Our greatest stories are made of heroes who overcome phenomenal odds to achieve greatness. Basically, people exceeding relative expectations. It is always about the relativity when it comes to expectations.

“We forecasted $1B this quarter and achieved it.” Oh, ok. Good work.

“We forecasted $750M this quarter but overachieved against our target to the tune of $1B through new product expansion, high velocity new business acquisition, and a new partnership channel that scaled up faster than expected leading to 33% growth over plan”. Damn, that sounds pretty awesome!

We humans are naturally bound to relative measurement through prospect theory. A behavioral economic theory developed by Daniel Kahneman & Amos Taversky that essentially says we value gains and losses differently. We make decisions based on perceived gains over perceived loss. Furthermore, we are inextricably tied to reference points where we evaluate outcomes based upon their relative movement against that starting point. Effectively, we prioritize relative change over absolute change. It’s a survival technique, ok?

It is never just about achievement. It is always about achievement against expectations. You see this play out in sports, business, finance and all other corners of the storytelling universe. With big tech earnings all over the news this week it’s an interesting time to examine the relativity of expectations. And loss aversion.

Narrative plays a role too. Netflix missed on their subscriber goals in the developed world last week because, well, they’ve captured like ALL of the developed world.  They’ve already so vastly overachieved all expectations that they don’t quite have their story straight for the future because that future already arrived so much more quickly than they thought. The absolute gain they’ve achieved over the past 18 months was overshadowed by the relative loss this quarter. Weird, right?

So if you’re preparing next quarter’s forecast, deciding when to finalize an upcoming project deadline, or issuing a goal to your team perhaps remember the relativity of expectations and the importance they play in our psychology.

It’s always about the expectations. Relatively speaking.