In 2015, Elizabeth Holmes was gracing the covers of business magazines such as Fortune as topping the list of “America’s Self-Made Women.” Forbes ranked Holmes No. 110 on the Forbes 400 with a net worth of $4.7 billion. Holmes, just 32, began a startup company in Silicon Valley whose purpose was to disrupt health care by offering cheaper and less invasive blood tests (in part because Holmes had a lifelong fear of needles). Theranos appeared to be on its way to being that health care disrupter when it signed a deal with drug store giant Walgreen’s to have the company’s blood testing services conducted there. With her daily "uniform" of a black suit with a black cotton turtleneck, Holmes was compared favorably to Apple legend Steve Jobs.
Yet, by the end of 2016, Theranos’ reputation had tanked, and Holmes had a net worth of essentially $0. An investigative report by the Wall Street Journal cast doubt on some of the company’s key claims. For example, the Journal reported that Theranos was actually performing only about 15 finger-stick tests using its proprietary technology. The rest were being performed using conventional, third-party analyzer machines -- the same machines used by conventional labs like Quest Diagnostics and LabCorp.
Things got so bad that in July 2016, Federal regulators withdrew certification of the Theranos lab in Silicon Valley, ruling that Theranos was unable to keep the lab “in minimally acceptable order,” charging that the lab suffered from five “serious deficiencies,” one of which “posed immediate jeopardy to patient health and safety,” and thus had it closed. Regulators also slapped Holmes with a two-year ban from the lab-testing business.
This paper reviews the leadership communication practices (or lack thereof) of Elizabeth Holmes at Theranos. The paper argues that Holmes failed to show leadership in three ways. First, Holmes was not as hands-on as a start-up CEO needs to be, as evidenced by statements that she was unaware that her blood-testing technology was not working as advertised. Second, Holmes failed to deliver on the public proclamations she had for her blood-testing technology -- a surefire recipe for disaster. Finally, Holmes failed to realize that even if a crisis is based on perception, that crisis is real in its consequences and needs to be handled with the appropriate communication strategy. Had Holmes not failed on these areas, maybe she would have been able to salvage a possibly revolutionary innovation in health, rather than now being perceived as a fraud.
This paper also reviews the process of the character assassination of Elizabeth Holmes. In the wake of Theranos’ problems, Holmes became the victim of character assassination. Once the wunderkind of Silicon Valley, Holmes became a “low life,” “fraud,” or “con artist.” This paper proposes that her failure to put distance between Elizabeth Holmes the person and Elizabeth Holmes the CEO put her at risk to have her character trampled. The lessons to be learned on the global front are discussed.
