Informal authority can work for years when decisions are familiar, relationships are stable, and the consequences are reversible. The habit feels efficient because nobody has to stop and name the boundary.
The weakness appears when the stakes rise. A major investment, leadership transition, or public commitment makes participants read the same informal arrangement differently. Management experiences scrutiny as interference. Directors experience a prepared recommendation as a decision already made.
The answer is not to move every important matter to the board. It is to define thresholds: which decisions belong to management, which require board approval, which require consultation, and which conditions trigger escalation.
Clear authority creates room on both sides. Management can act without guessing when the board will pull a matter back. Directors can exercise judgment without drifting into implementation.
Ambiguity feels flexible until the first decision that cannot be easily reversed.