Ungoverned

Why modern business is becoming intractable

Perhaps the most stunning feature of the FT opinion piece that A US recession doesn’t seem so likely anymore is the stark callout of the US president's whipsaw policies as the primary cause of a possible recession, and that it was manufactured.

Michael Strain, the director of economic policy studies at the American Enterprise Institute, wrote:

The massive uncertainty from Trump’s volatile trade policy will be a drag on business investment and expansion.

So, while a recession might not be on the near-term horizon, US trade policy will still be an issue that businesses must contend with in other ways. It’s incredible to think that just a few months ago, Trump was at Davos touting how America is open for business.

The irony deepens when you consider that his appearance came just one week after the release of The World Economic Forum’s Global Risks Report. Respondents there put Geoeconomic confrontation as the third most likely near-term risk to manifest (see page 30 for details).

It's another reminder that we’re no longer dealing with external environmental and social shocks alone. We’re manufacturing intractable problems through inconsistent policy and shallow, siloed thinking.

Still, these manufactured crises are shaking the foundation of a stable business operating environment. Any external crisis could easily tip the entire system over because many of these risks are interconnected, and we lack the systemic mindset to consider them in that way. We approach problems like this:

Issue arises → Deal with the issue → Move on to the next crisis

This isn’t tenable because we’re missing compounding issues that can form a polycrisis, which becomes too challenging to manage.

In other words, there is no longer a straight line from problem to solution, and we’re making things worse.

Not easily governed

Companies are now buffeted by so much instability and uncertainty that managing the growing cascade of intractable problems has become nearly impossible.

If you’ve been reading this Substack for a while, you’ll know that I like to think about business language. Intractable seems like the right choice to describe the issues facing modern business.

Intractable (adj). Not easily governed, managed, or directed (Merriam Webster).

What is it about modern business that makes every issue suddenly intractable?

We seem to be setting companies up to fail, and CEOs certainly feel it. The last year has seen record-high CEO changes, with February 2024 at the highest (248), January 2025 with 222, and February 2025 with 247. The top reason was listed as “Stepped Down” (per a Challenger, Gray, and Christmas report).

Apparently, stress is a top reason.

Stress among leaders is surging, with 71% reporting a significant increase in their stress levels since stepping into their current role. This marks a sharp escalation from 63% in 2022 and signals a critical inflection point for leadership stability.

The primary catalyst for this escalating stress is a pervasive sense of time scarcity. Globally, only 30% of leaders feel they have sufficient time to execute their responsibilities with the depth and diligence required.

That last line is key. Some leaders are stressed because they lack the depth and diligence required to address pressing issues. What causes this?

Intractable problems.

And the one we started with is just the tip of the iceberg.

Governance is at a tipping point, and while US trade policy is making a significant push, it certainly isn’t the only one driving instability. As always, the WEF Global Risks Report presents a complex web of interconnected global risks.

Still, the US is rolling back protections and long-standing guardrails, which are the very systems leaders rely on to assess and navigate risk. This is happening under the guise of business-friendly deregulation, but is it helpful?

Who said deregulation was good for business?

Since you’re following this Substack, you probably know I can’t stand disclosures, but I’m not writing about some sustainability reporting rule.

After Trump’s 2024 election, bank stocks jumped on the promise of deregulation. Barclays and UBS even called it an accelerant for growth, praising the broad, vaguely defined agenda. In January 2025, the White House made it official with a report titled Unleashing Prosperity Through Deregulation.

One key regulation that was partially rolled back the last time Trump was in office was Dodd-Frank. If you aren’t familiar with it, this landmark bill, passed after the 2008 financial crisis, aimed to increase transparency around banking risks, protect consumers, and prevent another near-global financial collapse.

In 2018, Congress weakened parts of Dodd-Frank. One key change was that banks with assets below $250 billion were no longer subject to the stricter oversight that initially kicked in at $50 billion.

Guess who sat at $212 billion when it collapsed? Silicon Valley Bank.

The Financial Times reported last week that related protections, namely the Supplementary Leverage Ratio (SLR), could be the next to go. SLR forces big banks to maintain capital relative to total exposure, regardless of how risky the investments are.

This matters because it ensures banks have a buffer, through real allocated capital, to absorb losses in a crisis. Without it, the financial system is more fragile, and taxpayers (as before) might be on the hook to rescue the banks.

What sounds like simplification becomes complexity in practice, especially when oversight disappears entirely. If you believe the public is your safety net and you can take on bigger risks, wouldn’t you? In this case, banks are left to oversee themselves in a vacuum, which didn’t work out so well last time. So, how exactly should that work when considering systems, like the global markets?

Again, that’s the very definition of intractability: systems that resist governance.

This short-term gain in rollback means that internal leadership is on the hook to hold the line on responsible and well-managed operations, like someone should have done at Silicon Valley Bank. Remember, Silicon Valley Bank also lacked a Chief Risk Officer at the time. That person should have been on the hook, but in their absence, the board and the management team were left holding the bag.

When regulations are relaxed, governance pressures shift to the company, and you better be sure you have the right people to guide you.

AHEM: Shareholders take note of who is on the board!

Governance erosion deepens the intractability

The SLR rollback is just one example of the uncertainty being created, and it is essential to look at it through a bigger lens, especially as it pertains to compounding the issue by removing accountabilities at the highest levels of the company.

Texas has passed State Bill 29, which seems to give company leaders near-total discretion, with little oversight or accountability. This includes codifying the business judgment rule, which is already there to protect the board’s decisions, and goes much further to give additional legal protections to the board, remove shareholder rights, and limit requests for records.

Some companies are considering moving from Delaware to states like Texas for these protections.

But let’s be clear. When the federal government undergoes deregulation, it puts pressure on the board and management team unless state laws protect those leaders. What does a company reincorporating in Texas under lax rules tell you about its ability to self-manage? Well, nothing, but it might mean the company wants to avoid your scrutiny.

Ultimately, this disruption only adds to the uncertainty that CEOs should feel because now it is all on them. When accountability shifts during deregulation, legal protections be damned, you still have to run the business and now there are no guidelines.

So, go ahead and do whatever you want. Let’s see how that plays out.🍿

Deregulation is just another intractable problem

But let’s not mistake this as just a leadership problem or a governance crisis in isolation.

External global risks are compounding faster than companies can respond. When complexity rises and the guardrails fall away, we have a system design issue. Accountability is handed off from public institutions and shareholders to individuals, without tools, guidance, or time.

This echoes an argument I made back in November 2024 that puts governance accountability squarely on board directors, and it is only a matter of time before shareholders wake up.

Or they won’t. After all, they eagerly rushed into a market frenzy post-election and, in January, saw the tangible impacts of their ignorance.

We talk about deregulation as if it's freedom or a license for growth. But in practice, it results in asking CEOs to self-govern not just their companies, but the global markets they operate within. It’s like removing the streetlights and telling the drivers to just be careful at night.

Trying to self-govern while chasing growth? That’s an intractable challenge.

We’ve seen what happens when governance fails with Enron, WorldCom, and Lehman Brothers. Governance isn’t just one pillar of ESG. It’s the one that can take your company down.

The business environment manifesting isn’t just unstable, it’s ungovernable. And no matter how much legal protection a board or CEO may claim, they still have to lead through it. Still, the U.S. is rolling back protections and long-standing guardrails, which are the very systems leaders rely on to assess and navigate risk.

If we care about business health, leadership resilience, and unleashing prosperity, we need to stop chasing the illusion of simplicity and start designing for complexity. After all, the systems we’re stripping away are the only ones built to manage it.