Blinded by a Vision

Theranos was going to revolutionize how blood tests were carried out, reality be damned

The essentials

“You can be very committed to knowing your idea will work,” says Hugh Helferty, “but not so committed to it that you’re blind to the evidence that it may, in fact, not work.” Helferty was referring to the debacle of Theranos, the American health technology firm that got tripped up by ethical missteps. Retired in 2015 after more than 30 years with ExxonMobil, Helferty led the company’s chemical, corporate strategic, and petroleum products research departments. As Executive-in-Residence at Smith School of Business, he will be teaching students business ethics and using Theranos as a case study of what happens when expediency overrules evidence. In this conversation with Smith Business Insight, Helferty talks about the key issues of the case.

A Flawed Vision

One of the many angles to this story is the failure of ethics. Elizabeth Holmes had a vision, which was the idea that you could do all kinds of tests on a pinprick of blood and tell people a lot about their health. Not only did Theranos try to progress it as a research idea but they also went into the testing business. They contracted with Walgreens, one of the larger drug chains in the U.S., as well as some doctors to provide hundreds of thousands of blood tests to people without having a test that actually worked properly.

When you do testing in a lab, you have to run standard samples several times on the same equipment to confirm it’s delivering reliable results. That’s common lab practice. The problem was that their equipment didn’t give reliable results but they proceeded to use it anyway. And they basically threatened their employees if they were going to divulge what was really going on.

Theranos had a valuation in the billions. So how did Holmes succeed? She didn’t even complete an undergraduate degree. She obviously was exceptional from the standpoint of communicating her vision. She hired capable scientists to try to work with her towards achieving it. She did one thing that was different from other science-based companies. Instead of placing people with scientific backgrounds on her board of directors, Holmes recruited a variety of political figures for the Theranos board, such as George Shultz, a former U.S. Secretary of State. That gave her credibility in terms of raising money but didn’t provide her useful guidance and control as a CEO. You need a capable board and you need experienced people working within senior management who are willing to operate to a high ethical standard.           

Why, Walgreens?

There is another interesting angle to the story: not only did Holmes succeed in raising money from venture capitalists but she also convinced Walgreens, a well-established drugstore, to go into partnership with her and provide thousands of samples and utilize her results. Even a reputable company that should have known better somehow got taken in. I would think that a company like Walgreens would have the technical expertise to evaluate this kind of technology and say, no, there are issues with this and we've got to be convinced it really works before putting our customers at risk. I can understand how other people were fooled, but I don’t understand how Walgreens was fooled.

Committed to the Vision, Blind to the Evidence

I don’t think people start out being bad. Holmes did have this vision for what she wanted to do, and it would have been quite an accomplishment had she succeeded. But in scientific research, you must operate to a high ethical standard. You can be very committed to knowing your idea will work but not so committed to it that you’re blind to the evidence that it may, in fact, not work.         

I've seen this often, where a scientist will promise to have a result by a certain time. Their career progress and all kinds of outcomes are influenced by their ability to deliver on the goal. Given the nature of scientific research, you cannot predict whether you’re going to be successful or not. It can be very difficult to face the reality that you can’t deliver on that goal. When it doesn’t turn out as you expected, then what do you do? How will you react?

You need to have the expertise and you need to listen to it. It’s not enough just to have a vision of what it is that you want to see happen because often it doesn’t play out as expected. There’s no end to failures. Even in projects that ultimately succeed in the long run, there are often many failures along the way. 

Interview by Luke Fiske

Smith School of Business

Goodes Hall, Queen's University
Kingston, Ontario
Canada K7L 3N6

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