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Karissa Kaiser

When a Vision Goes Dark

OGL 345, Chapter 7/ Module 2

August 30, 2023

Dimension 1: Define the Ethical Challenge

a. From Lucas’ perspective, he seemed to have been a part of the next best groundbreaking

technology in the medical field. As a chairman on the board, I imagine he was looking for

transparency between the board, other stakeholders, and Holmes while also expecting

positive reporting and results from the technology that was ‘created’ by Theranos.

b. The problem with this situation overall, is that Holmes was exhibiting hubristic leadership by

lying about the technology used for demonstrations being developed by Theranos and was

withholding information by siloing the departments and not allowing investors to have any

stakes in the technology or structure of Theranos (Fugate, 2022, p. 142). She also

demonstrated Machiavellian type of leadership signs by having unrealistic expectations of

her staff (Fugate, 2022, p. 19).

This type of leadership behavior led to ethical liability through the intimidation amongst

the employees and her own partner being driven out of the company based on her inability

to show responsibility for her questionable leadership and business owner tactics (Fugate,

2022, p.137). Statistically, only a small percentage of unethical behavior is illegal;

Fortunately, her unethical behavior led to legal liabilities taken against her for multiple

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reasons, most of which are due to fraud (Fugate, 2022, p. 136). She’s now being fined

millions and facing decades of jailtime.

If I were Lucas, I would be concerned about the problem(s) because of Holmes unethical

behavior towards her team members, using technology that was not developed by

Theranos for demonstrations but claimed as such, and the lack of transparency throughout

the so-called development of medical technology to Holmes’ stakeholders. These actions

could tarnish Lucas’ reputation as both an investor and a chairman.

c. Currently, Holmes is withholding information from stakeholders, hiding the fact that the

technology that Theranos should be building is unsuccessful, Theranos is demonstrating

technology that is already on the market that is not developed by Theranos, Holmes is

displaying Machiavellian type leadership, and refused stakeholders any part in her business

(Fugate, 2022, p. 19).

Desired state would be total transparency with stakeholders on any part of the project,

allowing them to influence any decision-making steps and viewing any documentation.

Holmes would be able to provide competence-based trust to her team, which is the

“expectation that the person or organization has the skills, abilities, experience and

reliability to deliver on its obligations,” (Fugate, 2022, p. 12).

d. Stakeholders who were affected by the problems Holmes caused with her fraud and

unethical leadership were any chairman member, investors, staff members, the public, and any

partners involved.

Dimension 2: Determine the Causes

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a. Holmes caused mistrust with her stakeholders and investors of her company by thriving off

of control and not allowing any of them be involved in any decisions or progress of the

technology being built behind closed doors, as well as falsifying the financial status of the

business with them. Holmes also caused unethical working conditions by exhibiting

Machiavellian and hubristic leadership behaviors by both having the expectation for

employees to be fiercely loyal to the company and willing to work immense amounts of

overtime using intimidation and control and presenting self-confidence in her actions of

fraud by utilizing other company’s machines for demonstrations under the guise of

Theranos (Fugate, 2022, p19 & 36). Holmes’ legal liability actions also led to her jailtime and

millions of dollars of fines (Fugate, 2022, p. 136.

b. Contextually, although the stakeholders were questioning her views and messages, I do

believe they should’ve joined together to push for honest answers and transparency and

provide an ultimatum for investors to pull out if Holmes was unable to provide what’s being

asked. I think this type of action may have been able to push her into honesty and allow

stakeholders to make changes, or it could’ve stopped the funds and cut her company short.

I think that her partner and president should’ve spoken up since he was the only person

that was let in on the fraudulent behavior and true results.

Dimension 3 - Describe Your Potential Solutions and the Intended and Unintended

Consequences for Stakeholders

a. From the stakeholders’ perspective, I wouldn’t accept the level of privacy Holmes was

demanding. You’re invested in this company; you should be a part of and have visibility to the

progress of the technology this company is building. I think the stakeholders should’ve worked

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together to demonstrate virtuous leadership by confronting Holmes’ unethical leadership styles

(Fugate, 2022, p.129). Holmes went into this company with loads of confidence and control; I

think the stakeholders, especially chairmen and investors, could use an ultimatum to pull out of

the company and try to manage her levels of confidence and control.

From the team’s perspective, they need to break the susceptible followership style and

learn to demonstrate a more compulsive style so they’re able to become a little more dominant

and gain the respect and credit they deserve (Northouse, 2021, p.356).

b. Holmes seems to value money and credibility the most so I think it would be useful for the

stakeholders to give her an ultimatum that if she is unable to work cohesively and ethically with

the stakeholders, they pull out. I think standing by the project team and other stakeholders to

support the company’s goals ethically could humble Holmes’ self-confidence.

Holmes cannot successfully run a company or build the intended machine without a

strong, knowledgeable team. I think the team being able to practice a more dominant and

individualistic type of followership would be an ethical way of standing up for themselves.

c. Building trust with stakeholders and team members starts with honesty and transparency.

Being able to persuade investors and partners will only take the project so far; delivering a

successful machine is going to take a strong team and a strong partnership with investors and

partners from beginning to deliverable. Short term effects for key stakeholders would be

allowing them transparency to project plans and finances. They would be willing to continue to

invest in the company and could provide key feedback and suggestions to help drive success.

Long term effects would be sharing honesty in the failed prototypes in order to deliver a proper

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machine built by Theranos with stakeholders and building out project plans to add additional

external support. Rather than driving away team members, make them feel valued and provide

a schedule that’s feasible, and a relationship built with trust and respect through an ethical

leadership style (Fugate, 2022, p.127).

d. A potential unintended consequence that could arise would be the ultimatum doesn’t have

the affect we were looking for. Investors and partners pull out and she’s able to find other

investors to replace them, ending up with the same result but even more stakeholders are

negatively affected by her fraud.

If the team members demonstrate a more dominant style of followership, Holmes could

retaliate as feared and make working conditions even worse. This could drive the team

members to quit or be fired, putting the development further back or in jeopardy. If the correct

talent isn’t hired, the developments could be potentially dangerous.

e. The medical community could’ve been affected negatively if the current investors are

replaced with unethical or less experienced investors. The fraud may have continued, putting

communities at risk with Holmes’ false reports and demonstrations.

f. I think my solution would work in an ethical manner because it’s putting the team forward

and centered around honesty. I think they would reduce the causes because people are

standing up to the unethical leader that is Holmes. There is potential for her to ignore the

efforts, but I do believe if stakeholders are persistent, they can change her mind in some ways.

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References

Fugate, M. (2021), Managing Business Ethics and Your Career. Sage.

Northouse, P. (2021) Leadership: Theory and Practice (9th edition). Sage.

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