Boards should anticipate the need to accommodate the pressure for more aggressive decision making with traditional concepts of business judgment.   

Netflix co-founder Marc Randolph recently emphasized in a speech to a health industry audience how important it is for innovators in all industries, including health care, to develop a “tolerance for risk” and to have confidence and optimism. “It was not about having good ideas,” Mr. Randolph told attendees. “It was about a system and a culture of trying lots of bad ones. What we realized is that the key to this is not the good idea. It was how quickly and easily and cheaply you could try as many ideas as you could think of.”  

The related governance challenge arises when the health system board is caught in the “vise” of needing to make “radical decisions” to respond to business disruption and industry transformation, on the one hand, yet feels confined by traditional corporate law limitations as they relate to prudent decision making and the business judgment rule, on the other hand. “Radical” decisions could refer not only to the scope and potential impact of certain decisions, and the risk and change they may involve, but also to the process by which the board evaluates those decisions.  

The board (and perhaps the strategic planning committee) may benefit from consulting with the general counsel on steps it may wish to implement now to facilitate (and sustain) more radical decision making as the board is called upon in the future to confront transformative challenges.