Passion Struck with John R. Miles - Why Good Companies Lose Their Humanity | Eric Ries - EP 775

Episode Date: June 2, 2026

Why do good companies lose their humanity? In this episode of Passion Struck, John R. Miles sits down with entrepreneur, author, and Lean Startup creator Eric Ries to explore a growing crisis hiding in plain sight: why so many people no longer trust the institutions that shape their lives. From global corporations and banks to everyday organizations, many entities begin with a clear mission to serve but gradually drift away from the core values that made them meaningful in the first place.Drawing from his groundbreaking new book, Incorruptible: Why Good Companies Go Bad and How Great Companies Stay Great, Eric explains how mission-driven organizations become vulnerable to "financial gravity"—the powerful systemic force that slowly pulls leaders away from long-term value creation and toward short-term extraction. Together, John and Eric examine why trust is the most valuable asset an organization can possess, how successful companies lose their soul, and what leaders can do to build institutions that remain aligned with their purpose for generations.Through the lens of real-world stories involving Costco, HEB, FedMart, Silicon Valley Bank, Walmart, Microsoft, and Amazon, this conversation reveals why organizational trust is eroding across society and what it takes to create companies that people genuinely believe in.In this episode, you will learn:The hidden force of financial gravity and how it quietly reshapes organizational behavior.Why organizations routinely lose their humanity as they become more successful.The tragic story of Sol Price, FedMart, and the governance secrets that protect Costco today.The critical operational difference between shareholder primacy and mission primacy.Why Silicon Valley Bank’s collapse offers vital lessons about corporate purpose and integrity.The concept of the invisible leader and why shared purpose shapes behavior more powerfully than hierarchy. Practical blueprints for founders, executives, entrepreneurs, and leaders who want to build organizations that endure without losing their soul.Passion Struck is the #1 Health and Wellness Podcast and personal growth podcast dedicated to helping people live intentionally, unlock human potential, and create lives filled with meaning, purpose, and mattering.Limited Time Offers:FODZYME: Get 30% off your first order when you go to ICanEatAgain.com/PASSIONSTRUCKShopify: Sign up for your one-dollar-per-month trial today at SHOPIFY.COM/PASSIONSTRUCKFull Show NotesDownload the companion Substack Article and WorkbookLearn More About Eric Ries: https://www.ericries.comGet Eric's New Book: Incorruptible: Why Good Companies Go Bad and How Great Companies Stay GreatConnect with John Pre-Order The Mattering Effect: https://matteringeffect.com/Book John to Speak: https://johnrmiles.com/speaking/Keynotes, books, podcast, and resources: https://linktr.ee/John_R_MilesChildren’s Book — You Matter, Luma: https://youmatterluma.com/Substack: https://www.theignitedlife.net/Support the Movement: https://startmattering.com/. Every human deserves to feel seen, valued, and like they matter. Wear it. Live it. Show it.DisclaimerThe Passion Struck podcast is for educational and entertainment purposes only. The views and opinions expressed do not necessarily reflect those of Passion Struck or its affiliates. This podcast is not a substitute for professional medical or psychological advice.

You know what's frustrating? Going out to dinner, excited for the meal, and then spending the next few hours regretting it. For a long time, I thought certain foods just didn't agree with me anymore. Garlic, onions, pasta, even healthy foods like beans. It always felt like a trade-off. Then I found Fodzine, a tasteless powder you sprinkle right onto your food. It helps break down FodMaps, the hard-to-digest components in foods that can cause bloating, gas, and pain before they cause discomfort. Think of it like lactate, but for garlic, onions, wheat, beans, cheese, and other common foods. It mixes right into your food, comes in portable packets, and honestly just makes eating feel enjoyable again. And it was created by Harvard-trained scientists and has been

clinically studied. We're so excited to partner with Fodzheim and offer you 30% off your first order. When you go to I Can Eat Again.com slash passionstruck, that's I Can Eat Again.com slash passion struck for 30% off your first order. Finally, you can enjoy your favorite foods without the pain. Just go to I Can Eat Again.com slash passion struck. Starting something new can be terrifying. I still remember launching Passionstruck and thinking, what if nobody listens? What if this completely fails? When you build something that matters to you, there's always the moment of doubt before you hit publish. But sometimes the biggest breakthroughs in your life start with betting on yourself. and if you're building a business today, having the right platform behind you makes all the difference.

That's where Shopify comes in. Shopify powers millions of businesses around the world and gives you everything in one place. From beautifully designed online storefronts to AI tools that help you write product descriptions, improve images, and streamline your workflow. And when it comes to marketing, Shopify helps you create email and social campaigns so you can actually find your audience. It's time to turn those woodifs into Che-Ching with Shopify today. Sign up for your $1 per month trial at Shopify.com slash passionstruck. Go to Shopify.com slash passionstruck.

That's Shopify.com slash passion struck. Cha-ching. Starting something new can be terrifying. I still remember launching Passionstruck and thinking, what if nobody listens? What if this completely fails? When you build something that matters to you, there's always the moment of doubt before you hit publish.

But sometimes the biggest breakthroughs in your life start with betting on yourself. and if you're building a business today, having the right platform behind you makes all the difference. That's where Shopify comes in. Shopify powers millions of businesses around the world and gives you everything in one place. From beautifully designed online storefronts to AI tools that help you write product descriptions, improve images, and streamline your workflow. And when it comes to marketing, Shopify helps you create email and social campaigns so you can actually find your audience.

It's time to turn those woodifs into Checheng with Shopify today. Sign up for your $1 per month trial at Shopify.com slash passionstruck. Go to Shopify.com slash passion struck. That's Shopify.com slash passion struck. Chiching. Coming up next on Passionstruck. Most organizations, frankly, are lying about what they're all about. They have a mission statement that sounds very lofty.

But if you read their legal documents, they have a legal purpose that is something different. Quite often, they have a lofty purpose. like I tell the story of Silicon Valley Bank. That was my bank before it collapsed. That's why after it collapsed, I wanted to know what happened. They had a lofty mission that was a mission statement that was like to advance the innovation economy or to move the innovation economy forward. It made me so proud to be a customer.

Oh, yeah, that's exactly right. But they're bank, their legal papers are all public. And you can read in the documents it says that their legal purposes to maximize shareholder value. If you have this divergence between mission and purpose, eventually the hypocrisy becomes too great and the thing collapses. That's what we see over and over. Welcome to Passionstruck. I'm your host, John Miles.

This is the show where we explore the art of human flourishing and what it truly means to live like it matters. Each week, I sit down with change makers, creators, scientists, and everyday heroes to decode the human experience and uncover the tools that help us lead with meaning, heal what hurts, and pursue the fullest expression

of who we're capable of becoming. Whether you're designing your future, developing as a leader, or seeking deeper alignment in your life, this show is your invitation to grow with purpose and act with intention. Because the secret to a life of deep purpose, connection, and impact is choosing to live like you matter. Hello, friends, and welcome back to episode 775 of Passionstruck. Today we begin a brand new monthly series I'm calling The Connection Crisis, why we feel so disconnected and how we find our way back to each other. Before we begin, I want to take a moment to reflect on where we've just been.

Throughout May, our Forged and Adversity Series explored how struggle shapes resilience, meaning, transformation, and ultimately contribution. We examined how adversity changes us, how people recover from setbacks, and how our most difficult experiences often become the foundation for growth. Last week, Eric Zimmer, host of The One You Feed, joined me for a thoughtful conversation about sustainable transformation and why lasting change is built less through dramatic reinvention and more through small, repeated choices that shape who would become over time. Then Walter Green helped us explore a different dimension of growth,

profound human need to know that our lives matter to someone else, and the importance of expressing gratitude, recognition, and appreciation, while we still have the opportunity to do so. As I reflected on those conversations, I found myself thinking about a deeper thread connecting them. Human beings can endure extraordinary adversity when they feel connected, to purpose, to relationships to community,

into a sense that their lives carry significance. Yet many people today are struggling with something that extends beyond hardship itself. They're struggling with disconnection. We see it in rising loneliness. We see it in declining troubles. We see it in workplaces where people feel increasingly disengaged, in communities that feel less cohesive, and in institutions that many no longer believe represent their interests or reflect their values.

One of the greatest paradoxes of modern life is that we have more ways to communicate than any generation in history, yet many people feel increasingly isolated from the people, places, and systems that shape their lives. When we think about disconnection, we often focus on technology, social, media or changing social norms. Those factors certainly matter, but there's another dimension of the connection crisis that receives far less attention, the gradual erosion of trust. Trust is what allows relationships to deepen. Trust is what allows communities to flourish. Trust is what allows institutions to serve the people they were created to help. And when trust begins to weaken, connection often weakens with it. That idea sits at the heart of today's

conversation. My guest is Eric Reese, entrepreneur, innovator, an author of one of the most influential business books of the past two decades, The Lean Startup. In his new book, Incorruptible, Why Good Companies Go Bad and How Great Companies Stay Great, Eric explores why organizations that begin with strong values and meaningful missions often drift away from the very principles that made them successful in the first place. Together, we discuss trust, leadership, mission drift, organizational culture, and the forces that cause institutions to lose sight of the people that they were originally built to serve. But beneath those topics is a larger question that affects every one of us. What happens when the systems we depend on stop feeling

human? And what does it take to rebuild trust once it has been lost? I can think of no better conversation to launch this series. Before we dive in, if Passion Struck has ever helped you see your life differently, please consider sharing the show with someone who might benefit from it. Leaving a rating or review on Apple Podcast or Spotify helps more people discover the show and subscribing on YouTube allows you to catch all our full conversations and weekly clips. Thank you for being part of this community. Now, let's dive in to my conversation with Eric Reese.

Thank you for choosing Passion Struck and choosing me to be your host and guide on your journey to creating an intentional life that matters. Now, let that journey begin. You know what's frustrating? Going out to dinner, excited for the meal, and then spending the next few hours regretting it. For a long time, I thought certain foods just didn't agree with me anymore. Garlic, onions, pasta, even healthy foods like beans. It always felt like a trade-off. Then I found Fodzine, a tasteless powder you sprinkle right onto your food. It helps break down FodMaps, the hard-to-digest components in foods that can cause bloating gas and pain

before they cause discomfort. Think of it like lactate, but for garlic, onions, wheat, beans, cheese, and other common foods. It mixes right into your food, comes in portable packets, and honestly just makes eating feel enjoyable again. And it was created by Harvard-trained scientist

and has been clinically studied. We're so excited to partner with Fodzim and offer you 30% off your first order. When you go to I Can Eat Again.com slash passionstock. That's I Can Eat Again dot com slash passion struck for 30% off your first order. Finally, you can enjoy your favorite foods without the pain.

Just go to I Can Eat Again.com slash passionstruck. I am absolutely honored and thrilled today to bring Eric Reese on Passionstruck. Eric, it's so nice to have this opportunity to finally meet you. Oh, thanks so much. Right. Nice to be here. So am I catching you in Austin today? Oh, no, I'm in the Bay Area.

Oh, you're in the Bay Area. I was listening to another one of your podcast episodes, and you must have been in Austin on that day, and I just thought I'd ask because I lived there for many years. Oh, it's a wonderful city. I like it a lot, but I'm not there at the moment, no. Well, it's like the Bay Area of the mid portion of the country now, given how many people from California have migrated there.

I know. I have so many friends there, yes. I really got to come up with an excuse to get back there. Eric, you have helped a generation build companies with the lean startup, and it is such an amazing book. But now you're warning that many of those same companies lose their soul. What did you realize you got incomplete? I wish someone would have told me that the more successful an organization is, the more valuable it is as a target. So I was taught, and I passed this on to others because, of course, it's what I was taught.

that success will give you freedom. If you get product market fit, if you build a company that's very successful, you'll be able to make it the way you want it to be. It will stay true to its values. It will have some long-term purpose. And that does happen sometimes, but quite often,

the gravitational pressure of our financial system comes in and redirects the company in ways that a lot of founders, a lot of leaders feel like they've become like Frankenstein and his monster. What is this thing that I have made? What happened to it? I don't understand. So, yeah,

I've watched so many, founders lose control of their company. And I tell the story in the book, going to a celebration of a founder who had made more money for his investors than they could spend in five lifetimes. Really a very successful story. But he had been ousted by those same investors because they wanted more. And I was counseling a new entrepreneur as I was on my way to this event. And I'm explaining to him these dangers and risks. And he was talking to me about this incredible technology that he's building. And he was like, wow, I'm so glad. Finally, someone is willing to talk to me about this. my employees and potential employees are constantly on me to answer this question.

How can I assure them that this company will stay true to its values, that it will pursue long-term value creation and not become extractive and exploitative so many other tech companies? But when I ask investors about it, they treat those kinds of questions like, oh, you must not be very serious about business. He was feeling trapped. Anyway, I'm like, look, I got to go. I can't talk right now because I've got to go to this event.

I can watch people streaming into the venue. A thousand people here who, flown in on their own expense from all over the country to be there to celebrate this founder. I saw someone walk in who I was like, I think that person, the founder laid him off. And here he is at the celebration. And the founder I'm talking to is like, wow, respect. That's the kind of company I want to build one day. Like, man, you are not listening to me.

He doesn't work there anymore. This is not a party. It's awake. And he's what? Did he die? No, he didn't die. Is the company dead? No, the company's not dead.

He's then what was lost? And well, this was a company we all trusted. And now we don't trust it anymore. Not because the new leadership is bad. I like the new leadership. They're perfectly fine. But I know now in my bones that any promises they make if investors don't like it, they're going to be gone.

Wait, are you saying that's going to be me someday? Like, that's what I'm trying to tell you. Success will not protect you. So we asked me the question that kind of launched this whole book. Is it possible to build an incorruptible company? And I had to tell them honestly, yes, it is possible. I will help you do that if you want to. But the bad news is you're already not on the right track

because you have adopted already without knowing it. So many of the best practices we teach today about how companies should be built, structured, and governed that are actually value destroying. So anyway, I've got to go to this event. But after the event is done, I'll call you back tomorrow. We'll get to work. We'll try to put this company on a new and better path, which we did.

And I want that for everybody. Eric, I should have probably introduced the book instead of having you mention it right there. But I mentioned your first book, but I didn't mention the reason we're here today, which is to talk about your new book titled Incorruptible, Why Good Companies Go Bad and How Great Companies Stay Great. And I want to start here. When I was at Lowe's, we partnered with Wake Force School of Business, and they took the senior leadership through a series of MBA level courses. And one of these was all on the financial success stories of companies. And I remember in one of the first lectures that the professor

gave, he had us do this exercise where he had us look at the Fortune 500 from 20 years ago and then look at it in modern day. And what did we notice? Well, what we noticed is about 80% of the companies were no longer there. And where I'm going with this is I recently had a reach out from Jim Collins's publicist because he's also coming out with a new book. Oh, yeah, I've heard it's great. It is great. It's great like your book is great. And what's interesting to me, though, is if you go back and you look at from good to great, how many of those companies that he explained are great are still considered great. And I think that is an interesting lead in to your book. How do these great companies go bad? So what would be your immediate answer to that?

What did Jim Collins get right and what did he get wrong? Yeah, well, Jim Collins is one of the all-time greats about management. How do we lead an organization to greatness? And in fact, if you look carefully at the subtitle of the new book and how it's laid out, it's actually a subtle homage to good to great. Yeah, I've been very influenced by his writing. I think a lot of us in the management field, though, have been a neglectful in focusing our attention on structure, on governance of companies. So what happens is you build these in remarkable companies. I've done this many times.

And then you get to this stage, this size, when you feel like you're up against this other force more powerful than management. And you have a hard time even saying what it is. We don't even have good language for it. Mission drift sounds like a navigation error. bureaucracy it sounds like paperwork what is this thing and i decided after seeing this in action for so many years we should use the name our grandparents would have used for it corruption in the old-fashioned sense of corrosion in the joints there's a weakening of the material a vulnerability both to

inner temptation and outer pressure that force that corruption knocks companies off course it knocks them off their true path and allows people to make money from them without creating any value. So that to me seems like the heart of the error that we have to work against. When I think of what you talk about in the book, you describe founders building something meaningful and then watching it slowly get taken from them. And there is no better example of that than I can think of than Tony Shea and Zach. Oh, goodness. Oh, goodness. Oh, yeah. because here you have a founder who built his whole company on belonging, on wanting to see his employees flourish, on concentrating on the customer and wanting the customer up to flourish as well.

And then when Amazon ends up purchasing them, you see this slow vanishing of the whole value system that he built into the company. Am I explaining it correctly? Well, I think that's fair. I knew Tony before he died tragically. And I had done some work at Zappos when it was owned by. Amazon so I could watch the conflict unfold in real time, this tension between the values of the founder, but I don't like to personalize it. It wasn't so much about Tony's personal disappointment, but rather in the promise that this organization had made to its customers. If you've read delivering

happiness, this company had a very distinctive ethos that was gradually lost. The same thing happened to Whole Foods under Amazon's management. And that's not to say that Amazon is a bad owner. I think they've actually been a reasonable steward of a lot of companies that they have acquired. But that's not the issue. The issue is not, is Amazon good or bad, but has something been lost, something that was value-creating and vital? We just, we see it over and over again. A number of years ago, I was speaking with Jim McKelvey, who you may know, the founder, Square.

And Jim, like you, does a ton of engagements with startups, mentoring new founders and helping them try to escape themselves in many cases. And I asked him, what is one of the biggest issues that you see that stops these startups from becoming successful? And he told me that they go into this, finding a problem that needs to be solved. And that's the starting point. All great startups are solving a huge problem that they see that needs a solution to it. And he said, But what ends up happening is over time, different things start happening to it. They get pressure from their investors. They start getting more attention.

And all of a sudden, they start becoming the opposite of what they set out to be, which is a key component of your book as well. Why did you both reach that same conclusion? Well, I don't Jim well. And I think highly of him. And if you're paying attention, you will form this conclusion. This is an epidemic. You look around. Let me tell it.

Let me try to explain it by way of a story. So maybe someone that's going to sound very abstract or like it's something that mostly affects boardrooms and fancy founders and stuff like that. Let's tell a story. Let's start with the legend of Saul Price. I think this is a good place to begin because Saul is widely considered to be the father of modern retail. You want to understand how influential Saul was when a guy named Sam Walton was thinking about starting a retailer in Arkansas. He called the company Walmart. as an intentional tribute to Saul's company, Fedmart, the original discount retailer.

So Fedmart was started by Saul in 1954, I think, in San Diego. And he had been a lawyer before he became a retailer. And so when he was a lawyer, he had this idea that he was a fiduciary to his client, meaning he had to put the client's interest before his own. That was the essence of what the legal code of ethics required. So it was natural to him when he became a retailer to say the customer is my client. I have a fiduciary duty to the customer. And he built the company on that principle. One of my favorite Saul stories is that when competitors would try to undercut him on price by

doing lost leader strategy, he would post their Sunday circular ads inside his own store with signs that said, don't buy this product from me. You can get it cheaper down the street. A level of integrity that today, modern business leaders, we find this almost unthinkable. That was Saul. The company was very successful. He took it public. Everyone made a lot of money. It was going great. But just like Jim was talking about, as the company became public, it faced this pressure, always pressure to raise prices, to lower wages, to grow faster, to betray the promise of Fedmark.

Saul was way too stubborn for that. So he wouldn't do it. And so he was always fighting with his investors. He brought in new investors to replace the old investors. It was like, Taylor's oldest time. The new board would be same as the old board because all of these financial intermediaries were captured by the same gravitational force. The same thinking about how to extract as much value from an organization rather than how to create as much value with that organization.

That is the cardinal sin of our modern finance-driven economy. In 1975, after Saul I've been building the company for 20 years, 20 years he built it. He comes into work one day, and just like my founder friend, whose party we were talking about, he can't get in the door because they've changed the locks. He doesn't work there anymore. And with him gone, the investors could finally get what they wanted. Fed Mart became a conventional retailer pursuing faster growth, more profit. What's so interesting to me about our modern economy is how often we see companies utterly destroyed in the name of profit. Isn't that odd?

It took the investors seven years to bankrupt Fedmart. By 1982, it was completely liquidating, all because they were pursuing profit. But Saul was not done. The reason I like this story, most stories like this have a sad ending, and that's the end. SAIC founder was betrayed right before he died. He died not knowing what would happen next. Nothing good. So many of these stories.

Edwin Land forced out of Polaroid. Polaroid never invented a single thing ever again. Rare do you have a second act story like Steve Jobs. Saul is one of the second act success stories. So Saul Price took two weeks off after this betrayal. He leased the office upstairs from Fedmark. and he was back at work. He built a new company called Price Club,

which today is not that well known, but when I was a kid, it was a major retailer. That's where my family shot. But more importantly, another person quit Fedmark in protest when Saul was fired, someone who had worked his way up from Stockboy to executive because Saul was a big believer in hiring

and promoting from within. And after he left, he helped Saul build Price Club for a while, then he struck out on his own, start his own new company. And some years later, his company, and Saul's company merged to form a company that they called Price Costco, but we just call Costco. Today, Costco is a $400 billion public company that still operates the ethos of

Saul Price, the fiduciary to the customer, above market wages, the capital margins, the whole thing. But why did this financial gravity destroy Fedmark while Costco endures? Is it just because they're so big, just because they're so successful? Dream on. Wall Street has has tried many times to ruin what makes Costco great, but it can't because Costco was built with structural integrity. It is protected by a governance fortress that makes it impossible for outside investors to interfere. That's the formula for building an incorruptible company. We've got to have the ethos of Salt Price and the integrity of Costco. Before we continue, I want to thank all of you who continue supporting Passionstruck and sharing

these conversations with others. One of the themes running through today's discussions is trust. How it's built, how it's lost, and why it matters so much to our ability to connect with other people, organizations and communities. Those same ideas are central to my upcoming book, The Mattering Effect, which explores why so many people today feel unseen, disconnected, and exhausted, despite living in a world that's more connected than ever. If you'd like deeper reflections, companion exercises, and weekly insights designed to help you live more intentionally, you can join us at theunitedlife.net. Now, let's take a quick break for our sponsors.

Thank you for supporting those who support the show. You're listening to PassionStruck right here on the PassionStruck network. Now, back to my conversation with Eric Reese. Thank you for sharing that. I spent a number of years earlier in my career at Lowe's Home Improvement, and I absolutely loved working for Lowe's. Even though when I joined it, it was $48 billion in revenue, it felt like it was a small business.

You still had many of the original employees. One of the most esteemed was a gentleman named Larry Stone, who's similar pattern had started out working in the mailroom and had worked his way all the way up. When I was initially there, he was the head of store operations and then became chief operating officer and eventually president of the company. And the store managers adored him. But what I loved about it at that point in time was everything was about wow customer service. how do we wow the customer every opportunity we have?

And every single meeting with the executive team, the CEO or Larry would get up there and they would constantly talk about the core values. And what was crazy to me was there was so much pride in the company that it was one of those environments where I would say at least 50% of the employees that you would see walking around the buildings were wearing lows apparel, whether it was a Jimmy Johnson racing shirt or something branded Lowe's. People were just proud to work there. And I then left there and I went to Dell. And this was during the transition point before Michael ended up taking the company back to being privatized and buying EMC. And no one wore Dell Gear. No one talked about core values.

And it was just black and white, the difference in the cultures that I saw. So I bring this all up because there is something really important here. And this gap that that gets created is a pattern that has now been repeating as you write about for over 200 years. Why do you think the system doesn't correct itself? Why do we keep doing this? Well, you say it's a thing that needs correcting. I think there's a lot of people that are profiting very handsomely from it being just the way that it is. You don't ask the locusts why they haven't corrected their behavior. You learn to control their population. You learn to harness those kinds of behaviors in a productive way.

That's what we have to do. It is important, I think, for founders, leaders of all stripes to understand how long this mistake is being made. I tell the story of Robert Owen, poor benighted Robert Owen, who first encountered that same Saul Price story in 1800. This is a longstanding pattern. But it's very important. When we start to talk about the history of this, the pervasiveness of this, people get depressed. Part one of the book is called The Shape of the Abyss. So I promise I'm not going to sugarcoat anything here.

Okay, I will tell you straight what is going on. This is not good. But it is not inevitable. People always tell me this is inevitable. They're like, what are you going to do, man? This is inevitable as gravity. No. If it was inevitable, there would be no exceptions.

But Costco is an exception. And in fact, in almost every industry, we have these outlier exception companies, Patagonia, Vanguard, Novan Nordisk, Akea, a lot of companies that have been around for a really long time and are still true to their own purpose. Are they perfect? No. But they endure. The data says companies that are structured in this very particular way that I advocate for in the book are like multiples of times more likely to live to year 50 compared to conventional structures. These companies are strong, whereas conventional structures are weak. So one of the things we have to do is study the outliers.

I've had the privilege of helping build some outliers, but we also have these historical examples. What are they all have in common? If you study, you will discover every single one without exception violates, grossly violates today's best practices about how companies are supposed to be structured. And so that was really my clue that it was time for a new theory of corporate governance, like a new idea of what the best practices should be. to get us out of this era of what's called shareholder primacy towards something I think would be a lot more productive. I prefer with something like mission primacy, where we focus on the beating heart at the center of these organizations.

They're reason to exist. They're not just financial instruments to enrich shareholders. That sucks. We can do so much better. In fact, in the book, I argue, that we should reconceive what it means to be a for-profit company as an organization that pursues the maximization of human flourishing. Are you familiar with Branson's B-Team concept?

Sure. Yeah, I think what he was trying to do there with that B-team, which was to try to get a number of high-powered CEOs of major companies, Mark Benioff was one of them. I think that the person who ran Harley-Devinson was another, and to try to get them to start using different metrics, success other than shareholder value. Do you think that is the path that we should be going down? It clearly is. And again, not just my opinion, man, but like we have real data. We have real

evidence that there are better ways. And in order to do this, we have to be able to preserve a company's ability to think long term and to stay on mission. I call it being mission driven versus mission hopeful. Most organizations, frankly, are lying about what they're all about. They have a mission statement that sounds very lofty. But if you read their legal documents, they have a legal purpose that is something different. Quite often they have a lofty purpose. Like I tell the story of Silicon Valley Bank,

that was my bank before it collapsed. That's why after it collapsed, I wanted to know what happened. They had a lofty mission that was a mission statement that was like to advance the innovation economy and move the innovation economy forward. It made me so proud to be a customer. Oh, yeah, that's exactly right. But they're a bank, their legal papers are all,

public and you can read in the documents it says that their legal purposes to maximize shareholder value if you have this divergence between mission and purpose eventually the hypocrisy becomes too great and the thing collapses that's what we see over and over again Eric I want to get into flourishing and do a deep dive into it in just a second I want to set it up though before we go there I think we need to give the listeners an understanding of what financial gravity is given the questions I was just asking you, it is the very thing that is shaping many of these decisions that is reshaping the identity of these companies. From leading into human flourishing, at what point does this financial gravity start to point people inside the organizations from stop choosing and really to start conforming?

This is a force we all experience. We live with it every day. It's as natural as physical gravity. And the reason I use gravity as a metaphor is because you can say, well, I don't believe in gravity. Gravity believes in you as it demonstrates every time you jump in the air, it brings you right back down. So if you ever had a meeting where a bunch of people sitting around a table,

including your boss and your boss's boss and the big head honcho and you, and the head honcho starts saying something that is really categorically stupid? And you're like, should I speak up and say, boss, big boss man? That just ain't true.

Or do you smile and nod like everybody else in the meeting? We've all felt that feeling where you're like, gosh, I want to speak up and say something, but is that going to be good for my career? Probably not. You don't want to be the non-consensus person in the room. Just like you have a subtle change in your behavior. If you've ever seen somebody meet a celebrity for the first time, you'll witness the same gross thing.

They become weirdly obsequious in ways you don't totally understand why. If you ask them afterwards, why did you do that? They often will say, I don't know, it just came over me. Same thing, you meet a billionaire. I've seen it. People, they just can't help themselves. They really want the approval of this person. They want them to think they're good, and there are levels to this.

I once was sitting in a room with a bunch of top executives meeting Oprah Winfrey. And you would think they were a bunch of little kids begging for teachers' approval all of a sudden, because when you're with someone who has a power disparity with you, you can't help it. you are biologically evolved to be deferential. We have a lot of research on this, a psychological mechanism. It is an unconscious reflex to try to please and align yourself with those who have resources. You can understand in evolutionary terms

why this might be a useful trait. But the problem is an organization is made up of many people who are all feeling this gravitational pressure. And because when people's behavior changes consistently over time, we know from the research, that eventually becomes internalized as values. We know from the psychology research

that consistently performed behaviors eventually become enacted as values. So the right way to think about gravity, it is an unconscious value transmission mechanism from those who have power, resources, status to those who lack it. So what happens is an organization grows, from a very early age, you start hearing people say things like,

well, we could do that, but investors might not like it. You hear this nonprofit, donors might not like it. You see a company go public and all of a sudden, everybody in the rooms, the market might not like it. Might. Are you saying you're sure? You've gone and interrogated those investors. You know what they want? No, I just think they might not like it. And that subtle change of values happens over time to the point where you often have people change their values completely without even being aware that they themselves had changed. Eric, in my work, and I've got a book coming out in October myself, called The Mattering Effect.

But in that, I define a term called the matter and gap. And the matter and gap is where we individually start feeling like we're being erased, like we're outwardly visible, but internally we feel invisible. And how does that relate to cultures of companies and the invisible leader that you bring up in the book? Yeah, so the invisible leader is a really important concept in the book. And to understand it, you've got to go back into the past. everybody knows Frederick everybody who studied management at all

and at all knows Frederick Winslow Taylor, the father of scientific management or Taylorism, which for much of the 20th century was a very dominant management idea and even now if people want to show their management bona feces, they often feel the need to criticize Taylorism and show how their new thing is a repudiation of it. So he was by far the most famous management thinker

of the 20th century and probably of all time. Modern readers can't really appreciate what an incredible celebrity he was when he was alive. But it was a contemporary management thinker named Mary Parker Follett. She lived around that same time. She was very active in the 19-teens and 1920s. And her work was diametrically opposed to Taylorism, whereas he saw workers almost like robots.

He was very into hierarchy and command and control. He had a bunch of racist ideas too. She was very far ahead of her time. Many of her ideas, if you saw them today, like on a LinkedIn post, you'd be like, oh, I assume that's Adam Grant or somebody. That sounds right on. That's just what we talk about today. But she was writing in the 1920s.

It's unbelievable. She talked about the preference for power with rather than power over. She said the goal of a leader is to make more leaders. Come on. If you're not on LinkedIn today, you'd be like, damn, right? I said right on. Very cool, right? She said that when asked once if subordinates should obey their superior, she said, no.

the superior and the subordinate together obey the law of the situation, meaning they work together to figure out what the situation requires and they do that. She just was way ahead of her time. And one of the things she used to say that would drive her contemporary is just crazy, she would say. Mr. Roundtree, the most excellent leader, the most excellent owner of the Roundtree chocolate factory, is not the leader.

of the Roundtree Chocolate Factory. And people are like, lady what? His name, his family owns the building, the company. Like, everybody works for him. If he's not the leader who is, she said, well, he is an excellent leader, but only because he is very effective at instilling in his employees

a sense of common purpose. And is the common purpose itself, rather than Mr. Roundtree, who is their invisible leader. If you understand this concept, you can understand so much about what goes wrong in modern companies. Because the vast majority of decisions that are truly consequential to whether a company endures or collapses are made when no manager is present. There are a million little decisions every day. Should we make the product a little bit worse to make a little extra money?

Someone calls into customer service with a problem that technically by the letter of the law you don't have to fix, but you could? Well, what are they going to choose? What are they going to choose? The modern kind of easy, lazy way of business, Jim Senegal, the founder of Costco, he calls it the business equivalent of taking heroin. He told me the story once that if they raise the price of a dollar bottle of ketchup at Costco to a dollar and three cents, no one would notice. It would not affect their sales at all. If they raise prices across the board by 3%. No one would notice, but they would double their net income, just a lot of money.

So why don't they do it? Well, if you do it once, you got to do it again. It becomes baked into your forecast. That's the easy way, the simple way. Seems like the seductive way. But if that's the ethos, if you don't consciously push back against it, that lazy default will infect everything in your business. So the goal of our operational leadership should be, as Mary Parker Follett taught,

to instill this sense of common purpose into every employee so that they know how they're supposed to behave even when nobody's watching. They still will want to do the same, the right thing. They will still try to earn the trust of our customers, of our employees, of our investors, of anyone that they're interacting with. And so the book is a lot about how to create the operating conditions for this to happen. Eric, in my first book, I had a chapter, which has been one of the chapters I get the most questions about. And the whole concept about this was, I think, the modern leader and what people are striving to is the wrong leadership model.

So what I suggest in this chapter is the concept of a gardener leader. And to me, what a gardener is really doing is it's all about the development of the culture. And the whole thing is putting the ingredients in place to make your employees flourish. because coming from a military background, if I'm at Special Operations Command, there's no way I can micromanage a Delta Force team that's 4,000 miles away for me. But I can give them the conditions to have success. I can make them understand what success looks like. I can give them the training to succeed.

But there comes at a point where you have to delegate and trust that you have developed the culture and they are going to accomplish the mission. And I think it's similar to what a lot of your book is about. Would you say there are common parallels there? Common parallels between. Between that whole idea of Gardner leadership, of cultivating this environment, this culture, to really create an environment where your employees flourish,

where you are eyes on but your hands off in many ways. Oh, I see what you mean. Yes, absolutely. I say in the book that many of the attributes that we're talking about, mission, values, culture, they are what are known as emergent properties in the scientific literature, meaning they are something that can be cultivated but cannot be commanded. People find this very confusing in the same way that we all as human beings find the philosophical question of what we are very confusing. Every one of us at some point in our lives has a late night philosophy session with a friend

to where you're like, wait a second, what am I? Am I in a body? Or I am a body? Who's in charge here? What's happening? What am I? And eventually, some people will conclude, well, yes, I am in charge of my body. I'm the one who's in here because I tell my arm to raise and it raises.

So I have the impulse and the thing obeys. And if you have a friend like that, you can say, oh, really, you're in charge. Can you command a cut to heal? Can you command your body to cure a disease? Can you command your body to be healthy? I'm like, oh, no. And sometimes after the, oh, no, people descend into nihilism. Like, oh, no, nothing I do matters.

I guess my health is random. I can eat all the Doritos I want. So no, actually, the choices you make have tremendous influence over the emergent properties of your body. You can make choices that will lead to health, but that's something you cultivate. Character is something you cultivate. You don't command.

I see managers and leaders make this mistake all the time. They say, of my company. Oh, how do you know? Because I give commands and they are obeyed. Congratulations. Your organization has a functioning nervous system. But what does that prove? Command it to be healthy. Command it to grow. Command it to be a humane and not sociopathic. You can't command those things, but you can cultivate them. And so figuring out what are the practices that build this asset. I call it the most underrated asset in the world. trustworthiness. How do we cultivate it, grow it, stockpile it, and then how do we protect it?

I want to go through two examples. I want to go through an example where this environment is working in the real world, and then I want to go through another company that we're both familiar with where I don't think it is. So in the book, you describe H.E.B., which is one of my favorite grocery retailers. Love living and love going there when I lived in Texas, but you describe this story where customers are coming in because there's winter storms coming through ice storms. And what ends up happening? The customers are picking up all these supplies and then they can't pay. So what's going on here? So yes, this is HB, a really interesting company in Texas. Man, people I know who live in Texas for any amount of time cannot stop

talking to me about HEB. So if you have a friend in Texas, go ask them about it. Just my favorite anecdote is that people in Texas often mistakenly think that the letters H-E-B stand for, hear, everything's better. When in fact, that is not even the name of the company. It's just the founder's sons initials anyway. H-E-B, there was this ice storm in Texas in the 2020s a couple years ago. And it was so severe that the power went out in the store. And I'm talking about hard power out, like backup power out, can't reach headquarters. on the phone, hard outage. Point of sale systems are down.

And a journalist who reported the story later said there was this collective groan that went up among the shoppers. Why? Well, you can imagine. Why? What did I say? There was an ice storm in Texas? What were people doing in an ice storm in Texas and HGB grocery?

They were stocking up to get the things they needed for their family. Now they're not going to be able to get what they need. A store manager, I think they jumped on the counter or something, asked everyone to huddle up, please come over. And they said, look, please just take your cart and go home. And someone yells out, how are we going to be going to be going to to pay, you're not. You're not going to pay. Just take your things. And customers were in tears feeling this act of corporate generosity. What I like about this story is when I tell it to managers,

sometimes they'll say, wow, what a brave manager. I'm defying corporate that way. I say, why? Why would you assume that they're defined corporate? They're like, well, did anybody calculate the ROI of this action? You're saying they got this tremendous intangible benefit of trustworthiness, but I don't know. In my company, the finance leaders would say this was ROI negative. Intangible benefit for tangible cost. So were they risking their reputation? No. This was not an exceptional event at HGB. This is the kind of thing they do all the time. They train for this. They drill for it. Not ice storms in particular, but this idea that they have a fiduciary duty to the customer to take care of the people that shop there so that this was not an acceptable. this is the rule that they're trying to cultivate.

I think it's a tremendous example. And now I'm going to lead to another example. So part of my time when I was at Lowe's, I was responsible for all the store systems. And the way we built them was on a Unix space system, which made it virtually impossible for us to ever not be able to take payment. And then we had processes in place

place that if we were where H.E.B. was we had condition after condition to give them the ability to take payment, even if it was paper payment. But part of the reason for doing that is H.E.B. ran on Microsoft like every other retailer did. And they had these issues, which is why we didn't run on Microsoft. And I remember when I was there and in this position, Bill Gates and Steve Bomber visited us. and they met with the CIA myself and a couple other people. And I remember Steve Balmer, big guy, stands up when we tell him we're not going to switch to Microsoft and just starts pounding his fist in the table and screaming at us about how big idiots we were not to use his technology. And then I fast forward that and I'm at Dell and we're coming out with a new mobile device and we had made the decision to go on Android. while Steve Bomber flies out, meets with Michael, and suddenly we're launching on a Microsoft

device. And I remember Ron Garrags, who was the head of the division, comes in to the executive room and says, we're dead on arrival. Fast forward, about 18 months later, Steve Bomber asked me to interview to be the CIO at Walmart. And I go into this environment, and I know you're very familiar with it because you were part of it. And I just remember it was such a dysfunctional environment because everyone was scared out of their mind to do anything that might upset bomber. What happened from that environment to one that they're in now where everyone seems to be flourishing because I think this is a great example of how a great company went bad and then how it restored itself. I know a lot of funny Steve Palmer stories and I don't even know which ones are

true, which ones are apocryphal. One of my favorites is someone was sent to to do a deal with Microsoft. And their boss had said, you've got to get this deal done. If you don't get it done, you don't need to come back from Redmond. I was like, we must have this deal. So they're telling the story.

They go there and they sit down with Balmer. And they had this whole presentation. They said, look, we've got this thing. We're going to do this partnership. We really think it's going to be a win-win for both of us. And he says, that is not a requirement from our point of view. And we're like, oh, no. It's like, yeah, we have to win.

Whether you win or not is not, That is not our concern. It was just such a harsh judgment. And for a time, that style of leadership is very effective, but it does eventually sow the seeds of its own undoing. As we saw with Microsoft, which had to be revitalized, you see it in a lot of places. Yeah, at Walmart, the spirit of Sam Walton is very alive.

And yet, when I was there in Bentonville, I remember people would say things to me like, well, we have this procedure or policy that Sam Walton, he would have violated. He couldn't even got a job here. he would have been fired. And there's all these legends about the stuff that he did, selling stuff out of the back of his truck. We can never do that today.

And I remember trying to, it's funny because his picture, his quotes and his picture all over the, all over at Walmart headquarters. And I remember trying in some of the workshops and stuff that I did there to channel him and be like, hey, remember as Sam Walton said? And I just want,

people would have this look on their face. It would be like, that was summoning a ghost, which I was. He's been gone a long time. So without proper revigoration, re-defending, These stories, these values, this lore gets stale.

And lore is really the key word. You have to remember that lore is humanity's oldest knowledge transmission technology. It predates writing by thousands of years. And preliterate cultures have been able to transmit knowledge and values over tremendous distances of time through storytelling. It is just a natural human instinct. Not all human cultures have had writing, but all human cultures have had lore. So in most organizations, the lore is left to just become whatever it becomes.

Leaders are indifferent to it. But the really far-sighted leaders, I think, take an active hand in trying to curate and cultivate the lore so that the story we tell ourselves as an organization is aligned with the company's deepest value. So, Eric, today we've talked about some companies who've gotten this right and some companies who've gotten it wrong. We've talked about Fedmark. I think another company people would understand would be toy. are us. Another recent example would be Spirit Airlines that have all seen their demise.

Yeah. And then we've talked about Costco, Patagonia, and H.E.B. Companies making decisions that might look irrational short term, but build long-term trust and cultures of significance. What's the common design principle that people can take away from today's discussion? This is all very dispiriting. You see these collapses. If you haven't seen, there's a new video that came out just very recently about the collapse of Panera bread, where not only did the private equity playbook lead to a degradation of quality, but people died. Nobody should die for Panera bread.

What kind of economy are we building? The common formula for the companies that are able to resist this collapse is very simply ethos plus integrity. Ethos is the character of a company, the fiduciary to the customer like Saul Price had, the ability to keep and make its promises so that it builds up that most precious asset trustworthiness. But so many of the companies that you name,

they have this stockpile of trustworthiness, and it's just lying around on the floor. And then they act surprised that somebody tries to steal it. Someone will, if you have an asset unprotected in this world, someone will try to steal it from you. So we have to build organizations that are structurally strong, we're going to put the trustworthiness in a vault and defend it. And that's where the corporate structure comes in.

That's where having a mission guardian. is important, being a public benefit corp is important. I really advocate in the book for a multi-tiered structure where the board of directors is accountable to a board of outside trustees. There's a bunch of these practices that we have really good data. This is not just my random opinion. We have good data that these are the practices that lead to sustained long-term value creation. Listeners, I highly encourage you to pick up a copy of Incorruptible, why good companies go bad and how great companies stay great. Eric, where's the best paper?

place people can go to learn more about you. Well, thank you for asking. Of course, you can follow me on social media, but social media is bad for your mental health. So I'd much rather you just go to my website, incorruptible.co. You can sign up for my mailing list. And there we have all kinds of bonuses and extras and downloadable content and the secret chapter that was cut from the main manuscript. So a lot of goodies you can get there. And of course, the book itself, you can buy absolutely anywhere that books are sold. If you want to follow along on the book tour and all the social media reaction without going on social media, we have a website called How Is Incorruptiblegoing.com, which you can follow as well. Awesome, Eric. Huge honor to have you. Thank you for joining us. Thank you so much. Really appreciate

you taking the time and such thoughtful questions. I'm very grateful. Everybody like and subscribe. Don't forget. That brings us to the end of today's conversation. One of the ideas that stayed with me long after this discussion with Eric is that institutions rarely lose their integrity through a single dramatic failure. Most often they drift. Priorities change, incentives evolved. Decisions that once would have seemed inconsistent with the mission gradually become accepted as necessary or unavoidable. Over time, the organization may continue to function and even appear successful from the outside, yet something important has changed. The original purpose becomes harder to recognize. Trust begins to weaken and people no longer experience the organization in the same way they once did.

What makes this conversation particularly irrelevant is the same pattern often appears in our personal lives. Disconnection develops through accumulated distance between what we value and where we invest our attention. Relationships weaken when they are consistently postponed. Communities become fragile when participation gives way to convenience. Individuals become disconnected from themselves when achievement becomes the primary measure of worth and reflection is pushed to the margins. As we begin this new series, I think Eric's work offers an important insight. The connection crisis is not simply a story about loneliness.

It's a story about trust. It's about whether people believe they matter, the organizations they work for, the communities they live in, and the institutions that influence their daily lives. When people stop feeling seen, valued, and represented, connection becomes increasingly difficult to sustain. Understanding how trust is built, how it erodes, and how it can be restored is one of the most important conversations that we can have today. On Thursday, we continue exploring disconnection from a very different perspective.

I'll be joined by physician, researcher, and best-selling author, John Lumpfee, for a fascinating conversation about what he calls the indoor epidemic and how modern life has gradually disconnected us from many of the environmental conditions that human beings evolved to thrive within. If today's conversation examines what happens when institutions lose their connection to human flourishing, Thursday's discussion explores what happens when people lose their connection to the environments that support human flourishing itself. It's a powerful continuation of this larger story and I can't wait to share it with you. In the last couple of generations, we've moved inside as a species and never left.

We spend as 93% of our time inside, in buildings or in vehicles, 86 and 7, if you're doing the math. And that means we spend our time in the office or in a classroom. Our commute is in a vehicle of some type, almost always. Our wind down rituals at night, what are those? Those are screens for the most part. we're watching TV, we're doing something on a tablet or a computer, or on our phone. For us, the environment made a choice for us to be inside before we knew that there was a choice to be made.

If today's episode resonated with you, share it with someone who might benefit from it. Leave a rating and review on Apple Podcast or Spotify and explore more, including the workbook for today's episode at the ignitedlife.net. Until next time, remember that trust grows wherever values and actions remain. align. I'm John Miles and you've been passion struck.