The Third Rail of Business

“I think we have to fire my dad.”

This rather surprising line was uttered by Christine near the end of a consulting session with me.

She and her husband Josh (names have been changed to protect the innocent) ran a highly successful business providing boat lifts for residential docks. Two hours earlier, they had started the conversation with a very different comment: “We need your help redesigning our sales commission structure.”

They were smart, capable founders. Installation was humming, referrals were up. But operationally, things felt sideways. Jobs were slipping through the cracks, or missing opportunities, or routed inefficiently for the installers. They felt the indigestion and diagnosed it as a comp plan problem.

This is what the Winchester House does to you. Josh and Christine were too close to the architecture. They couldn’t see the load-bearing walls; they just knew the floor felt crooked.

I didn’t redesign their commission structure. Instead, we spent two hours tracing every operational oddity backward. We followed the trail of dropped balls, misaligned territories, and “the way we’ve always done it” excuses directly to the feet of the company’s founder and former CEO: Christine’s father. He had stepped down from the helm, but he was still quietly steering the ship into the rocks.

Josh and Christine hadn’t seen it on their own because a system can’t diagnose itself. My job wasn’t to swing a wrecking ball from the outside; it was to hand them a flashlight and force them to look at the room they’d been intentionally walking past for two years. (We did this during a walk outside. More corporate meetings need to happen on walks. The sun, fresh air, and bilateral movement break loose thinking that will never happen in cushy chairs under fluorescent lights. I will fight anyone who disagrees with this.)

What got the company to $5M was Christine’s dad. And…he’s what was holding them back from $20M.

Let me pause here: There are two types of people. Most people have read down this far and curled their toes up inside their shoes because they’re so uncomfortable even reading about this conversation. Then there are a few who tend to cut more liberally than a barber trying to make his flight (Spoiler: I am one of the latter). Let me spend a moment talking to those of you who tend that direction. Because before you grab a machete and start hacking away at your own family members, tenured VPs, and legacy systems, we need to talk about the Chesterton Fence.

The writer G.K. Chesterton formulated a principle that goes like this: Do not remove a fence until you know why it was put up in the first place.

When leaders finally recognize their Loyalty Tax, the instinct is immediate amputation. They want to fire the beloved-but-incompetent sales director tomorrow. They want to unplug the legacy software tonight.

Don’t. The fence was built for a reason. That beloved sales director might be functionally useless at managing a modern CRM, but he might also be the only reason your three biggest clients haven’t left for a competitor. The legacy server might be a nightmare, but it might also be the only thing keeping your inventory system from crashing. (I use this principle a lot when running workshops. We’ll often lead the executive team to a major realization and they will want to take immediate action. That’s usually not a good idea.)

You must cut away the Loyalty Tax to find clear signal. But you must treat it with respect. You have to pry up the floorboards, figure out exactly what load-bearing wiring is connected to that sacred cow, and reroute it before you make the cut.

It doesn’t have to be a family-owned business for this to be true. Instead of a family member, it can be the venerated founder’s ideas, a beloved VP of sales who nobody has the heart to argue with, or even a set of core values that underpinned the company from day one.

Simple short-term decisions are the most common additions to the Winchester House, to be sure. They accumulate the most over time. However, they can often be easier to deal with. Not because they’re less complicated from an operational or technological perspective; no, often they are the most complicated ones. (Like the time I worked for someone who had nine, count ‘em, NINE SMS providers under one roof.) It’s a good illustration that simple <---> complex is not the same spectrum as easy <---> hard. Because touching the third rail in a business is a very simple thing to do.

It’s also the hardest.

They can go by many names: Third Rails, Sacred Cows, Unexploded Ordnance (everyone knows the bomb is there, they just plow around it, not risking it exploding). I have on occasion been known to refer to one as a Horcrux: in this specific case, a company I once worked for had a massive piece of legacy software that everyone hated. Just hated. But the very long-tenured CTO, one of the original employees, had built it and more or less put their soul into it. (Get it? Horcrux? …ask a friend if you don’t.) This particular person likely would have been fired long ago were they not the only one who really knew the system, so also just like a Horcrux, it was keeping them alive.

The CEO never had the heart, as long as I was there, to make the call that was clearly obvious to everyone. That company churned through both developers and IT people as no one wanted to work within that system, or connect to it, or otherwise incur the wrath of the CTO. It was a boat anchor around their technology for years. A while after I left that CTO eventually retired and that company made leaps and bounds out of the paralysis they had been in because of such legacy systems. (For those of you who know: think AS400, but more custom and even worse.)

Leaving the legacy around is “easy”. Making the hard call to move beyond it is “hard”.

Except…they’re both hard. That’s the part that executives often miss.

Too often I come into a situation and the Loyalty Tax is on full display. And often everyone except the person who has the authority to make the call is dying for them to do it. Companies lose good people, or good people become demoralized, less effective, and therefore mediocre people, because of the unwillingness to make the hard call.

There are feelings there. How could there not be? One company I worked with for a long time called them Sacred Cows, and had a policy against them. However, they still persisted. Because the call can be hard to make. Sacred Cow is a good analogy: these aren’t just a herd of bovine grazing on the hillside, waiting for their turn to be transformed into ribeye. (Or porterhouse, or filet, or brisket. You do you.) These are cherished pets. They have names. Their owners feed them by hand and take them into the house at night so they don’t get cold. Shooting a sacred cow is bound to get someone, often many someones, upset.

And yet, it is necessary to remove the noise to find a clear signal again. More on how to do so next week.