Thursday, October 13, 2011

Perception Trumps Reality

I attended a “Franchisor Boot Camp” last week in Denver that was hosted by Greg Nathan, a well-respected expert on franchising and psychology.  The goal of the conference was for franchisors to learn techniques for building more profitable partnerships with their franchisees.  It was a great learning experience with lessons that apply to both business and life, and I’ll likely touch on many of them for a long time in this blog.

One of the first and most frequent things Greg Nathan said was:

“When perception meets reality, reality comes in second place.”

This resonated with me because I recognize it as being very true but it’s a difficult concept for me to wrap my mind around. 

Reality” is defined as the state of things as they actually exist, rather than as they may appear or might be imagined.  Perception” is defined as the process of attaining awareness or understanding of the environment by organizing and interpreting sensory information.

My tendency is to look at facts, analyze them in black/white terms and come to a logical conclusion.  Meaning, I focus on “reality” and place a lot of value on it.  And I’m a big believer in taking responsibility for this reality.

What can be missed in this process, however, is an analysis of how people perceive these facts/terms/conclusions.

For example, when a franchisor rolls out a new initiative, have they taken into account how the franchisees will receive it?  Let’s say the initiative will create long term value but it requires an initial investment of time and money.  How will the franchisee feel when he hears about this required investment?  Maybe his cash position is strong so he sees it as a great opportunity.  Or, maybe his margins have been squeezed during the recession, the financial stress of which has caused stress with his spouse, and this new expense will be perceived as the proverbial “straw” that breaks not only the business, but the marriage. If the franchisor is unaware of this, the messaging and execution will be way off.  Now, while the franchisor feels good about themselves for this new initiative, the franchisee blames the franchisor for ruining his business and his marriage.  The seething franchisee then becomes vocal about his disdain for the franchisor and starts eroding the culture of the entire organization.  Meanwhile, the franchisor doesn’t know what the hell just happened.  They deployed an initiative that creates long term value, which is what the franchisees pay royalties for, right?

This is extreme, but it demonstrates how a mismatch between reality and perception can spin out of control pretty fast.  Whether you’re a franchisor, franchisee, entrepreneur, manager or anyone else in the workforce, you can probably think of your own similar examples.

So how do we build a better understanding of people’s perceptions?  According to Greg Nathan, the answer is to connect with them on a personal, human level.  Talk to them.  Ask questions.  Understand what’s going in their lives.  How are they feeling?  What are they nervous, excited, etc. about?  Let them tell you where they’re coming from.  Empathize, and be authentic.  Not only does this help you understand their perceptions, it develops trust and commitment.  And this makes all the difference in your ability to communicate, assist, lead and motivate.

Developing healthy relationships is a critical component of business success, especially for an entrepreneur when the company is young and fragile.  Understanding that perception often trumps reality is a key part of building these strong, healthy relationships.  I’ve added another post-it note to my desk to remind me of this “reality” and hopefully the advice helps you too.


  1. Check Brain Games, effectively it proves that reality doesnt exists and it's all about perception (ask my wife). Keep up the good work, love the sticky notes! Cheers, Maarten

  2. Great visual of the cat thinking it is a big boy. Psychiatrists say that many of us carry a schema; a perception of ourselves that may, but often is not, grounded in reality.

    If your franchisee is in a cash bind, as you say, his schema may evolve into him being a failure, especially if there other things at work: gets a chip on his shoulder: lashes out.

    Approach by asking questions. Good idea. Failure is easy: success is hard: maybe why it is often difficult to make a sale. I know of "bad karma." Maybe we should consider "bad schema." How do you get a lion to see a lion in the mirror; kind of the inverse of the picture? Can you answer that?