Who pays when the decision is wrong?

Corporate stagnation and the architecture of responsibility

My professional insights · Lyudmil Karaulanov · 7 min read

Published: 16 October 2026 · Version 1.1

After an unsuccessful transaction, it may turn out that everyone completed their tasks. The finance team checked the calculations, the lawyer revised the contract, and the managing director signed after obtaining approval. Yet no one examined carefully enough whether the overall decision achieved its purpose.

At such a moment, “Who is to blame?” is understandable, but does not yet help improve the way work is done. A more useful question, to me, is who should have brought the separate assessments together and taken responsibility for the final judgement. Without that role, good professional work on the parts may leave no one responsible for the whole.

A familiar scenario

The company signs a new lease, acquires an asset or enters a major partnership. The lawyer has checked the clauses and identified the legal risks. The finance department has calculated cash flows and given the green light on specified assumptions. Operational management has received instructions to execute. Six months later, the project is generating losses, delays and internal conflicts.

The explanations from the individual departments sound convincing. The legal adviser confirms that the contract contains the agreed protections. The financial analyst notes that the calculations are accurate given the assumptions originally supplied. Operational management reports that the task was completed within the resources provided.

Everyone accounts for their own role. Yet the project loses value because no one checked how these parts work together in practice. A legally sound contract does not guarantee economic success, and an accurate spreadsheet does not prove that its assumptions are correct.

Who does the work, and who answers for the result?

A specialist can examine their own area without having authority to decide whether the company should take on the commitment at all. It helps if this distinction is understood in advance. Otherwise, a signature confirming legal or financial review can easily come to be interpreted as general approval of the commercial choice.

The person carrying out the work prepares the contract, model or negotiations. The person accountable for the outcome brings these perspectives together, checks that they fit and secures a decision at the right level. To do so, they need a mandate, information and resources appropriate to the task. This is an organisational distinction. It does not automatically transfer statutory duties or financial liability.

As the business grows, procedures can become a shield. Several signatures create a sense of control without clarifying who monitors whether the decision actually works.

A defensive culture breeds stagnation

When every mistake prompts a search for the person without enough signatures behind them, people naturally begin protecting themselves. They copy more colleagues, seek more approvals and avoid taking a firm position. The defensive habit is understandable, but its price is increasingly difficult and slower decision-making.

Passing the buck becomes a core operational skill. Procedures cease to make work easier and become a means of transferring risk to another department. Every possible improvement is abandoned because it carries a risk of error.

The way out is not another signature

The way out of stagnation is rarely another approval level. Sometimes new rules are needed, but useful rules remove ambiguity rather than add a signature to it. The way out requires realigning incentives and the values underlying the organisation's culture.

For me, every key initiative needs clarity about who is responsible for assembling the full picture and following the outcome. This does not turn everyone else into advisers without responsibility of their own. The board retains its decisions, while the legal, finance and control teams retain their professional duties and necessary independence. The business leader takes acceptable commercial risk within their mandate. Personal resolve, however, cannot turn a prohibited action into an acceptable one.

Good team assessment recognises contributions to the overall outcome without rewarding convenient silence about risk. A bonus for a control function that depends solely on completing the deal may weaken the very scrutiny for which that function exists. Useful criteria include the quality of analysis, timely warnings and the feasibility of proposed solutions.

A mature business distinguishes a reasonable attempt within agreed limits from negligence and concealment of information. A bad outcome is a reason to examine the judgement. It is not in itself proof of a bad decision.

How shared responsibility is built

Management can show that it expects honest judgement and ownership of a task within clear limits. It does so by distinguishing a good-faith mistake from a neglected duty and examining the conditions in which the decision was made. Otherwise, the invitation to show greater initiative remains a risk only for the person who believes it.

Practical change can begin with a brief note before each significant decision: the purpose, key assumptions, acceptable loss, person responsible and review date. The subsequent check considers not only whether tasks have been completed, but whether the assumptions remain true. For example: if leased premises fail to obtain the necessary permit on time, who has authority to stop expenditure or seek an exit from the contract?

For a family business, this is also a succession issue. If the founder personally brings together all the conflicting signals, the organisation appears orderly only while the founder is there. The next generation deserves to inherit a visible decision-making process, rather than a list of people to call when procedures do not align.

Where is the point of instability?

What this concept means →

It appears when numerous approvals create a sense of collective security, but no one has a clear task to assess the overall result. An additional signature will not fill that gap on its own.

Someone is needed who has authority to decide, access to material information and a duty to explain their choice. Others can raise warnings and remain responsible for their own competent work. Collective participation then retains its meaning without diluting personal responsibility.

This material is of a general analytical nature and does not constitute individual legal, tax, financial or investment advice.