A few months ago, early in the trial of Elizabeth Holmes and her alleged fraud with her startup, Theranos, columnist Andy Kessler wrote an op-ed piece in the Wall Street Journal entitled “Failure is Always an Option.” In his article, Mr. Kessler provided a great essay on how important failure is to the practice of entrepreneurship. In fact, as he points out, some of the greatest innovations of our time have come directly as a result of failure. Pivoting from a failed outcome is how many great companies and products have been built.
The topic of failure as a part of the entrepreneurial process is one that I have visited several times before in my blog, it is one I discuss with virtually all of my guests on the En Factor Podcast, and it is frequently featured in my classroom lectures and business training programs. In my books, See, Do, Repeat: The Practice of Entrepreneurship and Exploring the Practice of Entrepreneurship, I devote an entire chapter in each to the role of failure. In the case of the Holmes trial, the US courts have already devoted 4 months to the examination of the failed company and its founder. The trial is expected to continue for several more weeks.
As the trial progresses, there have been plenty of former employees, investors, and patients who have characterized Ms. Holmes as confident but misleading in her work. However, Elizabeth and her lawyers insist she is not guilty of fraud. Instead, they argue, she naïvely underestimated the challenges of her company and that she never intended to deceive. During her early testimony, admitting she wishes she had done some things differently, Ms. Holmes suggested that she was merely trying to keep her company afloat and moving forward. However, as her testimony continued, she turned to blame and placed the responsibility on an abusive relationship with her then COO and boyfriend.
Theranos has become a case study for better understanding how fear of failure and a lack of intellectual honesty can undermine even the most confident and charismatic entrepreneurs. It is a story of how a meaningful and valuable vision, can turn into a dark nightmare. Every entrepreneur needs to give some time to consider their own perspective on failure. As a society, we also need to think about how we consider and process failure.
In an earlier blog entitled “Fear of Failure,” I share some of the histories of how failure has changed from something external to becoming a label used to define us personally. Perhaps this is one reason we now have so many participation trophies. It has become too painful to ever be a “loser.” Yet, mistakes, failures, and unwanted outcomes are always part of the journey to accomplishment. It is in overcoming these failures that we find true satisfaction and personal growth – and as Mr. Kessler suggested – even greater innovations.
I am not in a position to judge whether Ms. Holmes committed fraud or not. That is the job of others who are in the courtroom right now. However, I would be willing to suggest that she was not intellectually honest and that, had she been so, she wouldn’t now find herself on the witness stand defending her actions. There were many problematic signs along the way, but that is a story for another blog. The more important lesson, for now, is that Theranos and Elizabeth Holmes had the good fortune of wonderful PR. They were on a mission to make changes to the system that would be of great value to many. But like one of my mentors often said, it can be dangerous to believe your own PR. I have seen this happen to many entrepreneurs. It can be intoxicating to be featured as someone who is changing the world. It can be intensely frightening when things start to fall apart. So much so, that it becomes harder and harder to speak the truth.
We have to begin by reframing failure. If Ms. Holmes had read my books, taken a class, or thoughtfully listened to the myriad of stories entrepreneurs tell about what they learned in their practice, she would have at least been required to consider the role of failure in the entrepreneurial process. She would have learned that failure can show us the way to success. Failing early, while there are still reserves and resources, gives an entrepreneur the opportunity to make the changes necessary to succeed.
Had she read my book or blogs, she would have also been introduced to the topic of intellectual honesty. What is Intellectual honesty and why might it have made a difference for Theranos? Intellectual honesty might be defined simply as a focus on seeking the truth even when it doesn’t agree with your own personal beliefs. It means not lying to oneself, not pretending to know the truth when you don’t, it means not omitting relevant facts purposely and it means giving credit to sources of information where possible. It seems Ms. Holmes missed the lesson on intellectual honesty.
Over the years I have had many people question the value of entrepreneurship education. They suggest that entrepreneurs are born and that the practice of entrepreneurship can’t be taught. I agree that motivation and passion, which are important to entrepreneurship, come from within, but there is still a lot to learn. Sure, these lessons can be experienced on the job, but I agree with Mr. Kessler, it would have been much better for Ms. Holmes to have learned this lesson from a classroom, podcast, blog, or book than the way she is learning it today.