As former Silicon Valley darling Theranos continues to unravel, I have a confession to make: I was a Theranos believer. I first met Elizabeth Holmes, the now-embattled CEO of Theranos, at TEDMED 2014 in San Francisco. I followed coverage of her company's rise to fame, marked by covers and feature articles in top business and tech media.
Like many others, I was captivated by her vision of bringing radical transparency to one of the old guards of healthcare -- the blood test. Her no-nonsense, Steve Jobs-esque persona was a sign that maybe the Silicon Valley approach could finally shake things up in healthcare. Here was a woman with an irresistible back story -- a whip-smart Stanford dropout who defied the odds to build a $9 billion company from scratch. Want to know what gets Silicon Valley all weak in the knees? Here it is: a hugely disruptive (read: lucrative) idea with a great origin story.
Fueled by enthusiasm from the Valley and the promise of innovation, vanguards of the healthcare industry including Walgreens and Cleveland Clinic struck partnerships with Theranos, lending further legitimacy to the company. But by late 2015, the carefully crafted story began to unravel.
Coverage of how Theranos has been brought to its knees continues to be extensive, so I won't rehash it. While there is much to be learned across disciplines -- from investing to corporate governance -- I'd like to focus on a few valuable lessons for marketers, particularly those of us at the intersection of health and tech.
1. Look under the hood. When considering a key partnership, especially with a self-proclaimed disruptor, take the time to conduct a thorough, expert-led feasibility check before buying in. Make damn sure your potential partner isn't, as the British say, "all mouth and no trousers." It has been reported that several investment funds with experience in healthcare passed on Theranos early on. Yet established leaders in healthcare, like Walgreens and Cleveland Clinic, missed the warning signs. Marketers more interested in the story than the facts run the risk of being burned, damaging their own credibility in the process.
2. Protect trust. The strength of a brand depends on trust. Customers, investors and employees must all expect that you're being open and honest, living up to your brand promise at every interaction. This isn't to say that companies must be perfect; mistakes happen. Theranos' most severe misstep wasn't product failure. It was the lack of transparency and ownership around this failure that undermined the fragile trust holding up the brand. In its quest for disruption, Theranos failed to remember that it is first and foremost a healthcare company, not a tech company. By potentially putting its customers' lives at risk, Theranos embodies an extreme example of violating its brand promise, neglecting its responsibility to the people it was built to help. To preserve trust, and thus your brand, measure every decision against your brand promise. And when mistakes happen, own up early with a pressure-tested crisis communications plan.
3. Invite collaboration. Powerful brands build credibility and relationships by solving problems that matter to their customers. And building long-term brand value hinges on devoting the necessary resources to understand the opportunities, requirements and obstacles to effectively deliver your vision.
Partner with those who have the ability to contribute the most relevant knowledge about your product, operations, and most importantly, your customer. The right advisors aren't always the big names. Theranos had a board full of prominent people, but none were experts in laboratory science. The best collaborators are often your most loyal customers or biggest critics. Invite them in, and discover more authentic ways to understand and meaningfully address their needs.
4. Innovate for the long-term. Innovation is essential, especially in healthcare. It drives new methods, materials and partnerships in service of creating a healthier society. Theranos did a spectacular job tapping into this demand for innovation. It built a narrative of rebelling against a profoundly broken system, and it was remarkable how many people believed in its promise even in the face of alleged fraud.
Future investment in innovation is at risk if breakthrough companies misstep this badly. In the healthcare space, Theranos has done tremendous damage to an already risk-averse industry. Marketers must retain focus on building and protecting long-term value that is mutually beneficial to their companies and customers, instead of chasing the quick win. Because sacrificing integrity and trust harms not just the brand in question, but the industry as a whole.
Ultimately, the life and death of Theranos illustrates how thirsty the marketplace is for significant innovation. Brands that transform and disrupt in meaningful ways will be the ones to earn customers and build sustainable competitive advantage. The Theranos implosion offers a chance for reflection, serving to remind us of fundamental best practices we should rely on to navigate the best path forward for our brands in this ever-changing world. Perhaps using these principles as a roadmap will even provide us the opportunity to thrive, alongside the next unicorns and giants.