“There is nothing new under the sun.” This well-known phrase found in the Bible was written thousands of years ago and yet captures very well the nature of human behavior today. I was reminded of it after reading the book Bad Blood by John Carreyrou which is about Theranos, the fast-to-rise and fast-to-collapse blood testing company. Thinking about this company and its leaders reminded me of many other deceptive leaders like Bernie Madoff (leader of the largest financial fraud case in U.S. history) and Jack Bennett, founder of the Foundation for New Era Philanthropy (a Ponzi scheme that negatively impacted 1,100 individuals, churches and nonprofits). While most deceptive leaders do not become as infamous as Bernie Madoff, they do have some things in common in faking their way to success.
1. Making visionary promises.
Deceptive leaders are often visionaries, and vision is a good thing… when it can actually be accomplished. In the case of Theranos, who wouldn’t want to have their blood tested with a simple prick of the finger and have the results within hours rather than days? However, deceptive leaders are notorious for making grandiose promises that have a ring of truth yet cannot be delivered either at all or to the level at which they had advertised.
2. Varnishing the truth.
While there are many examples of unhealthy leaders outright lying, many start out with a little varnishing of the truth. Varnished truth is when you take something that has some factual aspect and then place a coating of mistruth over it either through exaggeration, misrepresentation, or only partial disclosure of the truth.
3. Creating a sense of mystery.
From the classified security details of the small mysterious testing unit of Theranos to the secret donors providing the matching funds for New Era, surrounding each was a sense of mystery. Deceptive leaders are uniquely skilled at creating an environment full of mystery. And people are attracted to magic even if they know it doesn’t exist.
4. Attracting highly credible sponsors.
One tactic of unhealthy leaders is to ensure a smell of legitimacy regarding their promises by recruiting credible people to endorse their products or services. New Era had the endorsement of John Templeton and highly respected institutions such as the University of Pennsylvania. Theranos had former Secretaries of State Henry Kissinger and George Schultz. This tactic causes others to feel safe by believing “this many smart people can’t be wrong.”
5. Punishing those who question.
“You want to know more than what is being shared? OK – then you will not get funding from New Era.” “You question our ethics of what is being done with blood tests? Fine – you are fired for lack of loyalty.” Deceptive leaders are like snipers. They pick off one person at a time who they deem to be damaging or dangerous to their deception. In short, they don’t like being questioned, and they like being told “no” even less.
6. Telling bold lies and maybe even believing them.
Some deceptive leaders are blatant in their deception – they are lying, and they know they are lying. Others appear to live in a confused space somewhere between “I am only trying to help others” and “I am a narcissistic sociopath who cannot tell the difference between truth and deception.” What’s really amazing is that, even when they are caught and the truth is piled to the ceiling, they will still try to work their magic!
7. Influencing others to suspend normal judgment.
How is it that very smart people can follow pathological leaders? In most cases, they have to convince themselves to suspend normal judgement. Those investing in Madoff’s scheme or with New Era knew they were getting far better than normal returns. But when suspicion would surface, they could always say, “Even though I don’t understand it, I trust so and so, and I know they would never embrace something that isn’t right or true.”
8. Creating a demand for access.
When people see others benefiting from the magic that is being worked by deceptive leaders, they fear that they are missing out. Investors see others making great returns and are told “he doesn’t accept too many clients.” Nonprofits see others getting big checks and desperately want in on the action and are told “you have to be invited in.” And the longer this goes on, the more outsiders want to get in on the deal.
9. Keeping experts at a distance.
Deceptive leaders often succeed by working to be the smartest one in the room. How do they do it? By keeping people smarter than themselves away. Think about this, Theranos was a bio-medical company, and yet it did not have any experts in blood science on its board nor did most bio-tech venture capital groups invest in it. They did have a lot of expert researchers working for them, and their board was made up of very intelligent individuals. However, the expert researchers were not allowed to have all of the details, and therefore their expertise was relegated to one small part of the big picture.
10. Controlling information.
Deceptive leaders are very skilled at controlling information, including who knows what and how much they are allowed to know. Bernie Madoff accomplished this by having a very small and loyal staff that included many family members. At Theranos, Elizabeth Holmes used lawyers, I.T. staff, and preventing staff from sharing information with one another. Accurate information is power, and those who have access to all of the information have all of the power.
What’s fascinating about these cases is how such large and elaborate illusions were exposed by a rather small collection of less powerful people who triggered the alarm. Theranos was exposed by a few courageous employees and a rather obscure pathologist blogger. New Era’s curtain of deception was pulled back from an accounting professor from a small college. And Bernie Madoff’s own sons exposed his bogus business.
We all would do well to make the same request found in Psalm 120:2, “Deliver me, O Lord, from lying lips, from a deceitful tongue.” And this includes not only delivering us from the damaging effects of the deception of others but also protecting us from ourselves.
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Jay Desko is the CEO of The Center Consulting Group and brings experience in the areas of organizational assessment, leadership coaching, decision-making, and strategic questioning. Jay’s degrees include an M.Ed. in Instructional Systems Design from Pennsylvania State University and a Ph.D. in Organizational Behavior and Leadership from The Union Institute.
