Beruflich Dokumente
Kultur Dokumente
GUNARSO Nicholas
Similarity : 30%
Achieving those objectives requires the organization to have good leaders. Leadership
becomes the primary driver for growth, development, and innovation in any organization.
However, being a good leader is not easy and not something that everyone can do.
Theranos Inc. scandal has directly damaged its investors, its employees, and also
the company itself, making the company has bad images in public. The case is caused by
internal factors, which are the leadership style and the followers, and external factors,
coming from the situation created around the company. Analysis of the case, to what
extent does the toxic triangle model can explain the reason behind an event can occur,
will be the scope of work in this case study. Also, giving constructive recommendations
to prevent the issue will be presented. First, an explanation regarding the literature of the
leadership, destructive leadership and toxic triangle will be presented. Secondly, there
will be an explanation about the case study and will be continued with discussion to
correlate the theories and the scandal provided in the case study. Thirdly, there will be a
Early identification and preventive measures will save many people, including the
companies. The problems raised by the case study can be good learning for other leaders
1
LITERATURE REVIEW
Leadership is a concept that has been used countless times from scholars, but it is
still hard to describe the exact definition of it. In 2017, Sultan Aalateeg summarized some
leadership definitions by some scholars. First, Bartol and Martin (1998) described
leadership as the process of influencing people to achieve organizational goals (Bartol &
Martin, 1998, cited in Aalateeg, 2017). Second, Antokanis, Avolio, & Sivasubramaniam
(2004) defined leadership as the nature of the process of influence – and its resulting
outcomes – that occurs between the leader and the followers, and how this process of
(Antokanis, et al., 2004, cited in Aalateeg, 2017). Based on these explanations, leadership
goals using certain abilities possessed by the leaders, which is similar to the definition
what needs to be done and how to do it, and the process of facilitating individual
The efficacy of the leadership process can be determined by how well a group canachieve
its objectives and how the leader has positive impacts on followers and society (Padilla,
Kaiser, & Padilla, 2007; Yukl, 2010). To achieve positive goals usually, a two-way
leadership efficacy, taking into account the interaction between leaders and followers
(Yukl, 2010). This theory explained that transformative leadership appeals to followers’
moral values in an effort to raise awareness of ethical issues and mobilize their energy
and resources to reform institutions (Yukl, 2010). This theory suggests that the leader
transforms and motivates followers by 3 ways, which are raising awareness of the
importance of task outcomes, encouraging followers to surpass their own self-interest for
the sake of the team, and activating their higher-order needs (Yukl, 2010).
behaviour: idealized influence (behaviors that generates strong follower emotions and
identification with the leader), intellectual stimulation (behaviors that boosts follower
awareness of issues and affects followers to view issues from different perspective),
(Yukl, 2010).
Destructive Leadership
destructive leadership (Padilla, et al., 2007). They consider that this type of leadership
welfare. Over the long term, such a process is alienating because the process fails to make
followers have meaningful goals toward the outcome (Padilla, et al., 2007).
Destructive leadership can be targeted to leaders (personal destructiveness) or the
company and its internal members and external stakeholders (Padilla, et al., 2007).
Personal destructiveness can be seen as unwanted things that have harmful consequences
for leaders, such as reprimands, criminal record, poor reputations, or even failure to
succeed in the career of leaders (Padilla, et al., 2007). While the destructiveness of
organizations can be seen as members when misery was added to followers, such as
Padilla et al. (2007) explained that five instruments can be used to identify
destructive leaders, which are charisma, narcissism, personalized use of power, negative
In general, leaders are characterized by a need for power (McClelland, 1975, cited
in Padilla, et al., 2007). Charismatic and narcissistic leaders are mostly related to
destructive leaders, who often use their power for self-serving end in a different way
(Padilla, et al., 2007). Charismatic leaders use their visions, self-presentational skills, and
unwarranted credit, blaming others for their mistakes, and covering up their mistakes
(Padilla, et al., 2007). Narcissistic leaders, on the other hand, abuse their power by
claiming that they have special abilities inside them and wanting unquestionable
obedience from their followers (O’Connor, et al., 1995, cited in Padilla, et al., 2007). It is
known also that narcissistic leaders are self-absorbed, ignore others’ points of view, and
self-promotion (Padilla, et al., 2007). These types of leaders use control and coercion to
impose their goals while censuring opposing views (Padilla, et al., 2007).
themselves in terms of negative life stories, usually in the form of childhood adversity
associated with using coercive influence techniques (Padilla, et al., 2007). These bad
experiences can lead leaders to have an ideology of hate. Using hate, leaders legitimize
the use of violence and retribution to finish a job (Strange & Mumford, 2002, cited in
combined with susceptible followers, and conducive environments (Padilla, et al., 2007).
The toxic triangle’s second domain is susceptible followers. Followers are divided
into two groups: conformers, followers who follow destructive leaders based on their fear,
and colluders, followers who participate actively in the plan of the destructive leader
(Higgins, 1997, cited in Padilla, et al., 2007). Each group of followers has different
purposes. Conformers try to mitigate the effects of not along while colluders pursue
personal gain by affiliation with a destructive leader (Higgins, 1997, cited in Padilla, et
al., 2007).
similar perspective with their leader’s point of view (Padilla, et al., 2007).
2005). Providing higher salaries and offering a comfortable environment for the followers
are the main reasons why this type of followers still follow toxic leaders (Lipman-
Negative Self-Evaluations
capability (pictured as low self-esteem, low self-efficacy, and an external locus of control)
(Padilla, et al., 2007), it will be easier for destructive leaders to manipulate and control
them.
Low Maturity
acts (Padilla, et al., 2007). Followers who lack a clear sense of self can internalize
destructive charismatic leaders’ value (Weierter, 1997, cited in Padilla, et al. 2007).
2007). Some leaders invite others to do a project to exceed the achievements norms of
followers have a similar concept with the leaders, a stronger bond between leaders and
followers will be created and followers will have more motivation to follow the leaders
Conducive Environments
The third toxic triangle field describes how rulers, followers, and their relationships
can be influenced by the environment (Padilla, et al., 2007). Padilla et al. (2007) propose
that disruptive leadership has four important environmental factors: instability, perceived
threat, cultural values, and absence of checks and balances and institutionalization
When there are demands for quick actions and unilateral decision making, leaders
are granted more authority to be the final executor (Padilla, et al., 2007). Once the
decision has been made, it is often difficult to evaluate the result (Padilla, et al., 2007).
Perceived Threat
Threatened people are more willing to accept assertive leadership (Padilla, et al.,
2007). They tend to follow and support the leaders more when given more threats, even
Cultural Values
ambiguity, collectivism, and high power distance (Padilla, et al., 2007). The climate of
situations causing individuals to seek strong leadership (Padilla, et al., 2007). Cultures
that emphasize collectivism require strong leaders to unite people (Padilla, et al., 2007).
In high power-distance cultures, followers are more tolerant of the power asymmetries
centers of power (Padilla, et al., 2007). To avoid the practice of abusing power, checks
and balances are required (Padilla, et al., 2007). Without balance control, any individual
Theranos Inc. is a consumer healthcare technology startup that was founded back
Elizabeth Holmes (Stockton, 2016; Tun, 2019). Initially, when Theranos was founded,
procedures cheaper and more convenient (Leiva, 2019). The first idea to develop the new
blood-testing method comes from her phobia of needles and also her mother’s and
grandmother’s experience who fainted at the sight of needles and the sight of blood
(Auletta, 2014).
The company developed a small device designed to draw, retain, and analyze a
droplet of blood from a patient’s fingertip and also its blood-testing machine, called
“Edison”, to run multiple tests on patient’s physiology within a short time and also at a
lower cost (Tun, 2019). Holmes, as the CEO of Theranos, even said that the tests would
be able to detect medical conditions such as cancer and high cholesterol (Carreyrou,
2015).
At first, Theranos seemed to be a quite promising company because the value of the
company in the market rose gradually (Tun, 2019). When Theranos was first founded in
2003, Holmes was able to secure not only high-profile investors but also strong
politicians, such as George Shults, Henry Kissinger, Betsy DeVos, Rupert Murdoch, and
many more (Leiva, 2019; Dunn, et al., 2019a). However, it turned out that the company
was using inaccurate technologies to run the blood test and was charged with “massive
unveiled a website that introduced its product to the world through press releases and
media features in 2013 after a decade of working in the dark (Leiva, 2019). Theranos’
products were first introduced to the consumers directly in September 2013 after the
company agreed with Walgreens to commercialize and use those products to the Arizona
area by opening “Theranos Wellness Centers” (Leiva, 2019; Sweeney, 2018). Since then,
many scientists started to question the technology which is used by Theranos because the
scientists believed that this blood tests may well turn out to be groundbreaking.
It turned out that Theranos has published little data regarding its technology to be
reviewed by other people (Auletta, 2014). The data that the company provided only giving
little information about the process in the device and also the quality of the result (Auletta,
2014). Holmes stated that the company is only trying to protect itself from competitors
while trying to do something unique and always avoiding to give actual information
(Auletta, 2014).
Before 2015, the company’s popularity remained unchanged and had positive
feedback. In fact, in 2014, Theranos was valued at almost $9 billion by Fortune magazine
(Tun, 2019). Following the increasing popularity of Theranos, Elizabeth Holmes, as the
CEO of this company also began to be regularly featured in high-profile media platforms
On 15th of October 2015, John Carreyrou, a reporter from the Wall Street Journal
released an article regarding Theranos based on his interview with Theranos’ former
deceiving the public (Carreyrou, 2015). The ex-employees exposed that during 2014,
Theranos was not able to deliver accurate results from its “Edison” machine, a machine
which is developed by Theranos to run multiple medical tests based on only a few drops
of blood (Carreyrou, 2015; Stieg, 2019). Moreover, it turned out that during 2014, the
company only managed to do 15 tests out of 190 tests using its “Edison” machine.
Based on Carreyou’s report, the results given by Theranos seemed inaccurate when
they were compared to hospital results (Carreyrou, 2015). The former employees stated
that the company is often not using the “Edison” machine to run the tests. The tests were
conducted in the traditional machine and done by manipulating the volume of the blood
samples taken from patients through a dilution process. Through this process, the
company increased the volume until it satisfied the volume specifications required. the
concentration of substances in the blood was changed and being measured to fall below
the machines’ allowable range which was causing a higher chance of erroneous results
(Carreyrou, 2015).
In the same report, John Carreyou was able to expose another leaders’ flaw
regarding the relationship between the leaders and the workers. In May 2013, Ian
Gibbons, who was the first experienced scientist hired by Theranos, was found dead by
committing suicide. Through the information given by Ian Gibbon’s wife, Rochelle
Gibbons, the scientist was afraid to get fired because of his argument towards the
company’s “Edison” machine (Carreyrou, 2015). Long before Theranos launched its
technology in Arizona, Gibbons had found out that the technology had flaws in 2010.
Hearing this news, the CEO was frustrated and decided to fire Gibbons. However,
Gibbons was quickly rehired with lower responsibilities (Dunn, et al., 2019a).
Gibbons remained vocal about the inaccuracies of the technology and was called to
meet Elizabeth on the 16th of May 2013. Being afraid to be fired again, Ian Gibbons finally
decided to commit suicide (Carreyrou, 2015). A week after Ian Gibbons’ death, the
company reached out to his wife and sent her two letters. The first one was a letter which
demanded all the intellectual property and any other data relating to the technology to be
returned to the company. The second letter consisted of a warning from the company’s
lawyers for not telling anyone what happened to her husband (Dunn, et al., 2019a).
Rochelle Gibbons even stated that the company never send any condolences to her even
the fact that her husband has worked for the company for almost ten years (Dunn, et al.,
2019a). This story gives a glimpse of explanations that the relation between the leaders
Based on Rochelle Gibbons’ story, it turned out that the company gave pressures of
lawsuit and intimidations to Ian Gibbons because he did not go along with the company’s
opinions about “Edison” (Dunn, et al., 2019a). Ian Gibbons stated that he did not like
Theranos for its fraud yet he also did not want to be unemployed and still looked to the
Theranos’ opportunity as a bright new chapter for him (Dunn, et al., 2019a).
On 14th of March 2018, the U.S. Securities and Exchange Commission (SEC)
charges Holmes with the accusation of raising more than $700 million from investors
through an elaborate, years-long fraud (Leiva, 2019). Holmes, then, is stripped of her
control of the company and the company was forced to close and return millions of shares
to Theranos (Leiva, 2019). Also, she is banned to serve as an officer or director of any
After this incident, some former Theranos employees have not got their proper job
due to the stain of Theranos on their resume (Fiegerman & O'Brien, 2019). Some of the
former employees even stated that the company was able to keep its workers inside the
company’s bubble (Fiegerman & O'Brien, 2019). The scandal created by Theranos hurts
its employees, its investors, its consumers, and even its leaders and to anticipate such
Sometimes theories have a problematic relationship with practice and can not fully
explain why some problems happen. The same issue occurs in the toxic triangle model
proposed by Padilla et al. (2007). Padilla et al. stated that there are three components in
the toxic triangle model, which are destructive leadership, susceptible followers, and a
conducive environment (Padilla, et al., 2007). Thus, how far can this model explain the
Initially, when Elizabeth Holmes build the company, she wanted to give positive
However, during the process, it turned out that Elizabeth Holmes possesses three
power.
Elizabeth Holmes does not want to listen to her employees' opinions and feedback about
the development of “Edison” machine, especially when the feedback is negative (Dunn,
et al., 2019b). Indicating that she does now want to listen to others’ opinions and force
other people to give the criticism she wants. Another indication of narcissism that can be
observed is that she wants full obedience from her followers. Ana Arriola, the former
chief design architect in Theranos, commented on Holmes' action towards her employees
who disagreed with her opinions. She said that every employee who disagrees with her
will directly be terminated which she thought as something unusual (Dunn, et al., 2019b).
charismatic leaders. She was able to convince many investors and many scientists to
induce new funding and workers into the company, by exaggerating the company’s
products (Bilton, 2018). Initially, in the eyes of some people, Elizabeth Holmes has the
charisma of someone who is brilliant and can revolutionize medical industries (Dunn, et
al., 2019b).
that many people suffered. People who are willing to be the test subjects of the company
are given inaccurate data. This incident can endanger the live of those people. Moreover,
due to Elizabeth Holmes’ leadership, many former employees are facing a pretty difficult
future.
In the case of Theranos, there is another domain of the toxic triangle model that can
the case of Theranos. This type of follower can be identified by looking at Ian Gibbons
and other scientists in Theranos. Ian Gibbons is willing to stay in the company to develop
the company’s product even though he has been disappointed by the company several
times (Carreyrou, 2015). Ian Gibbons spends his ten years of life to develop the product
and based on his wife’s story, Ian seems to put deep thought about how to make the
machine work well (Dunn, et al., 2019a). Another good example can be examined from
The reason behind the ambition of the followers can not be fully explained by the
theory. Based on Padilla et al. (2007), colluders followers use their ambition to pursuit
society by inventing the machine and making improvements (Dunn, et al., 2019b).
Another implication that can be seen from this case is that not everyone in Theranos has
ambition, some of them may just have curiosities about the technology and started to join
the company, such as Tyler Shultz and Erika Cheung (Dunn, et al., 2019c).
Looking at the third domain in the toxic triangle model, which is conducive
environments, two distinctive characteristics can be identified. First, the situation which
is created in Theranos by hiring strong political figures to the company makes the
employees become pressured. They are forced to follow the company regulations and
whenever there are people who endanger the company, Elizabeth will try to get rid of
them. The pieces of evidence can be seen through what the company do to Ian Gibbons’
wife (given letter not to tell what happen with her husband to public otherwise she will
be sued), John Carreyou (given letters not to publicize his works into public otherwise he
will be sued), Tyler Shultz (given a letter to appear in the court after the company knows
that he revealed the story to John Carreyou), and Erika Cheung (given a threatening letter
signed by David Boies even after she left the company) (Dunn, et al., 2019c).
Second, there are no checks and balances toward the company. For a long time,
many investors and people would believe Elizabeth’s statements about the company. The
possible reason behind this incident is that during that time, Theranos becomes a rapidly
the reason why most people become excited and forget to do checks and balances about
Based on the discussion, the main problem that actually occurs in Theranos comes
from the leader. The leader implement one-way communication in the company and does
not want to receive feedback from her employees, thus creating a situation where the
leader become very difficult to be resisted by workers and creates an unfavorable situation
in the company. This problem can be resolved only if there is two-way relationship
between the leader and the employees. Also the leader has to realize that her actions are
a solution that can be considered to solve the problem. In this theory, it is explained that
there is a two-way relationship between leaders and workers (Yukl, 2010). Moreover, this
theory also promotes positive moral values in the work environment to further develop
CONCLUSION
The Theranos scandal has given a lot of negative impacts to a lot of people and even
claimed lives. Many parties are involved in this case and it is not good to blame only one
group. Therefore, improvements that must be made in this case have to be done by
multiple parties.
Using the toxic triangle model proposed by Padilla et al. (2007), an analysis of this
corporate case can be made even though there is some limitations. In this theory, the
limitations are the absence of clear indicators that can be used to analyze each component,
thus creating a situation where subjectivity becomes the main components to do the
analysis. Also, not all the characteristics for each domain are able to explain the problem
and sometimes even contradict. For example, the ideology of hate and negative life
themes proposed to describe destructive of leadership are not suitable to explain this case.
In this case, the dominant aspect of the toxic triangle model is the destructive
leadership. The leaders not only limit the two-way relationship between the leaders and
workers. However, the blame is not only directed towards the leader. The company also
suffers due to its employees. Some followers are still persistant to support the leaders in
developing this impossible machine and the reason maybe comes from their ambition.
Thus, this condition slowly makes the leader more confident to realize the products and
To counter measure this problem, it is better that the leaders start to receive input
from others and implement the transformational leadership theory proposed by Yukl
(2010) by building a situation where the leaders and the followers work in an ethical and
constructive environment.
REFERENCES
Aalateeg, S., 2017. Literature Review on Leadership Theories. IOSR Journal of Business and
Management, p. 36.
new-company
Carreyrou, J., 2015. A Prized Startup's Struggles. The Wall Street Journal, p. 1.
holmes-jail-dropout/story?id=60707423
elizabeth-holmes-startup/story?id=60544673
fear-patients-health-started/story?id=61030212
story-bio-2018-4
what-happened-elizabeth-holmes-documentary
Lipman-Blumen, J., 2005. The Allure of Toxic Leaders: Why Followers Rarely Escape Their
Padilla, A., Hogan, R. & Kaiser, R. B., 2007. The Toxic Triangle: Destructive Leaders,
blood-test-technology-explained
Available at:
https://www.modernhealthcare.com/article/20181011/NEWS/181019973/walgreens-partners-
with-a-new-blood-testing-firm
unicorn.asp
Yukl, G., 2010. Leadership in Organizations. 7th ed. New Jersey: Pearson Education, Inc..