Madrid, June 6, 2023.- There are personal and professional skills that a CEO cannot learn at university or at a business school. There are borders, red lines, known to all of us. Laws, ethics, respect for everyone, good practices, traditional and at the same time modernized management. Elizabeth Holmes is an American businesswoman, a great fempreneur who rose to heaven to the level of Steve Jobs (Apple). But with one big difference, Steve Jobs was able to create a tech giant. Elizabeth Holmes created a gigantic fraud.

In a nutshell: Holmes, 39, was found guilty in 2022 on four counts of fraud for defrauding investors and conspiracy, by wrongly claiming that her company’s blood tests could detect a range of ailments and diseases by developing methods that needed only very small volumes of blood, such as from a fingerpick.

Elizabeth Holmes is the perfect example of what a CEO should never do. Business schools around the world will mention her story as one of the most abhorrent in american management.

There are plenty of articles detailing the Elizabeth Holmes and Theranos fraud on the internet. I would like just to focus on the important lessons to be learnt from this hideous case, the Forbes magazine recently highlighted them:

1. Align your vision with ethical principles

According to research published by Harvard Business Review, companies with a clear purpose and values are more likely to be successful. This is because having a definite purpose and set of values gives employees a sense of direction, helping them make decisions about how to act in the face of challenges or difficult situations. Moreover, having a clearly defined purpose and set of values allows organizations to communicate more effectively with their customers and stakeholders, as they can be sure everyone understands what the organization stands for and how it operates. Additionally, having a purpose and set of values can help to create a strong culture within an organization, as it gives employees something to strive for and identify with—which can lead to increased engagement, productivity, and commitment.

That said, although Holmes envisioned creating an easy and accurate way to test blood, she could not carry it out ethically. Culture within her organization was plagued by deception and a lack of transparency. Had Holmes and Theranos been committed to a mission that valued integrity and openness, perhaps the company could have avoided certain scandals and its eventual downfall. Instead, prosecutors subsequently accused Holmes of inflating the company’s performance to deceive investors. The takeaway is that setting out a purpose and values for an organization can be highly beneficial, but only if they are adhered to and executed ethically. Elsewise, the consequences can be severe. Holmes’ story is a warning of what not to do in the realm of innovation and trust-building with stakeholders. But, if done right, it can be powerful. Theranos may have been a failed attempt to revolutionize healthcare, but it is important to remember the lessons we can learn from its story. Holmes’ vision of making healthcare more accessible and affordable may still be achievable, but it must take place within an ethical framework.

2. Transparency is everything

Honesty is the best policy for any business, as it builds trust and establishes credibility. Theranos’ downfall began when the company failed to be transparent about its technology. Holmes was accused of lying to doctors and investors about the accuracy of its tests. To prevent such an outcome, strive for transparency in every function—from operations to communications and customer service. According to an MIT Sloan School of Management study, companies that are more transparent about their social practices are more likely to receive a positive reaction from investors. Moreover, a study published by Harvard Business Review found that transparency can help companies to build trust with customers. So, make sure you’re taking the time to communicate with everyone and be clear about what you’re doing.

By promising a technology that could run hundreds of health tests with only a drop of blood, Theranos attracted notable backers such as former secretary of state Henry Kissinger and defense secretary James Mattis. However, the company did not deliver on its promises, and its lack of transparency effectuated the federal investigation, wherein jurors concluded that Holmes was not transparent about her business practices—a significant factor in her conviction.

3. Engage with your stakeholders

When thinking about the next steps for your business, don’t forget to involve those who have a big part in its success: employees, customers, suppliers, investors, and even the local community. Engaging with stakeholders helps ensure everyone is on board and working toward the same goal. You can use surveys, interviews, focus groups and other methods to get feedback on how you are doing and what areas need improvement. And don’t forget to take the time to thank those who have helped your company get where it is today. Showing appreciation for their efforts will go a long way in creating goodwill and fostering relationships.

Holmes did not consider the stakeholders affected by her company’s actions. In fact, many of those harmed by Theranos’ practices were customers and investors—those who had put their trust in the company. Consequently, jurors found Holmes guilty of four counts of fraud. So, ensure you treat all stakeholders fairly: it’s a vital part of growing responsibly.

4. Lead by example

As a leader, it’s your job to lead by example and create an environment of accountability. This means taking ownership of your mistakes, owning up to your failures, and ensuring you’re doing everything possible to rectify them. It also means asking for help when needed and not sweeping issues under the rug. Accountability ensures that you’re doing your best at all times and that you’re not taking shortcuts. In addition, being accountable creates an atmosphere of trust among those around you and ensures success.

Holmes’ defense suggested she was naive but ambitious in the trial’s opening statement. But the Securities and Exchange Commission (SEC) argued that Holmes was responsible and therefore accountable for her actions. Before her sentencing, Holmes, through tears, expressed regret for her actions. “I am devastated by my failings,” she said. “I have felt deep pain for what people went through because I failed them. I regret my failings with every cell of my body.”

In summary, when attempting to achieve success, remember the cautionary tale of Elizabeth Holmes and Theranos. Strive for transparency in all aspects of your business, engage with stakeholders, and lead by example. Doing so will ensure you’re creating an environment of trust, accountability, and responsibility—all vital to growing responsibly. Finally, remain focused on the success of your business and always remember that integrity is one of the most important qualities to have in order to be successful. Without which, downfall is usually always inevitable.