used to comforts, big houses, vacation homes. However much you say that you won't fall into the trap of it, you do fall into its trap.
When we sat together at board meetings, there were no outward signs of Rajat's inner struggle, but my intuition tells me he was deeply scarred by his teenage crucible and never resolved his need for financial security. His thirst for money may have been his shadow side, controlling him more than he understood. His story shows how vulnerable we are to temptation if not guided by our moral compass.
Glory Seekers
Glory seekers define themselves by the acclaim of the external world. Money, fame, and power are their goals. Often it seems more important to appear on lists of the most powerful business leaders than it does to build organizations of lasting value. Their thirst for fame is unquenchable. No achievement is sufficient because there are always people with more money, more accolades, and more power. Inside, glory seekers feel empty and envy those who have more.
Greg Lindberg's story is one of Horatio Alger lore. The fifth child of a middle‐class family, Greg was first to graduate from college. Starting a trade publication, Home Care Week, as a college student, he invested $5,000 in making the newsletter his full‐time work upon graduation. He says, “I rented office space for $285 a month and lived there, sleeping under my desk for 10 years.” His mantra was “6 to 6 by 6”—working from 6:00 a.m. to 6:00 p.m., 6 days a week.
Greg paid himself just $40,000 annually and poured his earnings into acquisitions, first to expand his publishing business and then to expand into other industries. His formula for acquiring broken businesses was to find a business in distress, buy it cheaply, use offshoring to reduce costs, and grow revenue. When he was limited by Alabama law in funding related‐party transactions of an insurance company he owned, Greg moved the company to North Carolina to secure different regulatory treatment.
To ensure this favorable treatment, Greg and his team contributed extensively to the North Carolina insurance commissioner's campaign and formed a super PAC to donate $425,000 in advertising. When a new insurance commissioner was elected, Greg pressured him to approve extremely aggressive related‐party deals. He offered to donate $500,000 to the North Carolina Republican Party, with $250,000 directed to the commissioner's campaign fund—violating campaign finance limits. The commissioner contacted the FBI, which wired him up for a conversation in which Greg promised him $2 million in campaign donations to remove a regulator.
The trial made national headlines, as the media chronicled Greg's $35 million in luxury homes, expensive Gulfstream jets, and $45 million yacht. To reward women he met through matchmaking services, Greg provided jewelry, extravagant trips, and, in one case, a $90,000‐per‐month Manhattan apartment. In 2020, a federal jury convicted Greg of bribery. At his sentencing, Judge Max Cogburn said, “It was shocking that so much could be done in terms of buying and selling government, like sacks of potatoes.”
In 2001, Greg Lindberg was a smart, creative, and hard‐charging entrepreneur, but he never cultivated the moral character he desperately needed. Greg's glory seeking transformed him into a bully who ran over regulators. Did his lack of true friends blind him to feedback? Why did he shut down those who challenged him, forcing people to fall in line to keep his loyalty?
Today, he lives in a small prison cell. Greg hit his financial goals year after year until his lack of True North led to massive disaster.
Loners
Loners avoid forming close relationships, seeking out mentors, or creating support networks. They believe they can make it on their own. Not to be confused with introverts, loners often have myriad superficial friends and acolytes but don't listen to them. They reject honest feedback, even from those who care about them.
Without wise counsel, loners are prone to making major mistakes. When results elude them and criticism of their leadership grows, they circle the wagons. They are rigid in pursuing their objectives, not recognizing their behavior makes it impossible for them to reach their goals. Meanwhile, their organizations unravel.
Lehman Brothers CEO Dick Fuld was a loner who denied the deep trouble his firm was in. From March to September 2008, his associates warned him that the firm was overleveraged, lacked liquidity, and was inadequately capitalized, making it vulnerable to market volatility. Treasury secretary Hank Paulson had 50 discussions with Dick, telling him Lehman had “to recognize its losses, raise equity and strengthen liquidity.” In his book Hank wrote, “My conversations with Dick were very frustrating. Although I pressed him to accept reality and operate with a greater sense of urgency, I suspected that despite my blunt style, I wasn't getting through.”
On Friday, September 12, 2008, Hank called the heads of the big investment banks to a meeting to address the implications of Lehman's pending bankruptcy. Dick was not present, choosing to stay in his office behind closed doors, perhaps hoping for a government bailout. He was still waiting at 8:00 pm on Sunday evening when Securities and Exchange Commission (SEC) commissioner Chris Cox called to tell him there would be no bailout. In the early hours of September 15, Lehman filed for bankruptcy, putting Dick and most of his employees out of work, making their Lehman stock worthless, and triggering the greatest financial crisis since the Great Depression.
As a leader, you need to listen to your colleagues, accept honest feedback, and be willing to face reality when your strategy is going awry.
Shooting Stars
The lives of shooting stars center entirely on their careers. To observers, they are perpetual motion machines, always on the go, traveling incessantly to get ahead. They rarely make time for their family, friendships, communities, or even themselves. Much‐needed sleep and exercise routines are expendable. As they run ever faster, their stress mounts. Kabir Barday found himself in this situation as he built OneTrust, but his health crisis prompted him to reevaluate his life and his leadership.
Unlike Kabir, many shooting stars move up so rapidly in their careers that they never take time to learn from their mistakes. A year or two into any job, they are ready to move on, before they have to confront the results of their decisions. When they see problems of their making coming back to haunt them, their anxiety rises, and so does the urgency to move to a new position. If their employer doesn't promote them, they are off to another organization. One day they find themselves at the top, overwhelmed by intractable problems. At this point, they are prone to irrational decisions.
Shooting stars place their success above any deeper purpose for their organization, as Uber founder Travis Kalanick's story demonstrates. Travis grabbed headlines for the extraordinary international growth of his ride‐sharing app. With profanity‐laced tirades, he willed the company to success, often encouraging employees to drive the competition into the ground. As Uber grew to 12,000 employees, 40‐year‐old Travis explained his management style as pushing himself to the limit. “In a car, you can go fast, but there is a red line. You want to push into that red line and see what that engine's made of.”
Red‐lining CEOs are not fun to watch. By 2017, Uber was enmeshed in controversy over workplace culture issues, including a floodgate of sexual harassment complaints, issues with regulators claiming Uber broke transportation laws, and a Google lawsuit alleging Uber stole its intellectual property. A video of Travis lashing out at an Uber driver went viral.
While he admitted to arrogant outbursts, Travis saw them as a strength, boasting about Uber's tough culture. He dismissed internal survey data showing his employees' negative view of his leadership, saying he had a public relations issue, not a culture issue. He lacked confidantes who provided honest feedback. Ultimately, five board members requested his resignation.
Travis had a brilliant app that transformed transportation, but he lacked the leadership to develop a company around the app. His replacement, Expedia CEO Dara Khosrowshahi, reset the culture, established new values, and apologized for the company's mistakes. Dara streamlined the company's sprawling investments, grounded the company in making transportation simple by giving people access to vehicles, and made respect the culture's cornerstone.
The Loneliness of Leaders
It is lonely at the top. For leaders, talking with their subordinates or their boards about their biggest problems and deepest fears is risky. Leaders know they are ultimately responsible, and the well‐being of many rests in their hands. If they fail, many people will be harmed.
Because of this loneliness, many leaders deny their fears, shutting down their inner voice because it is too uncomfortable to hear. Instead, they try to satisfy external voices pressuring them. Because the advice of outsiders is often too painful to face, some leaders listen only to people who reinforce their views. As Apple founder Steve Jobs advised, “Don't let the noise of others' opinions drown out your own inner voice.”
Meanwhile, their work lives and personal lives grow more unbalanced. Fearing failure, they favor their work life, even saying, “My work is my life.” Eventually, they lose touch with those closest to them—their spouses, children, and best friends—or coopt them to their point of view. Over time, little mistakes turn into major ones, and no amount of hard work can correct them. Instead of seeking wise counsel, they dig a deeper hole. When the collapse comes, it is unavoidable.
Who are they? They could be one of those executives facing prosecution for their actions. Or a CEO forced to resign for personal reasons. But they could also be you, me, or any one of us. We may not have faced a plight as severe as these leaders, but we should all recognize in ourselves the capacity to lose our way.
Emerging Leader: Elizabeth Holmes
In 2015, Elizabeth Holmes appeared on the cover of Inc. magazine as “The Next Steve Jobs.” Forbes called her the youngest woman to become a self‐made billionaire and estimated her net worth at $3.6 billion. Six years later, it appears “The Next Bernie Madoff” might have been more fitting.
Like many tragic stories, this one started well. Elizabeth was a young entrepreneur who started a computer business in high school. As a promising chemical engineering student at Stanford University, she worked at the Genome Institute of Singapore, testing blood samples for SARS‐CoV‐1. After her freshman year, Elizabeth dropped out of college and used her tuition money to found blood testing company Theranos.
A young and relentlessly focused CEO, Elizabeth studied Silicon Valley founders and modeled herself after them. Associates say she deepened her voice to increase her gravitas. Like the late Steve Jobs, she wore black turtlenecks. She built a board of political luminaries—including former secretaries of state George Shultz and Henry Kissinger and former defense secretary general Jim Mattis. They brought connections and star power but—tellingly—no knowledge of medicine.
Powered by enormous fundraising rounds and breathless press, Elizabeth became the darling of Silicon Valley as Theranos' valuation peaked at $9.1 billion. In interviews, she cast herself as a disruptive leader who aimed to personalize health care with revolutionary blood tests. Fortune, Bloomberg Businessweek, and Forbes put her on their covers. She hired a celebrity photographer to send portraits to journalists, lived in a rented mansion, and traveled by private jet.
Elizabeth claimed her testing device Edison would diagnose terminal illnesses early, creating “a world in which no one has to say goodbye too soon.” In pitching a deal with Walgreens, she falsely claimed Theranos devices powered U.S. military's battlefield testing. She later admitted to doctoring investor reports by adding pharmaceutical company logos, so it appeared these companies had vetted Theranos' technology.
Internally, Theranos was a calamity. Her chief operating officer (COO), who became her boyfriend as well, described the lab in 2014 to her as a “f—ing disaster zone.” Most shockingly, Theranos' supposedly groundbreaking medical device didn't work. According to the Wall Street Journal, patients were given inaccurate diagnoses on cancer and HIV. Many employees resigned, questioning the efficacy of the technology, and rejecting Theranos' toxic culture.
Elizabeth ignored serious patient health risks presented by these issues, treating them as a public relations problem. Obsessed about her image, she directed employees to edit her Wikipedia page and hired law firms to threaten anyone who publicly challenged Theranos. In 2015, I was personally threatened by her vice president of communications for a critical article I wrote questioning her leadership.
The rules in medical technology are different from software products. If Pinterest gets a product update wrong, people don't die. If a testing company misdiagnoses cancer or HIV, the consequences are life‐threatening. That's why medical technology has a high threshold for risk. While Elizabeth embraced the role of celebrity CEO, she lacked the medical expertise required to build a medical technology company.
Elizabeth was not guided by a moral compass, nor did she try to develop herself as an authentic leader. Now at age 37, Elizabeth Holmes is paying the price for placing business success ahead of patient safety. In 2018, the SEC banned her from serving as an officer or director of a public company for 10 years. On January 3, 2022, she was convicted on four counts of criminal fraud.
Theranos? It is bankrupt with a valuation of zero.
Elizabeth Holmes' tragic tale is a lesson to emerging leaders: “Fake it until you make it” doesn't work, nor does its cousin, “Fake it until you become it,” which is equally dangerous. People will see through you.
Bill's Take: My Moral Compass Kept Me in Check
I was the kid who tried too hard to get ahead, be recognized, and be loved by others. I went straight from college to business school, graduating at age 23. Then I took an intentional detour into the U.S. government, serving as assistant to the Defense Department's chief financial officer (CFO) and as special assistant to the Secretary of Navy. I loved my 3 years there, learning from amazing leaders and contributing to my country.
Next, I accepted a position as head of strategic planning for Litton Industries, working for a wonderful mentor who taught me about business realities. Nine months later, I became general manager of Litton's microwave oven division with the mission to launch Litton into the consumer appliance market.
We grew the business at 50 percent per annum the next 9 years, built our organization from 200 to 2,000 people, and attracted a top‐flight executive team. Externally, there was never‐ending pressure—from our parent company for financial results, from competitors like GE and Sears, and from external regulators like the FDA.
I loved it, but it was stressful. In retrospect, I may have moved too fast in innovating to stay ahead of the competition and tried too hard to be Litton's best‐performing unit, which led to quality issues. I was young, aggressive, and brash in dealing with our corporate bosses.
Luckily, I had a strong sense of my moral compass. Penny's wisdom and support, the insights of my men's group, and learning to meditate provided guardrails to my life and leadership. I was fortunate that these tools helped me avoid the types of ethical lapses that can cause derailment.
Idea in Brief: Leading without True North
Recap of the Main Idea
- There are five archetypes of leading without True North: imposters, rationalizers, glory seekers, loners, and shooting stars.
- Derailing occurs when you fail to follow your True North, beginning the ethical drift which can culminate in behavior that is universally condemned and damages your reputation.
- Although it's relatively easy to rebound from a business failure, it's considerably harder to recover from a significant character failure.
- The seeds of such disaster are sown when we don't understand our journey and our motivations and we place too much emphasis on external measures of success or fame.
- As a leader, it is important to understand our shadow sides, which can pull us away from our True North.
Questions to Ask
- Have you seen leaders lose their way or worked with someone who fits these archetypes? Which of the qualities of the five archetypes do you see in yourself?
- Do you have a fear of failing? Do you fear what other people would think about you if you did? Are you avoiding situations in which there is a risk of failing? How could the experience of failing help you achieve your ultimate goals?
- In what ways do you crave success? How is this affecting your decisions about leadership and your career? Do you only choose situations that give you a high probability of success?
- What steps can you take to prevent being derailed during your career?
Practical Suggestions for Your Development
- Write down the most difficult ethical dilemma you are currently facing and chronicle the “least generous” interpretation of your actions.
- Project forward a decade and assume the worst: you have derailed in a major failure. Envision the situation in which you could lose your way.