The Interplay of Executive Debt and Technical Debt in Large Enterprises

Contrary to what you may believe, every business decision that everyone makes inevitably results in outcomes in the form of executive and technical debt.

These terms are not new to the business world.  All of us know that as part of our job we are chartered with daily tasks, initiatives, and projects that would not have been born had there not been debt to trigger these new activities.  Even transformational projects that theoretically begin with a new idea or business capability are born from debt.  I assure you that there was a history of business processes, and their resulting service to their customer base, that were lacking for the relative business service owners involved.  Debt is just a branding to encapsulate much of the “why” we do what we do when helping organizations remediate, stabilize, and optimize their IT ecosystem to improve and more sustainably support the business.

In large enterprise organizations with substantial investment and dependency on technology, the concepts of executive debt and technical debt are intrinsically linked. Over my 32 years of experience as a frontline technologist and as a thought leader, I have worked with a diverse range of clients, business units, each with unique business needs, yet all sharing a common struggle: the accumulation of executive and technical debt due to the methodologies, or lack thereof, employed in decision-making.

Understanding Executive and Technical Debt

Executive Debt refers to the accumulated impact of strategic decisions made at the executive level that led to constraints in future operations. These may stem from business priorities that emphasize short-term gains over long-term sustainability, lack of alignment between the business strategy and technology decisions, or even inadequate governance frameworks.

Technical debt, on the other hand, arises when expedient technical solutions are chosen over more sustainable, scalable alternatives. This may be due to budget constraints, aggressive timelines, or shifting business priorities, often dictated by executive decisions.  While technical debt is frequently discussed in IT circles, executive debt is less often acknowledged, even though it significantly influences the creation and persistence of technical debt.

How Executive Decisions Drive Technical Debt

Decisions made at the executive level set the foundation for project scope, schedules, and resources (budget and people). While these decisions help to maximize efficiency and business value, they often also create downstream consequences that lead to technical debt.  Although some of the technical debt that organizations may realize are the result of strategic operational decisions, most of the debt is realized through major investments and transformational, projectized initiatives.

How Technical Decisions Drive Executive Debt

Some folks believe that debt only rolls downhill, but it does not.  It also climbs uphill.  Decisions that are made at the technical level can also inadvertently create executive debt.  Oftentimes a short-term focus at the technical level can result in greater risk to the entire organization.

For example, IT teams sometimes prioritize immediate quick fix problem-solving and operational availability of systems.  Thereafter those systems begin to experience unscheduled and unplanned outages that affect service to customers.  Backend decisions can impact the entire image of the company.

Another example is technology solution and selection being made with little or no formalized input and ultimate buy-in from the cybersecurity arm of the organization; creating a security vulnerability that foreign actors can use to hold the company’s data hostage in the future.  Sad to say, but this could cost a company millions of dollars to remediate.

1. Project Scope and Unrealistic Expectations

Executives often define project scope with a focus on immediate deliverables rather than long-term maintainability. This can lead to situations where:

• Features are prioritized based on business pressures rather than architectural best practices.
• Core functionalities are implemented in a rush, leading to suboptimal code quality and fragile integrations.
• New initiatives are layered onto existing systems without adequately addressing existing systems capabilities or extensibility limitations.

Example: A government agency mandates the rapid implementation of a citizen-facing digital portal. Due to political and operational pressures, the project is pushed forward without addressing the outdated back-end infrastructure. The result is a system that meets the short-term policy goal but creates long-term interoperability, integration, scalability and security challenges.

2. Aggressive Schedules and Short-Term Thinking

Executives frequently impose aggressive project timelines to meet regulatory deadlines, competitive pressures, or budget cycles. In response, technical teams are forced to make trade-offs, including:

• Implementing quick fixes rather than well-architected solutions.
• Relying on manual processes that should have been automated.
• Postponing critical infrastructure upgrades.

Example: A city leadership team sets an ambitious 6-month deadline for rolling out a new data analytics platform for public safety. Due to time constraints, developers repurpose an existing tool with limited scalability rather than investing in a robust data architecture. A year later, the system struggles to handle increased data loads, requiring costly refactoring and reengineering.

3. Resource Constraints and Workforce Limitations

Budgetary and staffing decisions at the executive level significantly impact an organization’s technical capabilities. Insufficient funding for talent acquisition, training, and technology investments leads to:

• Over-reliance on outdated technology.
• Accumulation of undocumented tribal knowledge within a few key personnel.
• Increased risk due to lack of cybersecurity investments.

Example: A government department freezes hiring and training budgets while expanding digital services. The IT staff, already stretched thin, is forced to maintain a growing number of applications or backend manual processes with outdated skillsets, resulting in frequent system outages and security vulnerabilities.

Addressing Executive and Technical Debt Holistically

To break the cycle of accumulating debt, organizations must foster a culture where executive and technical teams work in alignment. Some best practices include:

• Informed Decision-Making: Executives should incorporate technical feasibility assessments into their strategic planning.  Just because an executive has the authority to make certain decisions does not mean that they should make those decisions alone or in absence of their technology leadership.
• Sustainable Roadmaps: Organizations should balance short-term wins with long-term architecture and infrastructure investments.  Why approve the procurement of a CRM tool for one business unit when such an initiative can be folded into a more organization-wide CRM initiative that is on the horizon?
• Governance and Accountability: Establishing a governance framework to review and mitigate technical debt accumulation as part of regular business reviews.  Project governance, memorialized through a solid project charter, is the right medium to articulating decision rights, risk management, and to identify future constraints based on decisions being made.
• Investment in People: Ensuring IT teams have the skills, tools, and resources necessary to sustain and modernize technology environments.  Investment in technology must factor those supplemental, or fulltime staff resources that may be needed to sustain that investment once it goes live.  Don’t forget that not every position needs to be insourced and fully burdened.  Explore various sourcing options to support the new capabilities.

Conclusion

Executive debt and technical debt are not independent phenomena; they are two sides of the same coin. Decisions made in the boardroom have profound impact on the technology landscape, and short-term gains often result in long-term challenges. By recognizing this interconnectedness, organizations can make more strategic choices that minimize debt accumulation and enhance the sustainability of their technology ecosystems.

For executives, the key takeaway is this: Every decision that shapes project scope, timelines, and resources will eventually manifest in the technical health of the organization. A balanced approach that weighs immediate business needs against long-term technical sustainability is essential to ensuring continued operational success.  Remember, there is executive and technical debt in every decision made.  The question is what techniques and frameworks may be adopted by organizations to analyze and hedge their risks, and ultimately their debt?  This article is just the tip of the iceberg.  Look forward to reading more of our upcoming articles about executive and technical debt.

For more information about executive debt and its link to technical debt I suggest the following  reading: Executive Debt – Confronting the Long-term Cost of Short-term Decisions.

Also, please feel welcome to message and reach out to me or any other members of AspireSix if you’d like to have further conversations about this topic.