I have seen many business owners saying their company has control and that they know exactly what is happening. On the other hand, with the same frequency, I hear business owners saying they make money but feel insecure about taking the next steps, precisely because of a lack of data and controls.
Let us break down these feelings to see if we can map what is happening. In general terms, the old-school entrepreneur accepts compliance but instinctively rejects traditional governance. He knows that distributing decisions into rigid rituals, forums, and committees can kill the freedom to decide that brought him this far. If founders were brutally honest, the "Mission, Vision and Values" frames on their walls would look very different from the HR manuals. It would be something like this, and few would share it publicly:
Mission: Make money with my business and prove to myself that I am capable of building something promising.
Vision: Succeed, grow big, and be successful.
Values: Profit first. Then I pursue compliance, if possible, and as long as it does not make me less competitive or get in the way of the game.
This lack of honesty is not cynicism. It is the necessity of the growth engine. The "profitable chaos" of someone in the trenches deciding by gut feel is what keeps the wheel turning. That is how everything started and kept going.
Yet the profit at this stage is often a "profit in spite of." The business thrives in spite of some inefficiencies, because the vision and the opportunity are greater than the mistakes. But why do so many companies with highly centralized and relatively unprofessional management manage to reach billions in revenue? It is not pure luck, nor pure competence. It is a combination of structural factors that sustain growth despite management fragilities.
First factor: macroeconomic tailwinds. When the entire market grows 15 to 20 percent per year, even poorly managed companies ride the wave. The founder confuses market growth with personal competence.
Second: entry barriers. Concessions, licenses, control of scarce assets, or first-mover advantage create competitive moats that protect the company for years, even with amateur management. Being first sometimes creates an advantage that is hard for competitors to overcome.
Third: the paradox of centralization itself. In the early stages, fast decisions and the founder's unified vision are a real advantage. What works with 50 people simply does not work with 5,000. But between the point where centralization starts to hurt and the point where the company actually enters a crisis, 10 to 15 years of growing revenue can pass, creating the illusion that the model works.
Daniel Kahneman, Nobel Prize winner in Economics, when analyzing Collins and Porras's "Built to Last," argued that much of the success of enduring companies is regression to the mean disguised as managerial excellence. In plain terms: when the winds shift, the company that confused circumstance with competence discovers that the "buttons" it used to press no longer work on the centralized management panel. What looked like managerial excellence was, in fact, the market carrying the business on its back.
This is not merely a theoretical observation. Throughout my professional career, I worked inside companies that had been generating billions of reais in revenue for years and that, internally, operated with surprisingly low levels of maturity in controls, governance, and decision decentralization. They were giant organizations sustained by the force of the founder's vision, structural competitive advantages, and expanding markets, not by sophisticated processes. That experience showed me in practice that revenue size is not proof of managerial excellence. Most of the time it is simply evidence that external conditions were generous enough to offset internal fragilities. And it is precisely when those conditions change that the bill arrives.
The challenge, therefore, is to transform that momentum into a "profit because of," where the structure amplifies results instead of merely being carried along by them.
Three pillars of business reality
To evolve, if that is the goal, the business owner needs to understand the forces sustaining current success and where those forces hide traps for long-term continuity. Success is the balance among these forces:
1. "Profitable chaos" vs. "sterile control"
The contrast is visible in the market. On one side, technology companies that adopt Blitzscaling (prioritizing speed over efficiency in uncertainty scenarios) grow at extraordinary rates and capture entire markets, even with chaotic internal processes. As Reid Hoffman and Chris Yeh describe in the book "Blitzscaling" (2018), these companies sacrifice short-term efficiency and profitability in the name of speed, betting that scale and network effects will justify the investment over the long term. Profit cannot be minimized, but it should not be the alibi for inefficiency that will, in the future, demand its price.
On the other side, there is "Sterile Control." Research by Gary Hamel and Michele Zanini (London Business School / Management Lab) estimates that if the bureaucratic burden in OECD economies were cut in half, the gain would be around US$ 9 trillion in economic output. Banks with full governance (IBGC) and committees for every minor decision often operate at a loss because bureaucracy became an end in itself, suffocating agility. I have seen this happen in practice.
2. Hypocontrol vs. hypercontrol
The entrepreneur's gut feel (hypocontrol) is what enables agility and innovation. It is what Bain & Company calls the "Founder's Mentality." According to Bain's study across thousands of companies, those that preserve founder traits, customer focus, frontline obsession, and an insurgent mindset, deliver shareholder returns 3 times higher than peers, based on Bain data since 1990. The research also shows that only 1 in 9 companies manages to sustain profitable growth for more than a decade, and 85% of executives attribute that loss of momentum to internal factors, not external ones. In other words, the company does not stop growing because the market dried up. It stops because internal complexity suffocated what made it agile.
The problem is hypercontrol: when governance is imposed from the outside in, with no connection to the business, it kills that soul. The secret to longevity is not replacing boldness with rules, but creating a "Minimum Viable Structure" that protects profit without locking the owner down. I am already seeing this happen with some founders.
3. The founder's "religion"
In hypergrowth businesses, the owner's vision is the only compass. People do not follow processes. They follow a "religion," a purpose and charisma-driven devotion. That power generates a level of sacrifice that no compliance rule can replicate.
However, longevity requires that this "religion" evolve into a performance culture. If the company depends 100% on the leader's charisma to function, it is not a business. It is a cult. And cults die with their leaders. Real and lasting profit comes from turning "faith" into systems that work even when the founder is not in the room.
Conway's Law
A fundamental concept for understanding this bottleneck is Conway's Law, formulated by computer scientist Melvin Conway in 1967 and popularized by Fred Brooks in "The Mythical Man-Month." Conway observed that organizations produce systems that are faithful copies of their communication structures. Although the law was formulated in the context of software engineering, its logic applies forcefully to any company: the business as a whole is a "system" shaped by the way people communicate and make decisions within it. In the case of a company led by a centralizing founder, the "system" (the business) will be a direct reflection of his mental processing capacity.
As the company grows, internal complexity increases exponentially. If the founder remains the sole decision point, he becomes the bottleneck. The boldness that brought him this far is now the cause of "complexity inflation": the effort to keep the business running grows faster than the value generated. Profit continues to exist, but it is "profit in spite of" an owner who can no longer let go of the reins. And if he does let go, the cart goes off the road.
The longevity dilemma
In his classic "Built to Last" (1994), Jim Collins and Jerry Porras highlight that the visionary companies studied, with an average age of nearly 100 years, are those that manage to preserve the core (the founder's essence) while stimulating progress (the professional structure). The impulsive founder often confuses "preserving the core" with "maintaining absolute control."
The moment when the founder has no more options and must seek new ways of managing is when risk stops being an ally of opportunity and becomes an exposure that threatens the wealth that has been built. It is the moment to decide whether you want to be the owner of a sandcastle that shines in the sun today but collapses at the first high tide, or the architect of a lasting fortress that will pass through generations.
The chaos relevance test
But if you are a company founder reading this article, how do you know whether you still need decision-making informality or whether it is killing you? Use the Traction Matrix:
Authority synchrony
The transition from informality to longevity does not require textbook governance. It requires what we call Authority synchrony:
1. Identifying the "profit in spite of": Mapping where inefficiency is draining resources that could be reinvested in scale.
2. Controlled decentralization: Creating decision forums that do not depend on the owner but follow his "vision" (the religion transformed into principles).
3. Frontline professionalization: Investing in leaders who bring new perspectives, respect what has been built, and have the courage to challenge the founder, protecting the business from impulsive decisions.
The challenge for the successful business owner is understanding that professionalizing is not "losing power." It is scaling your vision. If a professionalization process means stripping the founder of essential powers, it was probably poorly executed. Value the profit you generate today, but build the structure that will ensure that profit is not just a lucky accident, but the result of a lasting business.
The final question that the founder must answer with complete honesty: Are you building an empire that survives you, or a monument to your ego and your own need for control?
Article originally published on GazzConecta.
