Essay Sample on Building Trust for Sustainable Business Success: Adhering to Legal Provisions

Introduction

The success of any business is deeply ingrained in the trust that its stakeholders, including employees, customers, and the general public, have developed on it. Failure of business to uphold corporate ethics and integrity seizes its opportunity to built a sustainable reputation and a climate that would foster development and long-term growth. This explains the need for organizations to adhere to legal provisions and be legitimate to every party in the company. However, there are numerous cases in which organizations have tainted their integrity by lying to the investors, the government, and the people they serve. Theranos is a perfect example of a company that fell primarily due to a lack of integrity and ethical operations by making its stakeholders believe in fake goals and ambitions.

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The Foundation of Theranos

Founded in 2003, Theranos was a health technology company headquartered in Palo Alto, California, with the idea of developing a breakthrough technology that would carry out numerous blood tests within the shortest time possible using an exceedingly smaller volume of blood compared to the conventional methods. The founder, Elizabeth Holmes, was then a 19-year-old who had just dropped out of Stanford University as a medicine student aspiring to develop and own a healthcare technology company (Lowenstein, 2018). She was born in a home with a rich history, and being a billionaire was her primary goal.

The Claims of Theranos

The basis of developing Theranos was that the existing blood testing mechanisms were slow, demanded relatively large volumes of blood, and were inflexible. Thus, the company's primary claim was that their technology could run numerous tests on a single or double drop of blood collected through finger pricking (Cold Fusion, 2019). The technology could be a solution to the slow testing processes since it could carry out multiple tests simultaneously. Secondly, it could save people from unnecessary blood loss since only a drop or two could be needed for a complete test (Diamandis, 2015). Finally, the 'innovation' could reduce the size of machines used for blood testing, which traditionally larger than the size of photocopiers to the size of a personal computer making them more portable.

Whether the Claims were Real and the Reality with Blood Testing

Numerous scientific reasons prove that the claims put forth by the company were fallacious. First, the effective running of tests demands specific volumes of blood. Collecting drops of blood would mean excessive dilution or the use of more additive chemicals. Consequently, it was scientifically certain that the results of the tests, as claimed, would yield inaccurate results and make the samples non-reusable (Cold Fusion, 2019). Secondly, blood in the finger is not pure as compared with the blood in the veins. The impurity of the blood could eventually extrapolate to inaccurate results. Finally, reducing the size of the blood testing machine to the proposed size could lead to component interferences due to proximity making a claim impossible.

How Elizabeth Holmes Managed to Stage Deceit

Before being declared a hoax, Theranos had been valued at $9 billion. Elizabeth had managed to win the trust of large corporations such as Walgreens and personalities such as Bill Clinton, Joe Biden, Henry Kissinger, and Jim Mattis, among others who either committed resources in the company or provided goodwill. However, it remains unclear how Elizabeth managed to stage such successful deceit. Her deceit might be related to her confidence and how she believed in her ambitions. She believed in her own story and shared it with a lot of inspiration, captivation, and hope that made her rise among the Silicon Valley stars. The way she believed in herself made it quite impossible to think that she was doing anything wrong. Psychologists have connected such a problem with the working of the brain quoting that it gets confused easily when a message is shared with absolute confidence and tends to believe it even if it is wrong (Klapproth, 2016). Another considerable reason is that people are likely to believe a lie, especially when it is for a good cause and aim at solving a complex problem. For Elizabeth, Theranos was an opportunity for "making the world a better place with transparent and affordable access to your health care…, and making less people say goodbye too soon" (Cold Fusion, 2019). Even if it is a lie, such a mission would be enough to create a social magnet.

How the Company Employees were Treated

The CEO was obsessed with secrecy to the point that she would easily dismiss any employee who shared any truth about the company with an outsider. In a stealth mode, Elizabeth even sued some of the Theranos’ employees, claiming that they misused the firm’s trade secrets (Cold Fusion, 2019). She demanded that her employees work hard and for long hours and had systems and assistants in place to help track the time when the employees arrived and left the premises and their whereabouts. She fired employees who worked for less than eight hours.

How the Fraud was Exposed

The company was exposed when some confident employees such as Erika Cheung and Tyler Shultz began whistleblowing about the deceptive and unethical ways the company ran its tests and dealt with data. The ultimate exposure was when John Carreyrou, a Wall Street Journal reporter, received a tip about the company's fraudulence and began doing serious investigations about the conspiracy (Lowenstein, 2018). In October 2015, John reported that the company was misleading its investors and customers and was operating on a total lie. Due to the exposure, the company closed all its laboratories by the end of 2017, and by 2018 March, Elizabeth Holmes and Ramesh Balwani served with lawsuits. The reporter later published a book titled Bad Blood: Secrets and Lies in a Silicon Valley Startup, which further exposed the company's lies.

Why the Technology that Theranos Claimed to Possess was Unachievable

The technology that Theranos claimed to possess is unachievable, and it was almost certain that the company could not produce the testing platform as they claimed. The critical missing point in the company's primary idea was lack of medical knowledge and instead of trying to solve complex medical problems using purely technological approaches. The technology industry is certainly moving towards smaller devices and fast processes. However, such a trend might be practical in the medical field, where numerous life-based factors have to be considered. Scaling down the size of the blood testing machine and collecting blood samples through hand pricking instead of the syringe would generally cause interferences leading to erroneous results.

Why Fraud of Such Magnitude Happened in a Plain Sight

Various reasons might explain where the fraud of such magnitude happened. First, people are always anxious about innovations that would provide imminent positive change (Klapproth, 2016). With this concept, the company found support amidst failures hoping that it would eventually find a breakthrough, which it did not. Secondly, the founder was highly sociable and found it exceedingly easy to convince people in her favor while keeping the deep secrets.

References

Cold Fusion. (2019, March 1). Theranos – Silicon Valley’s Greatest Disaster [Video]. YouTube. https://www.youtube.com/watch?v=3CccfnRpPtM

Diamandis, E. P. (2015). Theranos phenomenon: Promises and fallacies. Clinical Chemistry and Laboratory Medicine (CCLM), 53(7). https://doi.org/10.1515/cclm-2015-0356

Klapproth, J. (2016). Effective communication as a key to success for managers: The art of convincing and winning over others to achieve one's goals. BoD – Books on Demand.

Lowenstein, R. (2018, May 21). ‘Bad blood’ review: How one company scammed Silicon Valley. And how it got caught. The New York Times - Breaking News, World News & Multimedia. https://www.nytimes.com/2018/05/21/books/review/bad-blood-john-carreyrou.html

United States Department of Justice. (2020, April 2). U.S. v. Elizabeth Holmes et al. www.justice.gov. https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-al