In Response: Don’t Celebrate Theranos’ Troubles

Learn from Holmes’ Vision

October 16, 2015
by Mike Dunkley

Recent articles in the Wall Street Journal have cast significant doubt on Theranos’ underlying technology and regulatory adherence, and also its ability to scale its business. These are appropriate concerns, and the pieces contain serious allegations about whether or not Theranos is following the appropriate regulations around the reliability of its testing results.

That said, the customer experience that underpins what Theranos aims to achieve remains strong. True enough, falling back on traditional methods of drawing blood, rather than the use of tiny vials of blood from finger pricks, does weaken its customer value proposition (especially for those, like Theranos CEO Elizabeth Holmes, who have a phobia of needles). But, as I wrote in a post last year, other aspects of the customer experience are quite compelling. These include:

  • Easy access for customers, via “Wellness Centers,” within five miles of their home, early, late, or during the weekend—a system that leverages existing pharmacy infrastructure and staff to bring healthcare into lower cost settings
  • Automation and standardization, combined with the ability for repeat testing, to eliminate the need and inconvenience of repeat sample donation
  • Same-day turnaround time, sample to result
  • Easy access to, and interpretation of, test data with longitudinal trends to provide actionable information for patient and physician
  • Transparent, low, and uniform pricing, whether a customer is insured or not

Taken together, these make up the value proposition to customers. Whether Theranos makes extensive use of proprietary “Edison” instrumentation, or is doing the bulk of its testing with instruments bought from Siemens AG, is not that important to its customers. If this approach allows Theranos to deliver on its customer value proposition and allows the company to scale profitability, then customers will not care and the business case remains viable.

However, customer and partner trust in the brand, along with adherence to the appropriate regulations, are also critical to success. If Theranos is discovered to have betrayed this trust or its interpretation of the regulations is deemed to be inappropriate or illegal, then we potentially have another “VW” in the making.

It will be easy for companies in the sector, whose current businesses are threatened by Theranos, to celebrate and congratulate themselves that they knew something was amiss. Better to take Theranos’ customer experience as a yardstick for their own offerings and to strive for continued improvement in experience for their own customers—any patient who has gone through the usual testing process knows the industry needs it.

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