When capital is committed before control is exercised, leadership is no longer deciding outcomes, only absorbing consequences.
That sentence is doing more work than it looks like it is. It is not about compliance, and it is not about risk appetite. It is about sequence.
The sequence problem
In most capital-intensive enterprises the sequence has quietly inverted. A project starts moving because it has to. Commitments are made — a contractor is engaged, a long-lead item ordered, a subsidiary begins work — and the governance catches up afterwards. The approval, when it arrives, ratifies a position rather than authorising one.
Nobody decided to run it that way. It is what happens when the decision path is slower than the delivery path. Given a choice between missing a window and getting ahead of an approval, capable people get ahead of the approval, and they are right to. The process made that the rational move.
Why it never shows up as a number
The cost of this is real and almost perfectly invisible.
It is not a line item. There is no account called “administrative lag”. The interest on capital committed but not yet working, the cost of a delay that pushed a milestone into the next quarter, the discount surrendered because a decision took eleven days instead of three — none of these arrive with an invoice attached. They are absorbed into project cost and read, later, as a variance.
That is the tax. It is charged on every decision, it compounds with the size of the portfolio, and it is paid out of the same budget that funds the work.
What actually fixes it
Not more governance. More governance is what created the gap: each additional control added time to the decision path without adding time to the delivery path, so the two drifted further apart.
What closes it is making governance faster than the thing it governs. Concretely, three properties have to hold at once:
- The authority is known before the case arrives. If the system already holds your Delegation of Authority, it does not have to ask who may decide. It routes.
- The case assembles itself. If the data lives in the ERP, the procurement suite and the service desk, the case should be built from those systems rather than typed out of them.
- The decision writes back. A resolution that ends in the minutes of a meeting has not finished. It finishes when the system that will act on it has been told, with the authority attached.
Do those three and the approval stops being the slow step. The sequence rights itself, because there is no longer an advantage in getting ahead of it.
The test
There is a simple diagnostic for whether you are paying this tax. Take one recent decision of consequence and ask how long it took between the moment the case was ready and the moment the money was authorised to move. Then ask what the organisation did during that interval.
If the honest answer is “started anyway”, the tax is being paid. It is only a question of how much.