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- Board decisions are made under uncertainty, where waiting for perfect information is rarely an option.
- While caution has its place, delaying decisions can subtly reshape outcomes, narrowing future choices and increasing risk.
- The challenge for boards is not avoiding error, but making timely, defensible decisions in imperfect conditions.
Fear of making the wrong call can be as risky as the wrong call itself. In boardrooms, hesitation doesn’t freeze outcomes, it changes them, often narrowing options and raising the stakes over time.
Board decisions are rarely made without a degree of risk or uncertainty. Major capital investments may be based on projections, not guarantees. Disruption may require a response before its full impact is clear.
While caution may be appropriate, delaying decisions due to uncertainty, incomplete information or fear of making the wrong call can create more governance risks than those based on well-tested, defensible assumptions.
History is littered with examples of costly indecision in the boardroom.
Kodak is still cited as a case where delayed commitment to digital imaging allowed competitors to define the market. More recently, Meta founder, chair and CEO Mark Zuckerberg admitted his company was slow to act on the competitive threat of short-form video platform TikTok. Meta’s eventual launch of rival platform Reels required heavy investment to regain momentum.
“In fast-moving areas, hesitation can lead to missed opportunities,” says Alison Watkins AM FAICD, non-executive director, PGA of Australia, Reserve Bank of Australia, Wesfarmers and CSL.
“The challenge is not to avoid risk, but to take informed, calculated risks aligned with the organisation’s objectives. Effective boards weigh consequences rather than wait for certainty.”
The risk of indecision
When boards delay decisions, not only does momentum stall, but organisations can lose direction while competitors move ahead. What’s more, stakeholders may interpret indecisions as incompetence, especially during high-stakes moments.
Then there’s the added danger that waiting too long could lead to decisions being made under tighter deadlines and greater pressure.
But according to Watkins, board indecision can also undermine a CEO and management team.
“Delayed decisions can indicate a lack of confidence in a recommendation or direction that management has proposed,” she says. “It’s very important that a strong alignment is maintained between the board and management.”
Dr Kath Hall, founder and director of Just Governance, says delaying a decision is “not a passive act”.
“It can change timing or shift the context, and can materially affect outcomes,” she says. “As conditions evolve, the range of available choices often reduces. What may have been a viable option earlier may become more costly or no longer feasible later.”
Hall, until recently a part-time non-executive director and company secretary of Women’s Justice Network, adds that the fear of getting it wrong can reinforce indecision and create a cycle where uncertainty feeds further hesitation.
“Delay is a governance risk in itself,” she says. “While the consequences of poor decisions are often visible and measurable, the consequences of inaction are harder to detect until they become significant.”
Dynamics in the boardroom
Different decisions require different risk thresholds. Areas like safety or regulatory compliance, for example, demand a low tolerance for uncertainty, while strategic and investment decisions, such as investments in AI, often require a higher risk appetite.
Philip Hardy, Ashurst head of risk advisory, notes another challenge is knowing when to invest in change.
“High-performing products or services may still be generating strong returns, even as disruptive threats emerge,” he says. “Reinvesting too early can impact short-term performance and be difficult to justify. Waiting too long risks falling behind. Boards must judge not only whether to act, but when and at what scale.”
Hall says while directors have a duty to be informed, they’re not expected to eliminate risk, but to make decisions within it.
“Decision making is strongly influenced by boardroom dynamics,” she says. “Where there is psychological safety, stable leadership and effective governance processes, boards are better able to challenge ideas and reach decisions more effectively.
“Where these conditions are absent, participants may withhold views, leading to reduced engagement and delayed decisions. Silence in the boardroom can become a barrier to timely governance.”
Balancing prudence with momentum
Decision making inherently involves uncertainty and risk, explains Watkins, noting boards rarely have a complete picture.
“This is why boards are structured with a breadth of skills and experience to enable collective judgement,” she says. “Achieving the right balance between caution and action depends on process and clarity. Early and ongoing engagement between management and the board, particularly between the CEO and chair, is essential.
“Complex issues should be discussed well before they reach a formal decision point,” adds Watkins. “By the time a decision is required, directors should feel confident they’ve kicked ideas around, had sufficient input and access to information.”
Hall believes the challenge is not always a lack of information, but an inability to interpret large volumes.
“In some cases, there is an overload of information without a clear framework for decision making,” she says. “Ultimately, effective decision making requires balancing short-term realities with long-term consequences, while avoiding the trap of over-analysis.”
Enterprise risk management frameworks and risk appetite statements can play a key role in ensuring a meeting of minds around different risk thresholds.
“Boards do not need perfect information to act, but they do need a strong process and a shared understanding of risk,” says Watkins.
Hardy says “premortem thinking” – testing of decisions by asking what would happen if key assumptions proved wrong – can help to balance prudence with momentum.
“This involves clearly identifying options and underlying assumptions, and considering alternative scenarios,” he says. “It also requires thinking through consequences – if the decision fails, what happens next?”
Making defensible decisions
How can boards know when enough information is truly enough?
Hardy says a practical way is to establish clear decision criteria upfront to define what matters most and to guide what information is needed. For example, what would the criteria be for making a call on a high-stakes digital transformation project?
“One criterion might be that we’ve assessed all the alternatives, such as upgrading the platform rather than rebuilding it,” says Hardy.
“Another might be that we have assessed customer requirements and validated that they are going to want this in three years. Another might be that we can control the spend, scale and speed of this program through effective gating and governance arrangements.”
Hardy notes that assessing decisions against criteria provides a structured and objective foundation, even in uncertain conditions.
“In this context, the goal is not perfection, but defensibility,” he says. “It’s about making decisions that stand up to scrutiny, even with the benefit of hindsight.”
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