- Talent Management
Over the past year, few CEOs have received more attention than Elizabeth Holmes—the exceptionally young and female one-time billionaire whose fortune evolved around a single desired medical technology: an inexpensive, fast and easy way to conduct blood tests. This week, news reports announced that Holmes’s rise and fall was over. Once worth an estimated 9 billion, Holmes company is now said to be worth less than 1 billion and Holmes personal fortune is said to be virtually gone (notably, both Theranos and Holmes have denied the news). The reasons for Holmes rise and fall are both plentiful and subject to great speculation.
There’s little question that Holmes’ rising star in the Silicon Valley and rapid fall was impacted by her gender on some level. She was celebrated as a role model for young women aspiring to become entrepreneurs and scientists. When the Wall Street Journal launched their initial investigation of Theranos, however, their reports were quick to point out that she was a woman—a young woman—over and over again. Was it sexism rather than bad science that brought Holmes’ down? Probably not. Nevertheless, Holmes’ gender didn’t help matters.
The short answer is yes. One of Theranos’s biggest mistakes was failing to produce the data needed to back up their claims about the integrity of their product. As a medical company, Theranos should have had peer-reviewed research providing strong evidence that their diagnostic method was accurate long before the product ever went on the market. It didn’t and its misfortunes are evidence of the impact of this huge oversight. Had Holmes not dropped out of Stanford in second year to start her company, would she have known better? Perhaps, but bear in mind she was working with many scientists, including one of her former professors. The truth is that in the rush to patent her invention and start to profit off it, critical steps were skipped.
Yes, compliance was also a problem. While the company initially rejected most of the claims in the Wall Street Journal article, as the crisis at Theranos spread, allegations mounted. For example, eventually, the FDA announced that it had never even approved the “nanotainers” used by Theranos in its diagnostic process. Was it a good idea to ignore FDA guidelines? Obviously, not. In fact, the Theranos case stands as a reminder of why and how compliance operates and of the negative impact failure to pay adequate attention to compliance matters can have on an organization.
Despite Holmes’ critical errors and the likelihood that Theranos will eventually collapse entirely (at least under its current leadership and name), Holmes’s future may still be bright. Think about Steve Jobs—the often difficult and also black-turtleneck wearing CEO from whom many onlookers believe Holmes’ has taken great business and sartorial inspiration. Some of Jobs’ earlier developments were so disastrous they had to be buried en masse in the desert (consider the Apple Lisa). Of course, Jobs not only rebounded but became an icon for how business might be done in the 21st century.
While Holmes may never rebound to such an extent, there’s no question that given her strong start (again, how many quit to launch their own med-tech start up?) it seems likely that we will continue to hear about Holmes in the years to come. Of course, there’s considerable damage control that Holmes will need to do to move forward successfully. Most notably, there’s no question that Holmes will need to take some responsible for some aspects of Theranos’ decline. Accountability, after all, goes a long way yet to date, Holmes and Theranos have proven resistant to it. Developing a more transparent and arguably more accessible and collaborative leadership style may also serve Holmes well. Finally, there’s no question that to survive, she’ll need to recognize that both data and compliance are more than passing trends in business. Indeed, today, data and compliance may be the two most critical issues shaping organizations across sectors.