Great Products, Bad Companies

I have long argued that great products are what powers great companies.

And while I still believe that great products are necessary for great companies, it’s become quite clear over the years that great products are not sufficient.

In fact, as counter-intuitive as this sounds, I have seen too many examples where great products can actually lead companies to very bad outcomes.

How can this possibly be?

The short answer is because a company that has demonstrated they are capable of producing great products becomes a very attractive target to certain types of people with very different motivations.

What kind of people?

The kind that infiltrate boards and leadership teams, replace founders and other missionary leaders, and destroy cultures and companies, all in the hope of a quick financial win.

Anyone that has worked in the tech industry for a while has likely witnessed this happening.  Or you know a startup founder that this has happened to.  Especially for product people that exist to create value and build trust with customers and partners, it can be so disheartening to see that value and trust destroyed before your eyes.

I have literally begged board members not to replace leaders, trying to explain that some bumps in the road are inevitable (like occasionally missing a quarter), and that what matters is the longer-term outcome, and that they are not just hurting the company, they are usually hurting themselves.

But this can be very difficult to explain to non-product investors and board members.  Or at least I don’t have a great track record convincing them.

It breaks my heart to see founders that have put so much of their heart and soul into their companies, and done so many things right, only to see their company wrestled away from their control, and their good work undone.  

And this doesn’t just happen to startups; it happens in scaleups and large companies as well.

I have long considered this a sad, but largely unavoidable, consequence of our otherwise strong tech ecosystem.

I have written about my frustration watching good companies go bad.  But I’ve told myself that I need to focus on the things we can control, rather than those we can’t.

Yet a new book has me completely rethinking if this is truly an unavoidable reality.

Fifteen years ago I published an article reviewing and strongly endorsing The Lean Startup by Eric Ries.

Today I want to talk about Eric’s newest book, Incorruptible.  

While The Lean Startup focused on creating strong products, Incorruptible is all about creating strong companies, where I’m defining a “strong company” here as one that is protected from the predators that successful products attract.

The book’s subject is technically corporate governance, which admittedly is not a subject I would normally be eager to read.  In truth, governance has been a subject that I completely deferred to the judgement of corporate lawyers and business experts.  That may have been a big mistake.

It’s hard to read this new book and not view it as a major indictment of the corporate lawyers supposedly there to protect our companies, the business school programs supposedly there to equip leaders to navigate the challenges, and the management consultants supposedly there to help strengthen our companies.

While The Lean Startup book discussed techniques and concepts that I had been working with for many years, and so I was very comfortable endorsing, this new book explores topics that are clearly outside of my expertise, so it’s hard for me to predict how well these ideas will resonate.  

The new book discusses alternative governance structures that are designed to protect your company from the types of threats and predators that so often target companies with strong products.  I was surprised to learn that some of my favorite companies (old and new) have already been created with these structures.

You may not realize how much corporate governance can actually impact your day to day life as a product person inside a company, but hopefully this new book will make that clear.

I can tell you that I am desperately hoping that people embrace his arguments, that the ideas in the book prove viable, and that we see many more of what he calls “mission-locked” companies in the future.

Most product people prefer to join a company working on a meaningful mission with a compelling product vision.  Yet once there, they all too often discover that the company does not have the culture that would allow them to succeed.

If you’re considering starting a company, then reading this book may be the single most important business book you’ll read.  If you’re a product creator or product leader at a company, then this book will help you understand your company much better, and the motivations and incentives of the board members and investors.

I’m hoping that as more product people become aware of these different strategies on corporate governance, they will vote with their feet and provide their talents and services to companies where they can make a positive impact for the world.