When doing the right thing is not always doing the easy thing.

Today's Wall Street Journal carries an article about Tyler Shultz, an employee of Theranos, who tried to do the right thing in informing his managers of his concerns about the accuracy of their novel/revolutionary blood testing technology.

The story chronicles the difficult path he has been on (and continues to be on) as a result of the company's abject failure in handling bad news from earnest employees. The fall-out is widely covered in the press, 60 Minutes and the courts.

Theranos has shuttered its testing in this area. Billions in valuation have vaporized. Board members are seen scurrying to a "board of counselors" to shield themselves from fiduciary liability in their failure to adequately act as stewards of the company. VCs and other investors are seen (to their shame) deflecting the business fraud, healthcare risk, technology fraud as a gender issue. Regulators are scrambling to re-assess how they could have missed such an obviously foreseeable fraud and cover-up for so long, and re-assessing the slap on the wrist they had recklessly given the founder and others.

In this article we focus simply on my visceral reactions to the WSJ story about Tyler's experience and the way it could play out (although without as much drama and high-profile machinations as in this case) in other companies--unless we use this as a high profile lesson in ethics, fiduciary responsibility, and the value of bad news.

What lessons can we learn? Leadership demands rigorous self-examination, unbending ethics and honesty. This also means engendering and nurturing a dependable level of trust in one's staff that bad news is uncomfortable, painful and perhaps threatening, but that it is essential to the success and operation of an ethical and good company. In a very direct way, bad news IS the fiduciary responsibility of all employees and managers.

In healthcare-related businesses such as blood laboratory testing, which is /was Theranos' business, the bar is much, much higher.

Beyond ethical, fiduciary, brand issues, are patients and clinicians that deal literally with life and death. This is not some clever app or some business or consumer shopping or chatting service that, if not perfect or even if horribly inaccurate, will simply result in customers / users leaving or abandoning the app or service or brand. It's not a game.

And in this case, in many senses, the investors, board, and exec team treated Theranos like "just another startup" with a "Unicorn" (multi billion dollar) valuation and a great founder story, technology story (fantasy as it turns out) and the darling of the many people rushing to bask in the glow of this fire and feed off of the plenty. They just didn't get it, or didn't want to get it.

And when it got uncomfortable, they closed ranks and to their shame, sought to deny the issues, vilify those with criticisms and put patients at risk and the trust in the entire blood testing industry and the potential and wonderful promise of technology-driven advances in healthcare at risk. This is unforgivable.

I won't replay the WSJ article or the many other news and commentary articles about the ongoing drama of Theranos. You can read it here. This is simply a real-life story of a young man that was trying to be truthful, ethical and true to his nature. He rightly recognized that this was potentially impacting thousands of unsuspecting patients and clinicians who were depending on the trust they had in Theranos' testing regarding the health of their patients. This is a sacred trust between clinician and patient. It is life and death for many. Clinicians on their part must have absolute trust in the laboratories and technologies providing these results. By direct extension it is a life-and-death level of trust. And this young man recognized the disconnect and sought to make his employer aware of the shenanigans and mis-deeds and help them clean it up, help identify the issues and solve them. And for this he got hammered.

Here is my note to the brave young man Tyler, and a few observations to leaders of companies and teams at all levels.

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Sometimes doing the right thing is not the easiest thing to do. 

And this defines great men and women of character.

I am proud to call Tyler my friend and I hope that if my daughter found herself in a similar position that she would do the same.

Without going into the specifics about Theraonos' failures (which others have done in exquisite detail) I would simply say to CEOs and managers at all levels, when an earnest employee comes to you with bad news, the smart, fiduciary, and honest response is not ire or cover-up or panic with respect to one's "valuation" or one's reputation/brand. Rather the obvious and universal response must always be to face the problem, fess-up to the board, customers and public, seek to fix the problem openly and transparently, and then reward the brave staffer who trusted you do things in an honorable and wise manner.

This is an abject failure of leadership at the Executive level, the board level, investors (deflecting the issue into a gender one), and al the while, ignoring the massive fraud happening at the expense not only of investors (which is a bad thing but does not hold a candle to the real fraud), but more importantly of trusting patients and clinicians, who are dealing with real people with real disease risk and real life consequences of potentially bad / incorrect /fraudulent test results.

This is not about a VC panicked and desperately doing damage control in defending a multi-billion dollar valuation and trying to explain to Limited Partners how they could have been so naive/stupid not to see this (or act on it more quickly)...

And it's not about "IP or privacy" (there can be no expectation of IP related privacy in the context of a massive fraud in testing for disease, and the imminent public health risk and direct implicit damage that is likely to occur with bad / fraudulent test results)...

And it is not about a CEO and executive team wanting to be kept ignorant of massive fraud and failure of technology so that they had "plausible denial" (which they did not, because they knew all too well about these technology failures or perhaps technology fantasy claims)...

It is about leading with a culture that says:

"if we have problems or issues, bring them to the forefront, because we want to find and fix them, and we celebrate those who help us in this way."

That is the only way to lead.

Those who don't will condemn themselves to ruin, as their employees, the ones who know the most about the product/service/technology will never truly engage and own the idea of quality, collaboration and "ownership" in excellence. They will just be drones collecting a paycheck.

And heaven help us all if that's how companies end up working. Especially in healthcare, financial services and large organizations like transportation, security and manufacturing.

Tyler is a good man and a brave man. He has paid a price that too few of us would readily sign up for. I stand with Tyler.

As for Elizabeth Holmes, not so much. And I think 2 years is 98 years too few to be banned from medical testing/laboratory or anything touching healthcare, IMO.

And as for Sunny Balwani, not so much either and I will keep him on the blacklist of CEOs and executives with whom I will never work and with whom I'd discourage anyone ever working or trusting or dealing with. And I'm sure there are more. There is no excuse for his behavior.

If he knew about this fraud and sought to discourage earnest employees from coming forward, he is not only culpable in massive fraud and the health risk of patients, but he is, by all measures, unfit to lead companies and unfit for investors' trust. That's my opinion and I'm sticking with it. If he was unaware of the issues, he is still culpable and still unfit for the trust of investors, as these leaders will never allow their teams to bring them bad news. This is the most dangerous type of manager.

There is also big shame and blame to the board of directors. This is your role. Shame on you for being blinded by the star power of your own show and forgetting what business your company is in. This is not an app company or a service company - it is a medical blood testing laboratory dealing in life and death matters that demand absolute trust from clinicians and patients. This is obvious but you seem to have missed the point.

This was monumental bad judgment, perhaps greed but more likely hubris and laziness and flattery of the spotlight of a "star" company. And again, this is not a spreadsheet or BI application, or a clever app or chatting service. Think. Think. Think.

News flash: It's not about money, guys. It's about health and well being of patients. Perhaps even you or your loved ones. That's a stupid reason to close ranks and act like there is no problem. See how that has worked out for you thus far.

Fiduciary responsibility means handling these situations with openness and integrity and honest investigation and ethical approach. Failure. Failure Failure.

Back to doing the right thing: 

Often not the easiest or most comfortable route, but the only route to take if you have character, ethics and in this case bravery.

I am proud of Tyler in this, and repeat the hope that my daughter and others I know and love would do the same thing.

I have been there before, but not in such a spotlight, and suffered short term for it, but came out in the end with a few scars, a bit exhausted, and ultimately happy that I stuck with my character, ethics and was true to myself. And those in the crucible with me ended up trusting and respecting me more for it.

If you find yourself in a similar situation, know that it will not be easy and it will not necessarily result in a "success" for you. But it will allow you to sleep at night.

Make no mistake, doing the right thing is painful and it creates self-doubt and some dark days.

But the sun does come out in the end and your true friends and allies will have shown themselves, (as will have the others).

Good on you, Tyler.

I'd have you work for me or alongside me any day. And I'd welcome bad news along with the good, because that's the only way we get better. It is as true in life as it is in business.