Boeing, Theranos, & the Cost of Secrecy

By Gabrielle Simeck

Boeing is a world renowned aircraft manufacturer, the largest in the United States. Theranos is a now-defunct health technology company that plummeted from a value of $9 billion to zero. What do they have in common?

More than you’d think.

The two companies have been in the headlines recently for whistleblower complaints and high-profile coverage of manufacturing errors and quality control issues. Boeing remains a reputable company, with the support of major airline companies, while Theranos is now viewed as a “cautionary tale” of Silicon Valley innovation ethics run amok. While at first glance the pair appear to share little, the root of their problems seems to be similar; both of the companies created environments in which employees feared retaliation for disclosing abuse or wrongdoing. The scrutiny both companies are facing shares a common source: a culture of secrecy and intimidation. As Sheelah Kolhatkar of The New Yorker recently wrote, “institutional denial, obfuscation, and retaliation are hallmarks of many whistleblowing cases.” Boeing and Theranos share related forms of a culture of secrecy, which threatens employees’ ability to raise issues internally and ensure that the public is receiving the best product possible. As both companies’ products immediately affect public health and safety, their accountability to quality control is critical.

Following the crashes of two Boeing 737 Max airplanes, one in of October of last year and the second just last month, investigators are now examining whether issues with automatic systems caused both tragedies. Max planes are grounded all over the world, but Boeing’s issues aren’t limited only to that airplane. Over the weekend, The New York Times reported production and quality control issues with the 787 Dreamliner as well.

Workers hoping to report errors or quality control issues have been confronted by intimidation tactics. John Barnett, a now-retired quality manager at Boeing, attempted to raise concerns about the problems he saw. He told The New York Times, “As a quality manager at Boeing, you’re the last line of defense before a defect makes it out to the flying public.” He added, “And I haven’t seen a plane out of Charleston yet that I’d put my name on saying it’s safe and airworthy.” Barnett left the company after facing reprimands for writing down errors and being transferred to a different part of the plant after he reported concerns. Other whistleblowers at Boeing have faced similar treatment. A former quality manager, Cynthia Kitchens told The New York Times in an interview that, “It was intimidation. Every time I started finding stuff, I was harassed.” Boeing’s efforts to suppress workers’ capacity to raise concerns have resulted in a culture in which whistleblowers fear retaliation for speaking up. Whistleblowers like Barnett and Kitchens illustrate the consequences of this culture: when whistleblowers speak up, their words fall on deaf ears and public safety is threatened.

In the aftermath of the two crashes, Boeing is now facing heightened international scrutiny. On April 19, the Federal Aviation Administration (FAA) announced that experts from nine civil aviation authorities are slated to participate in a Joint Authorities Technical Review of the Boeing 737 Max’s automated flight control system. The Senate Commerce Committee is also investigating whistleblower claims that the FAA safety inspectors who inspected the Boeing planes were not adequately trained and certified. Though these investigations will help evaluate the safety of Boeing airplanes and hopefully prevent future tragedies, Boeing has yet to address concerns regarding the chilling effect on workers trying to disclose wrongdoing. The company still has a long way to go to meaningfully empower its employees to raise concerns internally.

Theranos’ issues were significantly more serious than Boeing’s. The company’s founder, Elizabeth Holmes, once feted in major profiles, respected by major political figures and politicians alike, now faces criminal charges and is due in court in July. Theranos itself was eventually shuttered in 2018 following years of scrutiny and financial woes triggered by a series of damning investigative reports published by John Carreyrou of The Wall Street Journal.

The key sources for Carreyrou’s reporting were two whistleblowers, Tyler Shultz, the grandson of a former Theranos board member and Secretary of State George Shultz, and Erika Cheung, both of whom were young college grads who joined the company for a chance to work at what was then one of the hottest startups in the health industry. Both soon found that their dreams of making it big in the tech industry were marred by siloed departments, organizational malfeasance, and serious quality control issues. In the second episode of “The Dropout,” an ABC investigative podcast hosted by reporter Rebecca Jarvis, Shultz described the management style of Theranos under COO Sunny Balwani. It was well known, he said that Sunny Balwani was “the enforcer” of “intimidation tactics.” Erika Cheung also spoke with Jarvis on “The Dropout” during its fourth episode “The Whistleblower.” Reflecting on the culture of secrecy at Theranos, Cheung said, it was “instilled in us in our onboarding [that we needed] to keep certain things secret. You’re not allowed to talk to your friends and family about what’s going on here. They would barricade certain portions of the lab so you couldn’t see.” As Carreyrou wrote in this adapted excerpt from Bad Blood, the biggest impediment for Theranos’ tech was its “dysfunctional corporate culture.” “Holmes and Balwani regarded anyone who raised a concern or an objection as a cynic and a nay-sayer. Employees who persisted in doing so were usually marginalized or fired, while sycophants were promoted.”  

The costs of Theranos’ culture of intimidation and secrecy were high: employees charged with developing technology that would impact patients’ healthcare decisions were afraid to report wrongdoing they witnessed at work. On Shultz’ first day, he told Jarvis, a head researcher was fired by Holmes for asking too many questions. For Shultz, “that kind of set the tone for the entire scientific community at Theranos where working smart was not valued but working hard was.” At Theranos, Shultz said, “People knew, they would say… don’t speak up or you’ll get fired. There was definitely a culture of fear.” Cheung had similar experiences. “People were very scared of upsetting Elizabeth Holmes and upsetting Sunny Balwani.” When asked why, she cited three sources of concern: open discussion of fear of losing jobs, grueling hours, and the “blame game.” In that environment, Cheung said, “People aren’t trying to understand what’s actually going wrong but people are just getting upset about what’s going wrong.”

Theranos’ dysfunctional culture is a great example of the negative consequences of secrecy. Workers like Shultz and Cheung were discouraged and even prevented from effectively raising concerns during their time at the company. Ultimately, Theranos’ refusal to take workers’ concerns seriously caused harm to patients and led to its eventual collapse.

The lessons from Boeing and Theranos should be an example to other companies: cultures of secrecy breed intimidation and are hostile to whistleblowers. At Government Accountability Project, we work every day to support, defend, and empower whistleblowers. We recognize that when companies like Boeing and Theranos discourage the raising of concerns, cultivate a culture of secrecy, and intimidate whistleblowers from speaking up, the public is worse off. Companies should (and do!) encourage employees to exercise their rights as whistleblowers. Their disclosures make all of us safer.

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