Reality bites. It bites a lot harder when you avoid it through spin and hyperbole.
The Wall Street Journal reported this week that Theranos CEO and majority owner Elizabeth Holmes is under threat of major government sanction including a personal multi-year ban from the lab testing industry.
Holmes, a darling of the “unicorn” hype machine and a manufactured pop culture executive with outstanding political connections, has given every indication over the past 6 months that she is dedicated to a culture of spin to keep her venture going.
One need only look at the preceding and succeeding headlines of the piling on media tempest to see the realities of a spin machine undergoing a slow-motion train wreck.
First, the hype focuses on Holmes herself–she has an interesting story, and she makes for good press: College dropout, new technology, black turtleneck, mysterious company.
“This Woman Invented a Way to Run 30 Lab Tests on Only One Drop of Blood” – February 18, 2014
“This CEO Is Out For Blood” – June 12, 2014
Then, there is an expose’ about how the company’s technology might not actually work.
“Hot Startup Theranos Has Struggled With Its Blood-Test Technology” – October 16, 2015
That is followed by the righteous indignation of the company and its founder.
“Elizabeth Holmes Slams Theranos Critics” – October 21, 2015
But then people start to get wise.
“The Cautionary Tale of Theranos: Beware Runaway Stories” – November 15, 2015
And individuals start to question the overall honesty of the enterprise and its founders.
“How Theranos Misled Me” – December 17, 2015
“Could Theranos Go From Unicorn to Unicorpse?” January 28, 2016
“Theranos Sounded Too Good To Be True And It is” – February 2, 2016
“Study of Theranos Medical Tests Finds Irregular Results” – March 28, 2016
“Theranos wasn’t forthcoming” – April 14, 2016
Finally, as was published this week, regulatory authorities come into the picture, and in the case of Theranos, it wasn’t pretty. In a tersely worded letter, Centers for Medicare and Medicaid Services (CMS) officials basically told Theranos and Holmes that they are about to get the death penalty.
You can’t spin your way out of that one. That’s when the spin stops.
So who cares about this?
Well, you should. You probably work with people who aren’t exactly forthcoming about things that really matter. You know them–they’re the ones who lead organizations by expounding on ethics but whose honesty and integrity are known to have more holes than Swiss cheese by those who have worked with them.
Those types have the cardinal virtue of likability, which ropes people in with narrative and story and can actually hold quite a portion of the world in thrall. But narrative can’t overcome a lack of substance forever, and that is what the Theranos story shows.
The Theranos case also illustrates something more general. Theranos is a high-profile, high-growth, “disruption”-oriented company. Such companies come with a healthy dose of optimism because they are founded on the principle of swimming upstream.
But…there is a boundary in strategic thought that defines the difference between optimism and spin. It’s the boundary between honesty and dishonesty and is usually defined by a few markers.
First is personality vs. performance – if you find that the focus of a business strategy is on the charisma and glibness of the organization’s leaders vs. actually confronting performance issues, you probably have a spin problem. A charismatic leader is a great thing, but it can’t be the only thing.
Second is story vs. strategy – if you find that the focus is constantly on getting your story straight vs. actually addressing the merits of the strategy, you probably have a spin problem. This includes an overweening focus on what not to show others (management, boards, investors, the press). The more you have to artfully conceal–especially from fellow insiders–the more you are probably in the spin zone.
Finally is attacking vs. listening – If you find that your leaders, or the leaders you’ve hired, resort to the classic ad hominem approach when criticized, then you probably have a spin problem. Somebody questions the numbers and suddenly becomes a “jerk.” Somebody else brings up an issue with the logic of a strategy and is discredited as “academic.” Yet another person calls into question the sustainability of a company and simply isn’t around at the next meeting. They are attacked, whereas a sound culture listens and responds. Elizabeth Holmes, in the case above, decided that it would be a good strategy to attack a two-time Pulitzer Prize winning journalist at the Wall Street Journal as publishing baseless trip. There’s a certain arrogance in that.
These markers all form the boundary between basic optimism (a good thing) and basic spin (a bad thing). They all demarcate boundaries between healthy and sick cultures.
If you look at the Theranos case, you can see failure on all three markers.
What happens when you look at your own culture? What about your own leadership style? What side of the boundary are you on?
What happens to you when the spin stops?