Theranos, Inc.: Managing Risk in a High-Flying Biotech Start-Up

Author
Kelley, C.
Region
North America
Topic
Strategy & General Management
Human Resources & Organizational Behavior
Entrepreneurship
Length
15 pages
Keywords
Brand Management
corporate cluture
crisis management
customer communication
entrepreneurship
healthcare
investor relations
media relations
reputation management
Copyright Holder
Notre Dame
Student Price
$4.00
Target Audience
Graduate Students
Undergraduate Students

Theranos became one of the most exciting start-ups in Silicon Valley when it introduced a simplified blood testing method that had the potential to help countless people. However, a 2015 Wall Street Journal article changed everything. Suddenly, Theranos went from being viewed with praise to suspicion.

Learning Outcomes
  1. To examine the responsibility of the company in a highly regulated industry that releases a technology to the public with little to no oversight.
  2. To provide an example in which a company issues statements at odds with the available information.
  3. To analyze a company’s ability or inability to control the narrative after a whistleblower speaks to a highly credible news source.
  4. To demonstrate the conflict between transparency and secrecy in technological innovations in terms of regulation.
  5. To encourage discussion regarding the interpretation of and trust in significant technological advances.

Submitted by Giblin-Colleen on Apr 29, 2024

Rating
5
Average: 5 (1 vote)

First, this company is the subject of two forthcoming documentaries, and Jennifer Lawrence has signed on to play the CEO Elizabeth Holmes in the movie adaptation of the best selling book Bad Blood. This is all to say: we have the students' attention on this one!!!

An incredible story that is only going to become more prominent in cultural conscience over the next few years, so it makes sense to adopt this case now in our teaching. There are several viable themes, but as a marketing prof I'll say the most likely candidates for me personally would be creating and delivering value (or not...), public relations, entrepreneurship, and ethics.

I ended up wanted to go an even more specific direction for the MBA decision making elective I am currently teaching, but I would certainly come back to this case for a more general overview of Theranos next time I teach my core course. In particular, I recommend pairing this with a discussion on the WSJ article "Craving Growth, Walgreens Dismissed Its Doubts About Theranos." I plan to use that supplement to illustrate bounded awareness and further probe the decision making process why Walgreen's was so desperate for this cobranding opportunity they failed to conduct due diligence. I also recommend integrating documentary video clips as they come out--Nightline has released a short excerpt of their upcoming documentary and I am thinking that priming students with that clip (~12 minutes) will get them super interested to read this case.