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Business ethics: the Theranos case

The consequences of Elizabeth Holmes’s lack of honest shows that transparency should always come before ambition and financial success

The consequences of Elizabeth Holmes’s lack of honest shows that transparency should always come before ambition and financial success

 

Gabriela Corregiari Bei

 

“The only way to do big things is to be passionate and believe in what you are doing” is one of Elizabeth Holmes’s most known quotes, and it might explain why her story ended as it did. Elizabeth Holmes was once a promising 19-year-old from Silicon Valley, whose brand Theranos promised to revolutionize the health industry. The brand, founded in 2003, grabbed the investor’s and media’s attention by promising to perform over 200 blood tests with a single drop of blood inside a single machine. Perhaps even more impressive is the fact that such a revolutionary endeavor was being led by a young female Stanford dropout. Consequently, Holmes secured more than $724 million of capital, leading to a company valuation of roughly $10 billion. Considering how successful other revolutionary brands born in Silicon Valley had gotten, the investors did not hesitate regarding Theranos, which was possibly their biggest mistake.

For the whole duration of the company, Elizabeth encouraged Theranos workers toward the ultimate goal of transforming blood testing. Holmes’s initial purpose was to make her pioneering machine “Edison” genuinely work. Inauspiciously, that was scientifically impossible, leading to flawed results and misdiagnosis. Subsequently, her goal became to make it look like it worked. In furtherance of that motive, Holmes faked a report keeping her business alive.

At this juncture, it is helpful to use philosophy to comprehend the Theranos case more successfully. Firstly, it is evident that Elizabeth faced an ethical dilemma. When her company could not evolve as she anticipated, Holmes could have had an ethical attitude and admitted defeat. However, Holmes might have been too proud to abandon her idea, leading her down an unethical path. In other words, when forced to deal with an ethical issue, Elizabeth could have stuck to ethical morals but instead chose to lie about the efficiency of her creation, putting multiple lives in danger. Consequently, when the truth was put out by the Wall Street Journal in October 2015, the investigations regarding Theranos were initiated, eventually leading to Holmes’s conviction.

Ultimately, Elizabeth is not the only one to be blamed. The investors should also be held accountable for this case’s proportion. As the board started with drastically influential names like the former US Secretary of State George Shultz, many other significant figures were eager to join Theranos, believing to had found Silicon Valley’s next golden mine. The investor’s negligent attitude of investing without demanding to see the technology work and evolve for the entirety of the case can be elucidated by the concept of confirmation bias. The concept stands for the tendency to favor information that confirms previously held beliefs. Accordingly, the investors chose to believe Holmes’s words without commanding proof, due to their hopes that the revolutionary project would, in fact, work, and that most importantly, they would be a part of it. In essence, Elizabeth Holmes’s ethical crime was only possible due to the investor’s greediness and desperation to be involved in America’s next promising innovation.

Moreover, Elizabeth’s actions oppose the ethical paradigm of deontology. According to Immanuel Kant, rules should be used to distinguish right from wrong. For the philosopher, people should do what’s right, solemnly because it is, and not to avoid any consequences. In that light, people shouldn’t lie because it isn’t morally correct, a principle which was evidently broken by Holmes.

Finally, The Theranos Case and its analysis on the documentary “The Inventor: Out for Blood in Silicon Valley” can be used as lessons on business ethics. Firstly, the consequences of Elizabeth Holmes’s lack of honest shows that transparency should always come before ambition and financial success. Even though her business would have ended drastically, if Elizabeth had accepted failure and admitted that her technology could never work, she then, at the least, would have avoided an 11-year prison sentence. Moreover, the case teaches us the importance of discernment, a value that was absent in the investors who chose to blindly believe the CEO in the hopes of great outcomes. Therefore, even though Holmes’s quote sounds inspiring, believing in her idea, although it had shown to be unachievable, led to nothing but an ethical crime and all its consequences.


References

“The Best 26 Elizabeth Holmes Quotes”

“Learn what Confirmation Bias is and how to reduce it”

“Deontology – Ethics unwrapped”

“THERANOS: O Golpe do Século | Documentário Completo”

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