Webster defines Loyalty as “a strong feeling of support or allegiance”.  

Clearly loyalty to your family, your best friends, your alma mater are noble and worthy of the highest admiration. In the business world volumes of books have been written, countless lectures have been given, and leaders around the world at all levels strive to hone their leadership skills, with a fundamental tenet of loyalty.

But can loyalty go too far in the business world?

My Own Experience: Did Loyalty Hold My Team Back?

Over my 35 plus business career I have prided myself on loyalty. I worked on the absolute belief that to garner loyalty, one must give loyalty.  I read the 1996 book The Loyalty Effect,  which in some ways became a roadmap as I advanced my career.

In general this worked reasonably well for me, but now after some deep introspection, my conclusion is that perhaps I went too far and that perhaps my business results could have been more profound.  

Don’t get me wrong, I held people accountable, challenged the status quo, and made changes where necessary. But was I too loyal to the people, processes, and strategies?

Were my team and I victims of the Loyalty Paradox?

Loyalty is Key When Moving Your Business from Point A to Point B

Over the past two years, together with partners in our new venture, I have spent countless hours discussing why some businesses continue to thrive and grow at stellar rates, why some flatten out or even collapse after so much early on promise.  

Why over our careers have we seen so many companies, divisions, or teams within companies thrive going from Point A to Point B, then flounder reaching for Point C?  

We have witnessed this at startups, emerging companies, and within the Fortune 1000. We have seen or been part of the frustration and stress.

What we have seen is that the early phases of these new businesses is that things generally go well. The founding principles have a great ideas, products, or services ,and with a “chief, cook, and bottle washer” mentality the newly formed enterprise attacks the market with passion and zeal.

Generally, we witness a Tiger Team of like-minded professionals who are willing to do anything it takes to reach their mutually agreed upon goals of  moving from the “Point A”, their starting point, to“Point B”, nirvana.

Founders and the senior team do it all from bookkeeping, to deliveries, to troubleshooting, to running to FedEx. Goals are met, customers are happy, the team celebrates, the team’s family is proud, and the future looks amazing.

Don’t Let Loyalty to Old Systems & Processes Stagnate Your Business

So why does the history of business and our own observations clearly show that 65-70% of all businesses and initiatives within big businesses at best flatten out with many shrinking, trying to get to “Point C”? We believe it’s the Loyalty Paradox.

The Loyalty Paradox is the understandable human nature to be blindly loyal to the people, processes, programs, etc. that were so successful in the Point A to Point B journey.  But this level of loyalty generally does not work, does not scale and more often than not leads to frustration and disappointment on the road to Point C.

So why is this concept so difficult to grasp and even more difficult to act upon?  It’s not so simple to sack your sales manager who killed it in the Phase One journey and has become a friend and who your family possibly socializes with.

It’s not so easy to replace your bookkeeper with a true CFO, when the bookkeeper was an early investor in your company.

It’s pretty tough duty to tell your service delivery leader that he/she doesn’t scale well and they must take a lesser position if they want to stay.

It really takes courage to change your processes and/or strategies that have served you so very well. When the inevitable wall is hit, it’s easier to cliché manage with trusted old sayings like “we just need to get back to basics” than to make the tough decision that understandably feels disloyal.

What we have clearly witnessed over the past thirty-five years is that the 30-35% of the companies or teams that continue to grow at accelerated, above-market growth rates are those that understood that they could not allow a strength (loyalty) to become a weaknesses. Net net they made the tough decisions, in many cases actually removing themselves from leadership positions.

If your business has hit a plateau and you’re wondering how to take it to the next level, I suggest you ask yourself where you are as a leader in the Loyalty Paradox? Are you under indexed, over indexed, or balanced? Can you get past the human nature myopic of the Loyalty Paradox or do you need a trained, unbiased third party to help with that epic decision?

You need to know - the fate of your business may depend on it.

This article was originally published in February 2018 and has been updated.