All That Glitters...

Here’s a cliché for you — perception is reality.

It’s a cliché that needs to be understood, and maybe feared, by every businessperson, politician, celebrity — every person — who seeks in any way to engage the public.

But here’s the thing about clichés: they lose their sting, they cease to impress, they become just so much background noise.

So let’s try coining new descriptors — non-clichéd versions of the same stark truth: Perception has consequences. Reality can break you.

Or maybe a real-time case study will be convincing enough. So please bear witness to the bruising of Goldman Sachs, and see what lessons you might draw — and what lessons GS is refusing to draw — about the power of perception.

What’s vital to understand is that, as of this moment, it’s nearly irrelevant whether GS brokers were truly snickering and calling their clients “muppets” while conspiring to wring every last dime from them. And it doesn’t much matter whether GS was an architect of the housing crisis, a sinister, greedy manipulator, or whether they were just along for the ride like the rest of us.

The truth of these things doesn’t really matter because the perception about them has already gelled. It’s solidified into reality.

Goldman Sachs never put much work into image rehabilitation, even as they were pilloried by Congress and paid out half a billion to settle a SEC fraud suit. They’ve remained wildly profitable so they evidently didn’t see the need. But this stance left them ill-prepared for the late-breaking revelations from Greg Smith, who resigned from the company quite publicly and railed in a New York Times op-ed about a culture of corruption and duplicity.

Goldman Sachs can deny and refute, but that’s irrelevant too. Their new reality has already arrived. They lost three-and-a-half percent of their market value in a little under two days.  

Or if you need a more direct, cliché-free accounting of the cost of perception: about $2.2 billion and rising.

The C4:

1. Goldman Sachs stands accused of profiteering at the expense of their clients and of society at large. A former London-based employee named Greg Smith recently started a firestorm by publicly indicting the company’s culture.
2. Goldman Sachs has weathered economic challenges well, remaining consistently profitable throughout the financial downturn.
3. The company has shown little awareness, maybe even less concern, about their worsening public image.
4. Perception is reality, and a poor public image erases market share. Always has, always will.