The Leadership Gap: Why Boards and Chief Executives Fall Behind in Constant Change

Updated October 21, 2026. First published October 25, 2023.

Constant change exposes the distance between how boards and chief executives were built to work and what the moment asks of them. The remedy is not a new philosophy of leadership but a set of disciplines, grounded in evidence, that both can adopt now.

In Brief

The Problem. Traditional board governance looks backward at results and risk, and traditional chief executive leadership concentrates decisions at the top. Both designs fall behind when technology, markets, and regulation change faster than a quarterly cycle.

Why It Persists. The habits that fail are the habits that once succeeded: incremental choices, deference to past performance, collegial silence, and short-term incentives. Directors themselves report gaps in skills, candor, and information.

What Boards Should Do. Keep the division of labor clear, then do each role faster and better: protect time for what is changing, refresh the board deliberately, make dissent normal, push decisions to where the information is, and pay for the long term.

The era of constant disruption calls for leadership that is proactive, looks ahead, and is comfortable with ambiguity. Traditional models of board governance and chief executive leadership often emphasize past performance or competitors' moves rather than future-focused strategy. Boards can become trapped in analysis, while chief executives can become trapped in rigid hierarchies.

Most boards were designed for a world that changed slowly enough to review it quarterly. Most chief executives rose by executing well inside a stable model. Neither design fails all at once. It fails at the margin, in the decision that came a quarter late or the dissent that no one voiced. That is the leadership gap. My argument is that closing it does not require either side to take over the other's job. It requires each to do its own job with different disciplines. The counterintuitive part is that the board that adapts best is often the one that interferes least in management and asks the hardest questions.

Two Roles, One Division of Labor

The board's oversight, guidance, and decisions shape a company's long-term strategy and its resilience. Understanding the core functions of each role is the starting point; the more useful question is where those functions break down.

What the Board Does

Board governance is the oversight, accountability, and strategic direction a company's board provides. Delaware law, which governs many United States corporations, provides that a corporation's business is managed by or under the direction of its board (Del. Code Ann. tit. 8, § 141(a)). Four functions follow.

• Fiduciary responsibility. In my 2023 article I wrote that the board acts in the best interests of "shareholders and stakeholders" and maximizes long-term value. That was imprecise. Directors owe fiduciary duties of care and loyalty, which include a good-faith duty to oversee the risks the company faces (Chapman et al., 2023). Safeguarding assets, ensuring compliance with laws and regulations, and building long-term value are how that duty shows up in practice.
• Strategic oversight and guidance. The board guides the chief executive and the executive team, approves major strategic plans and the significant investments management proposes, and offers its view on emerging risks and opportunities. In 2023 I wrote that boards "make significant investments." Management makes them; the board approves them.
• Chief executive selection and evaluation. One of the board's most important functions is selecting, supporting, and evaluating the chief executive. The board sets expectations, provides performance feedback, and determines compensation.
• Risk oversight and compliance. Effective boards make sure risks are identified and assessed, and they work with management to put systems and safeguards in place against financial, operational, and reputational harm.

What the Chief Executive Does

The chief executive sets the tone for the whole organization. The chief executive's leadership style, view of the future, and ability to build a strong team largely determine the company's trajectory. Traditional top-down, short-term models, however, can limit even a very capable chief executive.

• Setting vision and direction. The chief executive articulates where the company is going and translates that view into strategy that the organization can align around.
• Building the executive team. The chief executive recruits and develops senior leaders and holds them accountable, individually and as a team.
• Leading the culture. The chief executive embodies the company's values and shapes "the way things are done," which affects engagement, innovation, and performance.
• Executing strategy. The chief executive oversees the translation of plans into operations, monitors results, and allocates resources.
• Representing the company. The chief executive is the company's face to investors, analysts, the media, and other stakeholders.

Constant change tempts both sides to cross the line between these roles. Boards that feel behind start to manage. Chief executives under pressure start to manage the board. The better course is for each to do its own job faster and with better information.

A World in Constant Change

Several forces question traditional business assumptions at once. The ones I see boards contend with most are these.

• Technological change. In 2023 I listed AI, blockchain, and the Internet of Things together. Three years later, AI has separated from the others as the technology boards must govern. In PwC's 2026 survey of about 600 public company directors, 71 percent identified AI as an area where their board lacks skills, and 60 percent said AI is not yet part of board oversight (Gaskin, 2026).
• Changing market dynamics. Customer expectations evolve quickly, and emerging markets and global competition add further complexity.
• Economic volatility. Supply chain disruption, energy prices, and geopolitical tension make the operating environment less predictable and require leaders who anticipate shifts.
• Workforce demographics and values. A workforce that spans several generations, and expectations of balance, social responsibility, and purpose, call for a different leadership style.
• Environmental and sustainability concerns. Climate and resource constraints push organizations to adapt their operations and their offerings.

These forces change the nature of uncertainty itself. Traditional forecasting is less reliable, so strategies must be adjustable. Events outside all expectation, such as the COVID-19 pandemic, require the ability to change course under pressure. And many challenges have no ready solution, so leaders must be willing to experiment without becoming paralyzed. Not all of these conditions call for the same response: frequent but understandable change calls for agility, uncertainty calls for more information, complexity calls for structure, and situations with no precedent call for experimentation (Bennett & Lemoine, 2014).

Where Boards Fall Behind

Board practices rooted in historical analysis and risk mitigation can produce a reactive mindset. Boards tend to fall behind in four ways when conditions shift quickly.

• Reactive rather than proactive. Boards excel at analyzing past performance and mitigating known risks. That focus makes them slow to act on signals of what comes next.
• Siloed thinking. Boards composed of experts in separate areas may not see how one risk feeds another across functional lines.
• Incrementalism. An emphasis on predictable outcomes favors incremental choices, because incremental choices are easier to defend.
• Limited stakeholder engagement. Boards that hear from too few stakeholders, such as employees, customers, and the communities the company serves, miss problems that those groups see early.

Directors recognize these limits. In the National Association of Corporate Directors (NACD) 2026 outlook, published in December 2025, only about one-third of directors were strongly confident in their board's collective skill set (NACD, 2025). In the 2026 PwC survey, 55 percent of directors said at least one fellow director should be replaced, and only 36 percent said their boards build skills gaps into succession planning (Gaskin, 2026).

Candor is the quieter problem. In the same survey, 27 percent of directors said a wish to keep a collegial atmosphere made directors reluctant to voice dissent (Gaskin, 2026). A board that cannot disagree cannot adapt.

Where Chief Executives Fall Behind

The traditional chief executive model emphasizes control and a narrow focus on the competition. Chief executives face four versions of the gap.

• Centralized decision-making. When decisions stay at the top, response slows and front-line knowledge never reaches the decision.
• Short-term focus. Pressure to deliver near-term results, especially in public companies, crowds out investment in new technologies and business models.
• Resistance to change. Chief executives who succeeded under one model may resist changing their style or strategy even when conditions call for it, and the organization follows their lead.
• Overreliance on past success. Strategies that worked before become the template for problems they were not designed to solve.

The short-term pressure is well documented. In a survey of 401 financial executives, Graham et al. (2005) found that 78 percent would give up economic value to report smooth earnings, and 55 percent would avoid starting a project with a strongly positive net present value if it meant missing the quarter's consensus estimate. The study is two decades old, but the incentive it describes has not gone away. The cost is measurable. The McKinsey Global Institute classified 615 large and mid-sized United States companies by their orientation and found that, from 2001 to 2014, the long-term group's cumulative revenue grew 47 percent more and its earnings 36 percent more than the others' (Barton et al., 2017).

How These Limits Create Vulnerability

Organizations bound to a traditional leadership mindset are more likely to lose ground to more agile rivals or to be unprepared for disruptive innovation. The vulnerability shows up in four ways. They miss opportunities, because the board and the chief executive stay with what is familiar. They respond slowly, because hierarchical decisions and analysis of past data delay action. They take too little risk, because a culture of risk aversion prevents the bets that uncertain markets reward. And they lose talent, because capable people seek organizations with purpose, autonomy, and room to innovate.

A Different Model: Integrated Leadership

In 2023 I proposed a model under a different name. I now call it integrated leadership, and I have kept only the parts that rest on evidence or on reasoning a skeptical director can test. The model asks leaders to look at themselves, at the people they lead, and at the organization's effect on the wider system it operates in. Five principles remain.

• Character before technique. Skills matter, but a leader's mindset, values, and presence determine how the skills are used, especially under pressure.
• Development of the whole person. Leaders and their teams grow cognitively, emotionally, and socially, not only in technical skill. In 2023 I added a spiritual dimension; I have removed it because it is outside what a board can assess or what this article can support with evidence.
• Systems thinking. Leaders see the organization as part of a larger system and weigh the effect of decisions on everyone the system includes.
• Shared purpose and values. Leaders build a shared sense of purpose and align actions with values that extend beyond profit. In 2019, 181 chief executives signed the Business Roundtable statement committing their companies to deliver value to customers, employees, suppliers, communities, and shareholders (Business Roundtable, 2019). For directors, that purpose must still be reconciled with the fiduciary duties described above.
• Language shapes decisions. In 2023 I wrote that language does not just describe reality but shapes it. The evidence supports a narrower version. When Tversky and Kahneman (1981) described the same public health program in terms of lives saved, 72 percent of respondents chose the certain option; when they described it in terms of lives lost, 78 percent chose the risky one. How a chair or chief executive frames a decision changes the decision. Leaders should frame deliberately and ask how the choice would look framed the other way.

Ten Practices

The principles become practices that change how leaders approach their roles. I list the ten from my original article, with corrections where the evidence required them.

• Empowerment and distributed leadership. Develop leaders throughout the organization and push decisions to where the information is, with clear decision rights and escalation rules.
• Self-awareness. Leaders who recognize their own reactions under pressure can respond thoughtfully rather than automatically. In 2023 I recommended mindfulness practice for this purpose. An integrative review of the research on mindfulness at work proposes that it acts through attention, which in turn affects cognition, emotion, behavior, and physiology, and through them performance, relationships, and well-being (Good et al., 2016). The review sets out a framework and a research agenda rather than settled proof, so I offer the practice as one I find useful, with that evidence behind it.
• A view of the future. Articulate where the organization is going in terms that go beyond incremental goals.
• Conversations that change outcomes. Hold conversations that challenge limiting assumptions, not only conversations that solve the problem in front of the team.
• Stakeholder focus. Recognize employees, customers, communities, and the environment as part of the system the organization serves.
• Disciplined intuition. Experienced leaders often sense a problem before the analysis confirms it. In my view that sense is most reliable in domains where a leader has deep experience and has seen the results of past decisions; it is least reliable in new domains, and it should prompt analysis, not replace it. Research on managerial intuition supports that view: Dane and Pratt (2007) propose that the effectiveness of intuition depends on the decision maker's domain knowledge, how that knowledge was learned, and the characteristics of the task.
• Comfort with complexity. Accept that solutions are not always straightforward and that decisions must often be made with incomplete information.
• Continuous learning. Treat challenges as opportunities to learn, for leaders and teams alike.
• Attention to well-being. Individual well-being supports organizational performance, and a culture that supports balance and resilience retains people.
• Ethical leadership. Build an organization that is socially responsible as well as successful.

What the Evidence Supports

In 2023 I wrote that this model produces "quantifiable strategic benefits" and is "a proven alternative." I could not support those claims as written, and I have withdrawn them. Two narrower claims are supported. First, teams learn when members believe they can take interpersonal risks without penalty; Edmondson (1999) found that this psychological safety was linked to learning behavior, and that learning behavior was linked to team performance. Second, companies managed for the long term outperformed their peers on revenue and earnings growth over more than a decade (Barton et al., 2017). Resilience, innovation, stronger teams, and sustainability are the outcomes I expect from the practices above; they remain expectations, and boards should measure them.

Applying the Model: Board and Chief Executive

My original article illustrated the model with two image-only tables of use cases. Their content could not be recovered for this revision, so I set out the practices here in text.

In the Boardroom

Traditional governance emphasizes financial metrics and risk mitigation. Applied to the board, the model lets directors look ahead without taking over management.

• Protect forward-looking time. Set a fixed share of each board meeting for what is changing, not for what already happened. Ask management to bring signals, scenarios, and the decisions they imply. More than 60 percent of directors in the NACD outlook said their boards were adding strategy discussion to meetings (NACD, 2025).
• Refresh the board on purpose. Tie director evaluations and succession planning to the skills the strategy now requires. AI is the current test.
• Make dissent normal. Invite the dissenting view before the vote, and assign a director to argue the other side on major decisions. Chairs build the psychological safety that Edmondson described.
• Widen the stakeholder view. Ask how employees, patients or customers, and communities see a major decision, and record the answer.
• Pay for the long term. Compensation committees should test whether incentives reward the results the strategy needs over three to five years, not only the next earnings report.

In the Executive Suite

The chief executive must balance decisive direction with empowering others. In continuous disruption, a rigid top-down style becomes a liability.

• Delegate with rules. Push decisions to where the information is, with clear decision rights and escalation rules, and tell the board what those rules are and what reached the top under them.
• Bring the board bad news early. A chief executive who reports problems while they are small builds the trust that lets the board stay out of management.
• Frame decisions both ways. Present major choices in terms of what could be gained and what could be lost.
• Measure the culture. Track whether people raise concerns, whether good ideas reach the executive team, and whether talent stays.

The Strongest Objection

The strongest objection is that this is a softer version of governance that boards cannot afford. Directors are fiduciaries, not coaches; their job is oversight, and talk of purpose, intuition, and self-awareness distracts from risk, capital, and the chief executive's performance. A board under legal and financial scrutiny, the argument goes, should become more disciplined, not more expansive.

I agree with the premise and disagree with the conclusion. That is why this revision drops the parts of my 2023 model that a board cannot assess and keeps the parts that are disciplines: time on the agenda, deliberate refreshment, structured dissent, clear decision rights, and long-term pay. None of them asks the board to run the company. Each makes oversight sharper. The evidence that boards need them comes from directors themselves: a quarter who see collegiality suppressing dissent, a majority who would replace a colleague, and few who plan succession around skills gaps. The board keeps its nose in and its fingers out. It asks better questions, sooner, and expects better answers.

Closing the Gap

The era of relentless change is not a temporary challenge. Boards and chief executives who rely on models built for slower change put the long-term health of their organizations at risk. Closing the gap requires more than new skills; it changes how the board functions, how the chief executive leads, and how the culture forms. The change is demanding, but for organizations that want to do more than survive this period, it is worth the effort.

For the Board

• What share of our last four meetings went to what is changing, and what share went to what already happened?
• Which skills does our strategy require that the board does not have today, and how does our succession plan close the gap?
• When did a director last change the outcome of a major decision by disagreeing, and do our minutes show it?
• Which decisions has the chief executive delegated, under what escalation rules, and what reached us under those rules?
• How did management frame the last major decision it brought us, and would we have decided differently if it had been framed the other way?
• Do our incentives reward the long-term results our strategy depends on?

To discuss how your board can apply these disciplines, book a conversation.

References

Barton, D., Manyika, J., Koller, T., Palter, R., Godsall, J., & Zoffer, J. (2017). Measuring the economic impact of short-termism (Discussion paper). McKinsey Global Institute. https://karriere.mckinsey.de/~/media/mckinsey/featured%20insights/long%20term%20capitalism/where%20companies%20with%20a%20long%20term%20view%20outperform%20their%20peers/measuring-the-economic-impact-of-short-termism.pdf

Bennett, N., & Lemoine, G. J. (2014). What VUCA really means for you. Harvard Business Review, 92(1/2). https://hbr.org/2014/01/what-vuca-really-means-for-you

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Del. Code Ann. tit. 8, § 141(a). Retrieved October 21, 2026, from https://delcode.delaware.gov/title8/c001/sc04/

Edmondson, A. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44(2), 350–383. https://doi.org/10.2307/2666999

Gaskin, J. L. (2026, September 23). Boards say they need more from management on AI. Corporate Compliance Insights. https://www.corporatecomplianceinsights.com/boards-say-they-need-more-from-management-ai/

Good, D. J., Lyddy, C. J., Glomb, T. M., Bono, J. E., Brown, K. W., Duffy, M. K., Baer, R. A., Brewer, J. A., & Lazar, S. W. (2016). Contemplating mindfulness at work: An integrative review. Journal of Management, 42(1), 114–142. https://doi.org/10.1177/0149206315617003

Graham, J. R., Harvey, C. R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1–3), 3–73. Working paper version: https://www.nber.org/papers/w10550

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