The “best practices” corrupting business, with Eric Ries and Krista Tippett

SPEAKER_1 (0:01)

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Eric Ries (1:42)

Companies that have been rated to have good governance have performed worse for their shareholders than companies rated to have bad governance.

Costco has terrible governance. Patagonia, if it was rated, would have the worst possible governance. Because we live in the era of shareholder primacy. If companies cannot be instantaneously bullied to do whatever shareholders demand, that's considered bad governance. So we glorify weak leadership, weak structure, weak cultures. But is that really what we want?

Bob Safian (2:10)

That's Eric Ries, author of The Lean Startup, recorded live at the Masters of Scale Summit in San Francisco. In this special episode, Eric talks with Krista Tippett, host of podcast On Being and National Humanities Medal recipient, about his new book, Incorruptible, and why some of the business world's most common best practices need to be reconsidered. Pointing to real world data, Eric challenges all of us to rethink basic assumptions about what fuels success, whether our motivations and KPIs are pointed in the right direction, and what drives true long-term value.

The implications for the future of our society are intense, and the urgency in an AI era is high. So let's get to it. Here's Krista and Eric.

Krista Tippett (3:05)

This is the segment of Masters of Scale, where we ponder a catastrophic blind spot in what you think you may know about the greatness of scale.

Eric, you've written this book, Incorruptible, Why Good Companies Go Bad and How Great Companies Stay Great. And you say that the book is littered with open secrets and hidden truths. This book also is a bit of, I don't know, an evolution, a corrective, to a lot of the wisdom that you have imparted across years helping people create value and grow and scale.

Eric Ries (3:44)

I don't write anything except for my own personal suffering and pain, you know.

The curse and the blessing of being known for 15 years now as the Lean Startup guy is that every day of my life, without exception, somebody calls me for advice about how to start a company or revitalize an existing company or work in a government or nonprofit. I mean, it's just been an incredible variety of things. I've helped hundreds of people, thousands of people. I've lost track, create companies and become incredibly wealthy and have all this success. And I'm immensely proud of all that. That's been wonderful. And I've seen the dark side of this business too, because so many of those companies have been destroyed. And they didn't, you know, some of them failed because they didn't do a good job.

Krista Tippett (4:27)

And they were destroyed even while they were succeeding.

Eric Ries (4:30)

It was their very success that led to their failure. It was scale that ultimately was their undoing. And we're not supposed to talk about that. I feel like it's like a taboo subject. But all of us have had the experience. I've been on book tour now a few months, and I do this with audiences all over the top. If I ask people, raise your hand if you have like a favorite product. Everyone has a favorite product.

Was it successful? Did it scale? Did it raise money? Was it taken over by private equity? Did it go public and acquired by a public company? Everyone's got a story like that, right? All of you do? I say, great. Can anyone just tell me a quick story about a time where thanks to that massive infusion of financial resources, the product got better?