An Ethical Tsunami At Theranos

It’s not hard to locate an ethical tsunami in the United States. Most have not made the news yet; but the amazing drama continues at Theranos.

You may have read in the past several years about this California based company: one that rose to startup stardom after promising accurate blood test results with just a prick of the finger. In the process of attracting world class directors and investors, Theranos provided founder, Elizabeth Holmes, with an estimated paper fortune of $4.5 billion as of nine months ago.

As is the usual case with organizations who brag about their robust compliance and ethical cultures, the lack of systems and desire to create honest,truthful cultures is non-existent.

Since June 2016, Theranos has been hit with allegations that its tests are inaccurate and is being investigated by a number of federal agencies including the SEC and DOJ. In addition, their actual revenues are no where what they claimed.

I have lots of ethical heartburn over this company that should serve as a warning to any company that has a Board of Directors or Advisors.

While federal regulators banned Elizabeth Holmes for two years from owning or operating a medical laboratory, she is still the CEO and member of the Board.

She is now instrumental in giving additional shares to investors to pledge not to sue her company. Yes, you did read the words I just wrote.

In a total act of self-preservation, rationalization, & continued arrogance, Holmes was planning to contribute her equity shares to investors who most recently contributed in Theranos’s latest funding rounds amounting to almost $600 million.

According to written reports confirmed by present Board members, the new plan is ready for approval.

We can only hope that the key investors will not approve this plan while major lawsuits are well underway. In particular, the lawsuits are alleging that Theranos fraudulently solicited investments via misleading statements about their capabilities.

I have observed many times that rationalization and justification of shortcuts leads to bigger risks being taken. In effect, organizations in their desire to grow are not willing to recruit the best people with ethical values who can build values based cultures.

Sooner or later the tsunami hits their shores and rips apart the organization.

Words are nice to read and hear in a company culture. Deeds matter a whole lot more and ultimately define any organization’s reputation and competitive advantage.

My friends please remember this: respect, consideration, and courtesy matter a lot. Treat others fairly, decently, and equally.

Build your moral compasses carefully and always monitor them daily.

You know the battle cry: do your best each day. No one can ask more or less from any of us.

All the best/blessings, Mark


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