“We are more often frightened than hurt; and we suffer more from imagination than from reality.”

— Lucius Annaeus Seneca

“Leadership is the capacity to translate vision into reality.”

— Warren Bennis

“Reality is merely an illusion, albeit a very persistent one.”

— Albert Einstein

“Reality exists in the human mind, and nowhere else.”

— George Orwell

Reality is irrelevant?

Back in the good old days of 2019 and before, the world was stable enough to allow a decent degree of knowledge and understanding of what was actually going on in the world. Many surprises of course but we at least had a framework for managing within or despite these. Then 2020 happened.

What we can see happening changes daily. Reports of what’s happening vary enormously in credibility and reliability, even to flip-flopping routinely.

Is there anything any longer that we can be sure we understand?

Managing a business today in an unreal world that has become largely incomprehensible and unpredictable is a major challenge. You need stable facts and trends to manage effectively. You can’t manage chaos.

Unfortunately, managing requires plans, decisions, and actions – daily. This process cannot wait for stability and predictability to return. Nor can it wait for us to gain a useful understanding of the immediate reality. Reality happens, even if we can’t see or understand it.

Maybe it is simply time to let go of objective reality, or more constructively, create our own working reality.

Perception and vision as reality

For most of us, what we see and experience each day is our reality. We can touch it, change some of it, and add to it. This is a perceived reality that we can manage to at least some degree and affect by what we can imagine.

Much of this reality is fast-changing, unpredictable, hard to understand but it impacts us directly. Our personal and business reality is the sum of how whatever-is-going-on-out-there affects us. Perhaps we only need to understand these impacts well enough to serve as a basis for plans, decisions, and actions.

For sure, objective reality – whatever it may be – is going to do its thing, forever. It doesn’t care whether we understand it or not. Let it be and concentrate on developing a solid understanding of how “reality” is affecting us and our businesses. As we perceive it.

This is perception, not necessarily the underlying, causal reality.

Always helpful Wikipedia offers this definition:

“Perception is the organization, identification, and interpretation of sensory information in order to represent and understand the presented information or environment.”

Perception tells us about what is affecting us and comes via our senses. The “presented information or environment” is our operating context and impacts on it. This is real enough to manage in most cases.

Perception comes from measurement

Measurement occurs in many forms: what we see, what we hear, what our analytics report to us, even what we intuit. The real challenge is to develop from our measurements a working understanding that is sufficient for our management purposes.

Objective reality, whatever it may be, becomes irrelevant.

But translating a wide range of measurements into perception that includes understanding is far from easy or simple. The starting point is what we know pretty much for sure – what we can measure in our business.

Today, we can measure a ton of stuff, technically speaking. We often have data overload to the extent that meaning is well-hidden. Deriving practical meaning from tons of data has become the essence of management, or at least its primary foundation.

Extracting meaning and understanding from data

We have so much data and information available today that meaning – what the data and information tells us – and understanding – how to use the meanings – has become a major management challenge. Analytics dashboards are quite helpful in communicating meaning but understanding? Mostly not.

Understanding data in its various forms and stages of interpretation may well be the essence of management. You can’t manage what you don’t truly understand.

Data is not understanding. Information, which is organized and interpreted data, is not understanding but a vital step toward it. Meaning gets us a step closer in that it places information into a relevant context that we can use in practice.

Understanding, the most important step, is highly personal. You may understand but a group does not unless you can communicate your understanding effectively.

Application or action is based on understanding. The understanding may be incomplete, flawed, or flat-out wrong but it is our basis for action.

Executives and managers go to great lengths to confirm, extend, and refine their understanding where stakes are high and reliability is vital.

Most business leaders are great at execution – but what about understanding?

The majority of business leaders earned their positions mostly by being exceptionally good at execution. Understanding that supports execution may well have been obtained mostly by communication – orders – or maybe not:

Business leaders make extensive use both of in-house experts and external consultants to build a sufficient understanding. Most are also very good at involving such resources productively, having been one of these resources for a long time.

Using specialized resources as a means toward understanding seems very wise. Consultants no doubt will agree, with enthusiasm.

This approach to understanding allows a business leader to address an amazingly diverse range of issues and fields without having to become expert in any one of them. Understanding is in effect outsourced to the appropriate experts.

The perception process: data > information > meaning > understanding

Because most business leaders are focused on decisions, actions, and results, the perception process can be outsourced to a great extent in many cases. Specialists can handle the data gathering, information interpretation, meaning development, and even gaining some understanding (their own). All of this, but primarily the latter elements, can then be communicated to the executive to eliminate the substantial burden of such essential but time-consuming work.

Again, the understanding end-point may not uncover any of the underlying reality but through this process of starting with impacts on the business, that reality becomes irrelevant. The process may give a few clues about what might be going on out there in reality-ville but these clues are not typically needed to manage effectively.

Managing by perception works just fine.

Until it doesn’t.

Fear-driven perception

People are, in their essence, emotional rather than rational creatures. Huge changes generate fear. Fear can change how affective inputs – feelings, emotions, moods – are perceived.

We have seen this almost unbelievably since early 2020. COVID-19 driven.

Fearful people can be very irrational. It is just the way we are. Few can wade through the current pool of alligators without some degree of concern if not outright fear.

Subjective inputs to the perception process are routinely needed and, in stable times, are typically reliable. These include a whole range of “instincts” and “gut feelings” that can be extremely valuable.

We are not in such times, and may not be again for a very long time. This means that validating subjective inputs has become vital. While it may be easy to eliminate inputs from those running about screaming “We’re all gonna die!”, it is much harder to assess the fear-factor from more self-controlled sources.

Some experts can be very good at hiding their emotions in a business environment. The only practical way that I can see to validate subjective inputs (as not being fear-distorted) is to get inputs from as wide a range in resources as possible. Cooler heads should then prevail as reliable sources.

Perception biases

Non-fear-driven biases, also called cognitive biases, occur even in well-behaved times. Wikipedia has a list of dozens of cognitive biases. We live with these every day, not just in chaotic situations. “These biases affect belief formation, reasoning processes, business and economic decisions, and human behavior in general.

This being the case, most of us will have become reasonably adept at handling these sorts of biases.

Bottom line:

Since we can’t know much about the underlying reality out there in these tumultuous days, we have to start with something concrete: what we can perceive as factual. Perception for management purposes is a process that extends from hard data to information, then to meaning extraction, and finally to the most important output: understanding.

Towards Data Science, published on Medium, has an interesting article on how data becomes useful – understood – ” Understanding data

“What is data science?   There’s a variety of opinions, but the definition I favor is this one: ‘Data science is the discipline of making data useful.’ The universe is full of information waiting to be harvested and put to good use. While our brains are amazing at navigating our realities, they’re not so good at storing and processing some types of very useful information.”

Forbes makes a solid case that cognitive biases affect perception and decision-making everywhere and have done so forever in “Understanding Biases And Their Impact On Our Perceptions”:

“Has anyone ever accused you of being biased? What was your reaction? The typical reaction is “Biased? Not me!” If that was the case, I am sorry to burst your bubble, but everyone has multiple forms and dimensions of cognitive biases. In my decades of experience in running businesses and developing others, I have found that our personal biases get in the way of good results more than any other factor. Identifying your biases is a very important part of the self-awareness journey that leads us to be more emotionally intelligent human beings, as well as better business leaders.”

“The list of cognitive biases is evolving, with nearly 200 already classified.”

Kendra Cherry writing in verywellmind.com digs into the topic of cognitive psychology for non-specialists in “What Is Cognitive Bias?”:

“A cognitive bias is a systematic error in thinking that occurs when people are processing and interpreting information in the world around them and affects the decisions and judgments that they make.”

“Cognitive biases are often a result of your brain’s attempt to simplify information processing. Biases often work as rules of thumb that help you make sense of the world and reach decisions with relative speed.”

“The concept of cognitive bias was first introduced by researchers Amos Tversky and Daniel Kahneman in 1972. Since then, researchers have described a number of different types of biases that affect decision-making in a wide range of areas including social behavior, cognition, behavioral economics, education, management, healthcare, business, and finance.”