How & Why Does Decision Governance Change?

This text outlines eight mechanisms of governance change. Each mechanism is illustrated using an example of a decision process for infrastructure capital allocation.

Variables Used Across Mechanisms For Governance Change

Variable	Definition
Environmental Change (E)	External events affecting capital needs or constraints (e.g. regulatory, technological, economic).
Stakeholder Mobilization (M)	Organized input from internal or external actors (e.g. engineers, regulators, communities).
Formal Guidelines (L)	Documented decision procedures or criteria (e.g. capital budget rules, risk frameworks).
Institutional Norms (I)	Informal expectations or unwritten rules among decision participants.
Interpretive Framework (C)	How strategic goals (e.g. sustainability, resilience) are interpreted in governance.
Decision Outcome (J)	Capital allocation decision for a specific project.
Precedent (P)	Past decision patterns that shape current practices.
Informal Practices (U)	Repeated but undocumented behaviors in decision-making.
Social Expectations (S)	Normative expectations from stakeholders about how capital decisions should be made.
External Governance Models (T)	Processes borrowed or adapted from other organizations.
Governance Reform (R)	Adjustments to rules, roles, or processes in the capital allocation system.

Example Used In Mechanisms

Assume the following: Decision governance in an organization is such that it implements the decision making process which involves five stages: reaction, explanation, search, decision, and action. Each stage is defined as follows:

• Reaction: The stage when the decision maker has observed something that leads them to believe that they need to take action. At this stage, the decision maker has not decided yet what the right action should be.
• Explanation: The stage during which the decision maker is building an explanation of what happened, why it happened, and why the decision maker believes they need to take action in response.
• Search: The stage when the decision maker is identifying and refining options, each involving different possible actions the decision maker may be able to take. –
• Decision: The decision maker commits to an option.
• Action: The stage during which the decision maker is performing the actions described by the option they committed to.

Suppose the organization has a decision making process for allocating capital to infrastructure projects. Assume that this decision making process has the five stages mentioned above, namely reaction, explanation, search, decision, and action. 

This text is part of the series on decision governance. Decision Governance is concerned with how to improve the quality of decisions by changing the context, process, data, and tools (including AI) used to make decisions. Understanding decision governance empowers decision makers and decision stakeholders to improve how they make decisions with others. Start with “What is Decision Governance?” and find all texts on decision governance here.

Summary Of Relationships

The following diagram shows key variables mentioned in each mechanism. Links are labeled by the number of the section of this text, which mentions the said relationship between the variables.

1. Precedential Evolution

Governance changes incrementally through the accumulation and reinterpretation of past decisions. As recurring outcomes consolidate into recognizable precedents, they reshape the process across stages.

Rules:

• Precedent → Decision Outcome
• Decision Outcome → Precedent
• Precedent, Institutional Norms → Governance Reform

Example: If past capital allocations have consistently favored projects with short-term returns, this creates a precedent. Over time, institutional norms may formalize this into a default rule applied during the “search” and “decision” stages. Reform may occur when this pattern is challenged—e.g. in light of new ESG objectives—prompting a redesign of scoring models used in the “search” stage to favor longer-term benefits.

2. Rule-Based Reform

Governance is changed by formally revising guidelines in response to mobilized stakeholder input, often triggered by external change.

Rules:

• Environmental Change → Stakeholder Mobilization
• Stakeholder Mobilization → Formal Guidelines
• Formal Guidelines → Governance Reform

Example: A new climate regulation mandates stricter emissions targets for public infrastructure. Environmental Change (E) triggers Stakeholder Mobilization (M), such as internal sustainability officers lobbying for new investment criteria. This results in a revision of Formal Guidelines (L) that reshapes how the “explanation” and “search” stages are conducted—adding environmental impact metrics and carbon budgeting tools.

3. Strategic Reinterpretation

Reform occurs as the organization’s strategic objectives are reinterpreted, especially in response to internal and societal shifts.

Rules:

• Interpretive Framework → Decision Outcome
• Decision Outcome → Interpretive Framework
• Institutional Norms, Social Expectations → Interpretive Framework
• Interpretive Framework → Governance Reform

Example: Suppose the organization reinterprets its strategic goal of “resilient infrastructure” to prioritize digital connectivity over physical robustness. This changes how infrastructure needs are framed during the “reaction” and “explanation” stages. New models for assessing long-term digital impacts are introduced, reforming the governance system to align decision framing with updated strategic values.

4. Governance Benchmarking

Organizations adapt governance models from peers or industry leaders, especially in the face of performance gaps.

Rules:

• External Governance Models → Formal Guidelines
• External Governance Models → Institutional Norms
• External Governance Models, Institutional Norms → Governance Reform

Example: A benchmarking study reveals that comparable public agencies use participatory budgeting platforms during the “search” stage. Inspired by this External Governance Model (T), the organization pilots stakeholder co-prioritization tools for community infrastructure projects. As these tools become normalized (I), governance reforms are adopted to embed them in early-phase capital assessments.

5. Crisis-Driven Change

Acute disruptions lead to fast-track governance changes, bypassing typical deliberative processes.

Rules:

• Environmental Change → Formal Guidelines
• Environmental Change → Institutional Norms
• Environmental Change → Governance Reform

Example: A major flood causes billions in damage to public infrastructure. In reaction, fast-tracked processes for emergency project identification and approval are introduced. These changes bypass traditional “search” deliberations, allowing quicker transitions from “reaction” to “action.” Post-crisis, temporary reforms may be codified to expedite decisions in future emergencies.

6. Codification and Formalization

Informal but effective practices become formal rules, improving consistency and transparency in decision-making.

Rules:

• Informal Practices → Formal Guidelines
• Institutional Norms → Formal Guidelines
• Formal Guidelines → Governance Reform

Example: Project engineers have informally conducted site visits to validate feasibility during the “search” stage. Though useful, this practice is undocumented. As demand for auditability grows, it becomes codified into the capital review process. Governance reform formalizes engineering validation as a required step before financial modeling.

7. Pragmatic Alignment

Governance evolves through iterative adaptation to stakeholder pressures, real-world constraints, or operational feedback.

Rules:

• Social Expectations → Decision Outcome
• Social Expectations → Institutional Norms
• Social Expectations, Institutional Norms → Governance Reform

Example: Community pushback against highway expansion alters expectations about engagement. As a result, the organization modifies the “explanation” and “reaction” stages to include earlier and broader consultation. Over time, new protocols emerge requiring stakeholder review before internal options are developed, aligning decisions with evolving legitimacy norms.

8. Normative Drift

When deviations from formal processes persist and gain legitimacy, they eventually reshape formal governance.

Rules:

• Informal Practices → Social Expectations
• Informal Practices, Social Expectations → Governance Reform

Example: Budget officers frequently adjust ranking scores informally during the “decision” stage to balance regional equity. While not permitted by guidelines, this practice becomes widely accepted and expected. Eventually, equity weighting is added as a formal criterion, reforming governance to reflect established behavior.

Summary: Influence Across the Five Decision Stages

Stage	Susceptibility to Change	Influential Mechanisms
Reaction	High (to external shocks, framing)	Crisis-Driven, Strategic Reinterpretation
Explanation	Medium (to interpretive shifts)	Strategic Reinterpretation, Benchmarking
Search	High (to procedural innovation)	Codification, Benchmarking, Rule-Based Reform
Decision	High (to precedent, pragmatism)	Precedential Evolution, Pragmatic Alignment
Action	Low–Medium (affected by implementation norms)	Normative Drift, Crisis-Driven Change

Change in decision governance is driven by both external imperatives and internal factors. In the context of capital allocation for infrastrucure projects, governance change can originate in the formalization of informal practices, reinterpretation of strategy, or reaction to crisis. Each mechanism has distinct implications across the five stages of the decision process—reaction, explanation, search, decision, and action.

A resilient governance system will anticipate and integrate these changes systematically, using monitoring and feedback at each stage to ensure alignment with evolving priorities and stakeholder expectations.