Monday, June 5, 2017

#156 / It Didn't Occur To Me

Pictured is former United States Secretary of State George P. Schulz. After serving as Secretary of State, Schulz served as a member of the Board of Directors of Theranos, Inc. There seems to be some considerable evidence that Theranos was a company engaged in a financial scam. 

Wall Street Journal reporter Christopher Weaver has written a number of articles about the company, which claimed to have developed a revolutionary new technology for taking blood samples. Weaver's most recent article, which appeared in The Wall Street Journal on Wednesday, May 31, 2017, said this in its two lead off paragraphs:

Two former Theranos Inc. directors said they didn’t follow up on public allegations that the Silicon Valley blood-testing firm was relying on standard technology rather than its much-hyped proprietary device for most tests, according to newly released court documents. 
In depositions, the highly decorated former directors—former U.S. Navy Adm. Gary Roughead and former U.S. Secretary of State George Shultz —who were board members when concerns of employees and regulators became public—said they didn’t question Theranos founder Elizabeth Holmes about the matter.

Schulz was specifically quoted as saying that he "didn't probe into" whether the company's technology was working, adding: "It didn't occur to me." This is, actually, both alarming and all too common.

The Board of Directors of any company is ultimately responsible for what the company does. The Directors are supposed to make sure that corporate managers are running the company responsibly. When there is any credible suggestion that there are problems, the Directors are supposed to look into the matter, and take appropriate action.

In this case, though, Director Schulz said that "it didn't occur to me" to question corporate management, even when responsible sources, like The Wall Street Journal, were suggesting that the company was "faking" what it did. 

Unfortunately, it is not uncommon for those with ultimate responsibility to defer, unquestioningly, to the paid managers they have hired, when questions are raised about what those paid managers are actually doing. It happens in government, too, not just in the corporate world. 

Recently, the City of Santa Cruz has embarked on a "Corridor Rezoning" process that seems to be aimed at turning the City's four main transportation corridors into valleys of high-rise, "mixed-use" commercial and residential structures something like what you'd see in San Jose. 

As residents have found about this, they have become increasingly alarmed that a huge shift in the shape and character of their local community is being proposed, and large numbers of residents have come to the last two meetings of the City Planning Commission to protest. The kind of transformation that they fear is illustrated below, comparing the current "Buttery Corner," at the intersection of Branciforte and Soquel Drive, to a simulation of what the scale of the buildings that could replace the current structures would be like, if the corridor rezoning plan is enacted as currently proposed: 

Concerned residents have formed a new community group, Save Santa Cruz, to try to get this corridor rezoning process under community control, and to "Stop Overbuilding Santa Cruz." The very first suggestion of Save Santa Cruz was that the City Council should get involved, even though the current process doesn't call for that, so the Council could evaluate for itself what is happening. 

The City's Planning Staff and consultants want to carry out this process without any City Council involvement at this time, telling the Council that things are going well, and that the end result, coming early next year, will be everything that the Council could ever want.

From my perspective, having had twenty years as an elected official in Santa Cruz County government, this is the point at which the Council should intervene, and hold some meetings to get some direct testimony from the public, rather than relying simply on what their management staff is telling them. 

The City, in other words, should not be following the example of George P. Schulz, who "didn't probe into" the complaints that were being made about the organization for which he was responsible. Somehow (although that was his job), it didn't occur to Schulz to see if the complaints were valid.

I'm hoping that the Santa Cruz City Council doesn't make the same mistake, where this Corridor Rezoning process is involved.

Image Credits:
(1) -
(2) - Save Santa Cruz Photo


  1. Gary,
    The city government has a hierarchy of decision making and advisory bodies, as you know. For the planning and zoning decisions, there is a process which involves first the planning commission working through the details, alternatives, public input, and discussions. That's what they've been doing. Then after the Commission and staff work out a recommendation including alternatives, the matter goes to the City Council. From what I've seen, the lower levels (staff and Planning Commission) have been doing their duties to get public input on their proposals. If you had remained through the last Planning Commission meeting on the 4-corridor rezoning plan, as I did, you would have seen that the public input that you and many other residents provided that night had an effect on the commissioners' decision. The zoning plan was altered to alleviate some of the concerns of the public. I don't see any reason that the City Council should step in and take the process away from the Planning Commission at this time. Let the process continue, keep up the public input, be vigilant and don't walk out of the Planning Commission meetings prematurely.

    1. Thanks, Stanley. Naturally, I will be happy if the Planning Commission takes account of the public testimony. Several members of the Save Santa Cruz group did stay to listen. The fact that the Commission deferred the staff presentation until after the close of public comments made it impossible for any comment to be made on what the Commission was going to discuss, and this did not send the signal that public participation was welcomed. On the main point I made in this blog posting, while I understand the "normal" process, this is a situation in which what is happening at the staff / Commission level is causing great public consternation. The situation is NOT "normal." I think the Council should try to figure out what's going on, so they can apply any corrections they might decide were appropriate BEFORE everyone has to spend the next six months fighting about something that maybe doesn't even have to be fought about. I do have some experience in what elected public officials can and should do to make sure that the government of which they are in charge is actually responding to what the public officials want. What they can and should do is to question what's happening, and get some direct experience. The "trust the staff " approach can lead to some real problems, as the Theranos example indicates. The same phenomenon does happen at the local government level!


Thanks for your comment!