The Founder’s Dilemma: When Loyalty Becomes Liability

“The most difficult conversation I’ve never had.”

That’s how one African CEO described his relationship with the three executives who helped launch his now-dominant company. They were there in the cramped office with unreliable electricity, there when investors laughed them out of meeting rooms, there through the first impossible year when market share hovered at a seemingly immovable 8%. 

Within their first five years, his company achieved the seemingly impossible commanding 70% of their market. And those same executives have become his greatest challenge.

This story repeats across the continent with remarkable consistency. The kitchen cabinet that drives initial success becomes the anchor preventing necessary evolution. The midnight strategy sessions that once sparked innovation now maintain outdated approaches. The scrappy founders perfectly suited for insurgency struggle with the disciplines of market leadership.

What makes this dilemma particularly acute in African business contexts is the intertwining of professional and personal loyalties. The executive who loaned you capital from personal savings during cash flow crises isn’t merely a colleague. The co-founder who housed early employees in their home isn’t just another manager. These bonds transcend conventional employment relationships.+

“I know precisely what needs changing,” confessed another CEO of a rapidly scaled financial services company. “But when I look across the table at the executives who need replacing, I see the people who believed in this company when nobody else would.”

Greiner’s growth curve predicted this tension decades ago. As organizations evolve from entrepreneurial phases to more structured operations, leadership requirements shift fundamentally. The creativity and risk tolerance that drive initial success often become liabilities when systems and predictability matter more.

But knowing this intellectually doesn’t ease the human element. One telecommunications founder admitted anonymously: “I’ve built my reputation on disruption and challenging incumbent thinking. Now I find myself unable to disrupt my own leadership team.”

The consequences extend beyond emotional discomfort. Companies across multiple sectors show a clear pattern of stalled growth precisely when founding teams remain unchanged beyond appropriate transition points. When loyalty to individuals trumps organizational requirements, innovation suffers, decision-making calcifies, and competitors find openings.

This pattern played out with sobering clarity in our CEO’s company. From that remarkable 70% market dominance early on, the business has seen steady decline over the past four years, shedding over four-fifths of its pre-Covid valuation. The same founding team that engineered their meteoric rise has now presided over this financial freefall—a painful reminder that yesterday’s revolutionary thinking often becomes tomorrow’s organizational inertia.

The most successful transitions happen when CEOs reframe the conversation from personal loyalty to shared legacy. “The hardest realization was that keeping my original team in roles they’d outgrown wasn’t actually loyalty—it was undermining everything we’d built together,” reflected a retail chain founder who eventually restructured his entire executive team.

This reframing acknowledges an uncomfortable truth: the skills that build companies rarely align perfectly with those needed to sustain them. The passionate generalist who drove early momentum may lack the specialized expertise required at scale. The relationship-focused leader essential during early client acquisition might struggle with the process orientation needed for operational excellence.

For CEOs facing this dilemma, the path forward requires separating people from positions. The founding team’s contribution remains invaluable, but their ongoing roles must align with evolving organizational needs. This might mean creating advisory positions, developing specialized roles that leverage specific strengths, or in some cases, facilitating graceful exits with appropriate recognition.

At Nova, we’ve observed that the most successful leadership transitions preserve the core values and vision that founding teams established while evolving the execution capabilities to match current challenges. The question isn’t whether to maintain absolute loyalty to early executives, but how to honour their contributions while building teams matched to present realities.

The telecommunications CEO who struggled with this transition eventually found resolution through brutal honesty: “I finally realized that my unwillingness to make changes wasn’t about protecting them—it was about protecting myself from difficult conversations. True leadership meant having the courage to honour our past while securing our future.”