Ethics Class Part 2: How it went

University of San Diego campus

My nerves were on edge as I took the wheel of Rich Marin’s Tesla Model X. We were driving from his Escondido hilltop home to old town San Diego for an early dinner. The car wasn’t what was worrying me. My issue was about after dinner when we would drive to the University of San Diego campus and I would guest lecture in Rich’s graduate class on Law, Policy, and Ethics. Agreeing to speak in his class a month before meant choosing a case to study (I chose Theranos), doing the research, and structuring the two-hour class to allow the key ethical considerations to emerge. I also wanted to impart a few invaluable nuggets from my years in business.

My nervousness was mostly due to typical public speaking jitters and so many unknowns – what does the classroom look like, how will the audio/video work, will we arrive early enough or be rushed, how will the audience behave? Knowing myself, nervousness rarely helps bring out my best.  As we rode, I told myself: “You’ve got this; these situations typically go well for you, you’ve done your homework, now just relax and have fun. Things will all work out.”  Slowly I relaxed and by the time we found the classroom, my frame of mind was where it needed to be.

My preparations had involved reading about half a dozen books  and watching the movie. It is the one I mentioned in The Ethics Class Part 1 newsletter and, Rich assigned to the class as preliminary work. The movie, The Inventor: Out for Blood in Silicon Valley” was done in 2019, about two years after Theranos ran into all its trouble, but before Holmes and Balwani were indicted for fraud.  It is terrific and I recommend this documentary.  I also found a link to a video deposition Holmes did in 2017. This was revealing as I was able to hear Homes directly contradict, under oath, nearly all of the claims she’d made about Theranos and its technology.

In addition, one of the subscribers to this newsletter and a good friend, recommended “The Business Ethics Field Guide,” by Brad Agle, Aaron Miller, and Bill O’Rourke. It bypasses all the often boring “why’s” regarding ethics and focused instead on the how’s, creating 13 categories of ethical dilemmas, real-life stories for each situation and a basis for analysis and signposts for finding your way through each of them.

While practicing my presentation with Maggie, she gave me another example, closer to home than I had realized.  Some years ago, while editing a manual for the documentation company where she worked, she found a part number had been entered incorrectly.  She corrected it and sent the document back to the writer on the project. The next day she noticed he’d rejected her correction, forwarding it to the client uncorrected, with the wrong part number.  Confronting him on why he’d not taken her correction, he said it was a matter of “malicious obedience,” justifying his action by saying he’d been instructed, in no uncertain terms, to never make changes to an engineer’s mark-up.  He’d been told technical writers were not to second guess engineers – ever.  Maggie was furious and reported the incident up the chain of command and assumed the manual would be corrected prior to publication.  She was incensed when she later discovered it was not.  Should she contact the client directly and smear her company’s reputation or not? Choosing to be (or not to be) a whistle-blower is a very tough choice.

On the day before the class, Rich told me more about how this single class on business ethics fit into the storyline for the full course, Law, Policy & Ethics.  If you’ve not guessed, legal choices can be unethical and vice versa and policy can go either way as well.  The course will touch on not only ethics but impacts that need to be considered for stakeholders, which include shareholders and creditors, employees and consumers as well as suppliers and competitors. Arbitrage, markets & ethics get a deep dive as do a look at ESG (Environmental, Social and Governance, including anti-discrimination and socioeconomic investing).  He’ll end the class with a look at some of the fundamental concepts in business ethics, individual liberty vs. the common good, and how that affects capitalism, public policy, and civil society.  I hope Rich will be able to get me Zoom access so I can audit the entire course.

You can read Rich’s summary and impressions near the end of his recent newsletter here.  My favorite comment from Rich was this: “In twelve years of teaching I have never seen so much student engagement as we had during this debate.” My assessment is completely the same as Rich’s, although with a twist. My best college teaching experiences were always with highly engaged students.  For Wednesday’s class, I tried two approaches I’d used in the past to help move things in that direction.  The first was before the class began.  As students filed in I spoke to as many as I could. I asked where they worked, why they’d decided to enroll in this program, and what it was like taking classes at night while trying to hold down a job. Rich watched me as if he thought I was running for mayor.  The second step was to begin my presentation with an anecdote to subtly communicate it was okay to speak up, and their thoughts and ideas would be welcome. The above, combined with a contemporary and compelling case and the intelligence, preparation, and interest of these students, resulted in the unusually high level of involvement Rich’s comment points to.  The two hours flew by, all the key points were made and it was great fun.  As in nearly every interaction with graduate students in this age group, I came away having learned things I did not know and impressed with the generation who’ll take over for us when ours is gone.

Oh, one last thing.  Theranos and Elizabeth Holmes are about to get hot. Remember, you read about it here first.  An eight-episode series from Hulu called “The Dropout,” will go live March 3. There will also be a “Bad Blood” film based on John Carreyrou’s book directed by Adam McKay and starring Jennifer Lawrence scheduled to show up on AppleTV.   And last, if you have access to Apple Podcasts, you can follow “Bad Blood: The Final Chapter”, where John Carreyrou and Emily Saul discuss the testimony of witnesses in the trial and everything said by the lawyers and judge.

Business Ethics: An Oxymoron?

My friend, Rich Marin, has invited me to teach at one of his graduate business school classes in San Diego, on the subject of Evaluating and Using Business Ethics. While looking forward to this, it’s forced me to take several actions.  The first was to find a company around which to build an appropriate case study, one which could become a lens for evaluating the points I hope to make.  After some reflection, I chose the story of Theranos.  The jury had just found its CEO guilty of fraud charges this month (January 2022). The saga of this company’s trip from a $9B valuation to zero is compelling and provides an opportunity to discuss the ethical issues I plan to cover.

Next, I reviewed ethical issues I faced in my business career, as real-world questions faced by the presenter are sometimes the most memorable.  Then I dusted off and reviewed sources and inspiration for my ideas on right and wrong and tools I evolved for making decisions consistent with my values and beliefs. Finally, I found several books written by thinkers on ethics and read or re-read them, including one Rich assigned his students.  I’ll list these, as well as some videos at the bottom of this newsletter, with some links. This newsletter is as much to help me crystalize my thinking as it is to convey some thoughts to readers on why I believe this is such an important topic.

I believe ethics is not a theoretical abstract idea to be relegated to the classroom or pulpit. Ethics is practical and pragmatic, a tool for making the best decisions, in business and life.  It helps ensure our choices are consistent with our values, principles, beliefs, and norms.  The more difficult and ambiguous the decision, the more ethical considerations play an important, even crucial role.   Complicating things is the fact that right and wrong are often moving targets. While one may be tempted to believe the proper decision is only a matter of viewing alternatives against a backdrop of carved-in-stone rules or codified laws, it often is far more complex.

Next, I contend business ethics is not an oxymoron. While fraud at Enron, cheating clients at Goldman Sachs, illegal foreclosures at Countrywide Financial, and a Ponzi scheme by Bernie Madoff may seem like a trend, they’re all anomalies.  Most businesses struggle to operate within the law and some even adhere to strict ethical standards.  It is rare to join a decent-sized company today and not be given an employee manual containing a section on ethical considerations.  Some larger companies even have chief ethics and compliance officers, responsible for training, monitoring, and auditing compliance with laws and the company’s expressed values. Ethical failures, businesses have found, can lead to embarrassing messes that require massive effort and expense to clean up. Better to do it right the first time.

Is Business Ethics an oxymoron in “Fake It ‘till You Make It” culture?

Although I’d read some about Theranos and its charismatic CEO, Elizabeth Holmes, I was unaware of the whole story.   While my timeline in Silicon Valley overlapped somewhat with hers, she and her company were not on my radar. By the time they left their “quiet period,” I was long gone and so have no firsthand knowledge.  During a deep dive into the company, I was again impressed with how incredible the Internet is at chronicling and preserving nearly everything.  Besides books and movies, I was able to easily find some of the first news stories on the company.  I watched an early TED talk where Holmes outlined her dreams for the company and even found a clip of her on the stage with Bill Clinton.  I found the first of what would become many cover stories on Holmes which would pack newsstands, including Roger Parloff’s cover profile of her in Fortune Magazine in June of 2014 with the headline, This CEO is out for Blood as well as Ken Auletta’s in-depth article in The New Yorker in December of 2014.

Within a few days, I’d created a PowerPoint presentation with most of the key elements for a solid case study – a timeline of Theranos, information on the key players, and finally, the protagonist who made the decisions that we could scrutinize and discuss.

Since then I’ve engaged several good friends and former business colleagues in discussions on ethical questions.  Ethical questions impact a large number of contemporary issues and discussing them with so many intelligent people has been a world of fun – although I’m not sure it’s been as much fun for them as it has for me.

Ethical dilemmas are everywhere:

  • Early in the Covid crisis, nurses faced inadequate supplies of protective equipment and limited testing. They could go to work, putting themselves, their patients, and their families at risk. Alternatively, they could stay at home, knowing severely ill patients need nurses to be on duty. What to do?
  • As it relates to charges of voter fraud in the 2020 presidential election, some attorneys who represented those bringing lawsuits claiming fraud may be facing ethical issues with their state bars. On the one hand, every client deserves representation, even those with claims you may not agree with or might be unpopular.  On the other hand, it is something else to file baseless or false claims.  Every state bar has some version of a rule known as “the rule of candor.” It requires that lawyers shall not knowingly file false statements of fact or knowingly present false evidence to a court. The argument goes: by making allegations of voting improprieties without data to substantiate those claims, these lawyers might be violating the rule of candor. They could be disbarred. Which is the ethical choice: to give legal representation or obey the rule of candor?
  • And on voting itself: Should voters vote solely for their interest, or should they vote for the common good, whatever that is?
  • The U.S. Congress where elected officials vote not for the good of the whole (state or country) but for the segment that might re-elect them?

I will no doubt have more to say about all of this after the class, so stay tuned.  In the meantime, below is a list of the most compelling books, movies, and YouTube videos I’ve found on this topic:

Books

Right/Wrong – How Technology Transforms Our Ethics, by Juan Enriqez. A fun, entertaining, and thought-provoking look on how common wisdom and technology enable ethical behaviors.
Bad Blood: Secrets and Lies in a Silicon Valley Startup, by John Carreyrou.  A deeply well researched and compelling history of Theranos by the Wall Street Journal reporter who broke the story about the company’s misdeeds in 2015.
Justice: What’s The Right Thing to Do?  By Michael J. Sandel.I’m reading it a second time.  It is an easy read. Sandel weaves in the biggest ethical questions man has struggled with through the ages using contemporary situations and issues.  Highly recommended.
Something for Nothing: Arbitrage and Ethics on Wall Street, by Maureen O’Hara.  This book attempts to tease apart “legal” and “ethical” in a practical and educational way.  Rich recommends it for his class. Not being a finance person, I found it slow going.

Movies

The Inventor: Out for Blood in Silicon Valley – 2019  (Documentary – HBO) Well done, unbiased and thoughtful history of Theranos and what occurred. Many good interviews with key people and relevant historical footage.

The Real Adam Smith: Ideas That Changed the World – 2017  (Documentary in 2 parts – Curiosity Stream and YouTube). Adam Smith’s observations, chronicled in two books written in the 18th Century, on free trade, the nature of wealth, and moral behavior, remain valid in the 20th Century.  This show explores how his thinking changed the world in the decades after his death and how his principles are still part of modern thought. A highly compelling story.

YouTube Videos

Elizabeth Holmes, Theranos CEO at TEDMED 2014

The Significance of Ethics and Ethics Education in Daily Life | Michael D. Burroughs | TEDxPSU

Science can answer moral questions | Sam Harris

Spilling the Blood of a Silicon Valley Unicorn

Creating ethical cultures in business: Brooke Deterline at TEDxPresidio

In His Own Words: The Theranos Whistleblower  (Filmed at the Markkula Center for Applied Ethics)

Ex-Theranos CEO Elizabeth Holmes says ‘I don’t know’ 600+ times in depo tapes: Nightline Part 2/2

How Elizabeth Holmes sold the idea of Theranos to employees, investors: Nightline Part 1/2  (In two parts)

Theranos CEO Elizabeth Holmes: Firing Back At Doubters | Mad Money | CNBC

2015 Clinton Health Matters Initiatve: Disruptors in Healthcare

Theranos: How Did a $9 Billion Health Tech Startup End Up DOA?  (Berkeley Hass School of Business)

Building business on character ethic – Kevin Byrne at TEDxNoviSad

Ethical dilemma: The burger murders – George Siedel and Christine Ladwig

Justice: What’s The Right Thing To Do? Episode 01 “THE MORAL SIDE OF MURDER”  (Class at Harvard University)

Ethics in the age of technology | Juan Enriquez | TEDxBerlin