Seeing Clearly: Aligning Perceptions and Reality in Family Business Governance

We’ve all been there—at times, believing something is crystal clear just to realize we were way off. 

In Family Business, where perception often shapes reality, it is especially crucial to recognize the obvious may not be so obvious. Family members may face the same situations but from entirely different vantage points. How they respond can significantly impact the organization’s future—especially regarding critical leadership decisions.

A good metaphor to illustrate this is the Café Wall Illusion, as pictured below: At first glance, the lines appear to be slanted when offset by alternating high contrast colors. In reality, if you apply a ruler they are perfectly aligned, straight and parallel. And just as our eyes misinterpret a straightforward pattern, our biases, past experiences, and personal narratives can color how we interpret situations. Family members can misread signals about leadership, ownership, and governance, often leading to unnecessary conflict or instability. 

Fibonacci, CC BY-SA 3.0 <http://creativecommons.org/licenses/by-sa/3.0/>, via Wikimedia Commons

Recognizing these differences is key to understanding and resolving tension in family businesses. Here are three key lessons we can draw from the Café Wall Illusion to overcome potential misalignments in family business governance: 

In succession planning, different generations often view the same situation through different lenses. Founders may believe they are creating a clear transition plan, while the next generation perceives uncertainty or favoritism. Like the illusion, these misinterpretations can create tension even when the structure itself is sound.

To counteract this, families should prioritize transparency and communication, ensuring that all stakeholders share a common understanding of roles, responsibilities, and future leadership plans.

It’s also vital to recognize that each individual brings their own narrative—shaped by family history and past events—into decision-making. For example, a family member might feel wronged by a previous generation’s decisions, affecting their perspective on future leadership. Being aware of these biases can help mitigate their impact. 

Just as slight shifts in the Café Wall pattern cause dramatic visual effects, small inconsistencies in governance—such as unclear decision-making structures or misaligned incentives—can lead to significant dysfunction over time. 

Sometimes, these minor misalignments may seem insignificant, but over time, they can create major distortions in how the family and the business operate. For example, asking the ownership group to provide feedback on their comfort level with considering a first-time non-family CEO is different than saying that they have the right to decide who will be CEO. 

Clarifying decision rights among owners, board and management is crucial to alignment.  This is where an external advisor can be particularly useful. Advisors can help identify and address these issues before they spiral into larger conflicts. Sometimes, it takes an outside perspective to step in and help leaders see things for what they really are by challenging assumptions, providing fresh perspectives, and helping bring clarity to confusing situations. In these moments, the value of having different people in the room, bringing a neutral eye, cannot be overstated. Often, it’s just a matter of asking, “What do you see?” You’d be surprised at how differently others might interpret the same scenario—an eye-opening revelation that can lead to better decision-making.

Conversely, when perspectives are too similar, issues might not appear at all, even though they exist. It’s the contrast, the difference in perspectives, that helps illuminate these hidden problems. Small misalignments in governance systems, like unclear leadership roles or conflicting family values, can grow into major issues down the road. Scenario planning can help anticipate these unintended consequences and offer guidance for future generations.

The illusion exploits the way our brains process contrast and patterns, leading us to see something that isn’t there. In family businesses, cognitive biases—such as overestimating a particular family member’s leadership potential or underestimating the risks of nepotism—can skew succession decisions. A family member who feels slighted by past decisions may subconsciously seek information that confirms their own narrative, overlooking evidence to the contrary. 

To mitigate these biases, families should incorporate objective assessments, external advisors, and clearly articulated processes and policies into their governance framework. This is especially important when there is no clear “right” or “wrong” answer, such as in the case of whether or not to appoint a family member as CEO. The key is to ensure that decisions are made collaboratively, with input from a diverse set of perspectives.

The Café Wall Illusion reminds us that without structure and intentionality, families can misinterpret succession dynamics and governance challenges. The key to overcoming these distortions is clear communication, carefully designed leadership transitions, and a clearly defined governance model. By recognizing how perception influences decision-making, family enterprises can foster stability, ensuring that leadership transitions are built on clarity, not illusion.

In some cases, objective measures, such as an objective performance evaluation process can clear up ambiguity. Other times, it's about recognizing that there may not be a singular "correct" way to approach governance or leadership transitions. But the process should always include diverse perspectives and honest dialogue. Trusted external advisors can also play a pivotal role in facilitating this process, offering guidance, and ensuring that decisions are made based on shared understanding, rather than assumptions or biases. 

Just as an artist can correct the Café Wall Illusion by realigning the tiles, family businesses can overcome their challenges by continuously refining governance strategies and approaches—transforming optical distortions into a clear and steady path forward.