Critique the reasons why the strategic plans adopted by Theranos failed? Yes, there were whistleblowers but what else was at play?
Essentially, Theranos stated that all tests were performed on Edison, this advanced technology was able to perform tests based on a tiny blood drop. In reality, out of two hundred tests, only fifteen were conducted on Edison and the rest on traditional lab machines, like Siemens AG. The company’s objective was to create blood-testing equipment marketed as revolutionary since it only required patients to contribute just a few blood drops. Nonetheless, this assertion was misleading and impossible to achieve.
Theranos did not have the technology and necessary conditions to perform accurate analysis, and several employees started to understand it. Tylor Shultz was one of them, he was ultimately employed as a full-time employee before quitting when he saw that the company’s promises regarding Edison did not stand up to inspection. He initially believed in Elizabeth Holmes and her mission, nevertheless, Tylor noted that the corporation entirely ignored failed quality checks, claiming that the small amount of blood was sufficient. Laboratory personnel had to dilute patients’ blood to run tests using traditional equipment, resulting in incorrect test findings. Thus, the firm depicted two realities: in the first, Elizabeth Holmes tried to save the world and reform the medical field, and in the second, lab employees misrepresented the blood tests and worked unethically. At the same time, the corporation asserted that Edison was the revolutionary technology that offered the highest level of accuracy.
Holmes was able to get some smart and successful business people as well as politicians and people with military backgrounds to invest and support the company. Formulate a thesis on why so many ‘smart’ people made these decisions that were wrong and unethical in some cases- include specific examples from the documentary to support your thesis. Look back at chapter 7 – what ‘factors affected their decision making’?
From my perspective, Elizabeth Holmes was a leader who people followed without a doubt. She was unshakable in her belief in the success of her idea, which sparked interest in the investors’ eyes. Homes was able to motivate people, and “motivation is more than a tool that managers can use to foster employee loyalty and boost productivity” (Ferrell et al., 2018, p. 362). Morale, the sum of individuals’ sentiments about their employment, employer, and colleagues, is an essential human quality that influences motivation (Ferrell et al., 2018). Employees and investors believed that the Theranos mission was built on good intentions and a desire to contribute to making the world a better place by saving more lives.
The primary factor that affected their decision-making was intuition. The concept refers to ‘immediately comprehending that something is the case, seemingly without the use of any reasoning process or conscious analysis” (Ferrell et al., 2018, p. 206). Another factor is framing, widely acknowledged as a component that not only influences but leads to many decision errors. Ferrell et al. (2018) emphasize that framing refers to the propensity to evaluate positively offered information favorably and negatively presented information adversely. For instance, Tylor Shultz told about the misleading blood tests to his grandfather and one of the board members, namely George Shultz. Nevertheless, George Shultz did not believe him as his decision-making was based on framing.
What leadership styles from the text did the key players use – what examples from the documentary made you select those styles.
Notably, Elizabeth Holmes and Sunny Balwani are illustrations of charismatic leadership. Charismatic leaders motivate their followers to perform at a greater level, build confidence in themselves and other leaders, empower employees and subordinates, and inspire incredible dedication and obedience (Ferrell et al., 2018). Essentially, charismatic leaders demonstrate “a strong sense of dominance, self-confidence, a need to influence, and a belief in the value and righteousness of their causes” (Ferrell et al., 2018, p. 342). For instance, the documentary showed that both Homes and Balwany inspired employees with their speeches about the importance of Theranos. Although the laboratory workers saw the actual situation, they sincerely believed that one day it would change, and they are working to improve Edison.
Why were the investors and Board of Directors blinded by the company’s deceits? Why didn’t more employees step up and question Holmes and Therano’s actions?
Investors automatically trusted Holmes’ concept and saw her as the new Steve Jobs. She speculated that Edison’s technology’s high level of secrecy was intended to keep competitors at bay. Theranos’ workers signed an obligatory non-disclosure agreement. Therefore, they had no right to talk negatively about the corporation or share any information, even with relatives. Employees’ emails and personal computers were scrutinized, and the transmission of information within the organization was kept to a bare minimum. Holmes’ charismatic leadership style affected the workers’ sense that they worked for the greater good.
What could the managers have done differently that might have led to a different outcome? What changes should be made in order to keep this from happening again? Do you think we could have a failure of this magnitude again? Why or why not?
From my perspective, investors should not rely on an idea only when deciding to become a board director. Managers or employees should immediately inform if they face unethical behavior, such as misleading blood tests. Ferrell et al. (2018) state that the most crucial step in understanding management ethics is learning to identify ethical dilemmas. An ethical dilemma is a specific problem, scenario, or opportunity that requires a person or organization to choose between ethical and unethical activities (Ferrell et al., 2018). Therefore, in order to prevent corporations from the situations that happened at Theranos, it is vital to enhance corporate ethics. I believe that if corporations educate their employees on the importance of ethics, we will not have a failure of this magnitude again.
Reference
Ferrell, O. C., Ferrell, L., & Bierman, L. (2018). Management: Principles and applications (4th ed.). Academic Media Solutions.