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By:

Rashmi Kulkarni

23 March 2025 at 2:58:52 pm

Loss Aversion Is Why Your Good Idea Fails

Your upgrade is their loss until you prove otherwise. Last week, Rahul wrote about a simple truth: you’re not inheriting a business, you’re inheriting an equilibrium. This week, I want to talk about the most common reason that equilibrium fights back even when your idea is genuinely sensible. Here it is, in plain language: People don’t oppose improvement. They oppose loss disguised as improvement. When you step into a legacy MSME, most things are still manual, informal, relationship-driven....

Loss Aversion Is Why Your Good Idea Fails

Your upgrade is their loss until you prove otherwise. Last week, Rahul wrote about a simple truth: you’re not inheriting a business, you’re inheriting an equilibrium. This week, I want to talk about the most common reason that equilibrium fights back even when your idea is genuinely sensible. Here it is, in plain language: People don’t oppose improvement. They oppose loss disguised as improvement. When you step into a legacy MSME, most things are still manual, informal, relationship-driven. People have built their own ways of keeping work moving. It’s not perfect, but it’s familiar. When you introduce a new system, a new rule, a new “professional way,” you may be adding order but you’re also removing something  they were using to survive. And humans react more strongly to removals than additions. Behavioral economists Daniel Kahneman and Amos Tversky called this loss aversion where we feel losses more sharply than we feel gains. That’s why your promised “future benefit” struggles to compete with someone’s immediate fear. Which seat are you stepping into? Inherited seat:  People assume you’ll change things quickly to “prove yourself”. They brace for loss even before you speak. Hired seat:  People watch for hidden agendas: “New boss means new rules, new blame.” They protect themselves. Promoted seat:  Your peers worry the old friendship is now replaced by authority. They fear loss of comfort and access. Different seats, same emotion underneath: don’t take away what keeps me safe. Weighing Scale Think of an old kirana shop. The weighing scale may not be fancy, but it’s trusted. The shopkeeper has used it for years. Customers have seen it. Everyone has settled into that comfort. Now imagine someone walks in and says, “We’re upgrading your weighing scale. This is digital. More accurate. More modern.” Sounds good, right? But what does the shopkeeper hear ? “My customers might think the old scale was wrong.” (loss of trust) “I won’t be able to adjust for small realities.” (loss of flexibility) “If the digital scale shows something different, I’ll be accused.” (loss of safety) “This was my shop. Now someone else is deciding.” (loss of control) So even if the new scale is better, the shopkeeper will resist or accept it politely and quietly return to the old one when nobody is watching. That is exactly what happens in companies. Modernisation Pitch Most leaders pitch change like this: “We’ll become world-class.” “We’ll digitize.” “We’ll improve visibility.” “We’ll build a process-driven culture.” But for the listener, these are not benefits. These are threats, because they translate into losses: Visibility can mean exposure . Process can mean loss of discretion . Digitization can mean loss of speed  (at least initially). “Professional” can mean loss of status  for the old guard. So the person across the table is not debating your logic. They’re calculating their losses. Practical Way Watch what happens when you propose something simple like daily reporting. You say: “It’s just 10 minutes. Basic discipline.” They hear: “Daily reporting means daily scrutiny.” “If numbers dip, I will be questioned.” “If I show the truth, it will create conflict.” “If I don’t show the truth, I’ll be accused later.” In their mind, the safest response is: nod, agree, delay. Then you label them “resistant.” But they’re not resisting change. They’re resisting loss . Leader’s Job If you want adoption in an MSME, don’t sell modernization as “upgrade”. Sell it as protection . Instead of: “We need an ERP.” Try: “We need to stop money leakage and order confusion.” Instead of: “We need systems.” Try: “We need fewer customer escalations and less rework.” Instead of: “We need transparency.” Try: “We need fewer surprises at month-end.” This is not manipulation. This is translation. You’re speaking the language the system understands: risk, leakage, blame, customer loss, cash loss, fatigue. Field Test: Rewrite your pitch in loss-prevention language Pick one change you’re pushing this month. Now write two versions: Version A (your current pitch): What you normally say: upgrade, modern, efficiency, best practices. Version B (loss prevention pitch): Use this template: What are we losing today?  (money, time, customers, reputation, peace) Where is the leakage happening?  (handoffs, approvals, rework, vendor delays) What small protection will this change create? (fewer disputes, faster closure, less follow-up) What will not change?  (no layoffs, no humiliation, no sudden policing) What proof will we show in 2 weeks?  (one metric, one visible win) Now do one more important step: For your top 3 stakeholders, write the one loss they think they will face  if your change happens. Don’t argue with it. Just name it. Because once you name the fear, you can design around it. The close If you remember only one thing from this week, remember this: A “good idea” is not enough in a legacy MSME. People need to feel safe adopting it. You don’t have to dilute your standards. You just have to stop selling change like a TED talk and start selling it like a protection plan. Next week, we’ll deal with another invisible force that keeps companies stuck even when they agree with you: the status quo isn’t a baseline. It’s a competitor. (The writer is CEO of PPS Consulting, can be reached at rashmi@ppsconsulting.biz )

All in the Family

In Maharashtra’s politics where ideology is negotiable and arithmetic reigns supreme, the Pawars are playing the long game.

It would be fair to say that politics in Maharashtra has long ceased to be a contest of ideas. It is akin to a revolving door, where yesterday’s adversaries share breakfast today and plot against one another by dinner. Alliances are stitched together with remarkable speed and unravelled just as quickly, leaving voters struggling to keep track of who stands where or why. If this fluidity has a single emblem, it is the Pawar clan.


For decades Sharad Pawar has been cast as the state’s supreme tactician, a politician who treats ideology as a suggestion rather than a constraint. After 2014, as national politics hardened into a bipolar contest, Maharashtra went in the opposite direction. The familiar categories of friend and foe dissolved. The Congress embraced its ideological foe -the Shiv Sena; the Sena split in two; the Nationalist Congress Party fractured along family lines. What once appeared unthinkable became routine.


Volatile Politics

The 2019 Assembly Election marked the high point of this volatility. The Bharatiya Janata Party (BJP) and the undivided Shiv Sena, which had fought together, fell out spectacularly after the results. In the chaos that followed, Pawar executed what many still regard as his finest manoeuvre: midwifing the Maha Vikas Aghadi (MVA) - an improbable coalition of the Sena, Congress and NCP. Uddhav Thackeray, a man whose party had spent decades railing against Congress, was installed as Chief Minister. Devendra Fadnavis, the BJP’s rising star, was left stunned.


For two and a half years, Fadnavis appeared to brood on this reversal. Then came his riposte. In 2022 he engineered a split in the Shiv Sena, peeling away Eknath Shinde and a majority of its legislators. Shinde became CM while Fadnavis accepted the post of deputy, though few doubted where real power lay. The counter-stroke was devastating. The MVA collapsed, and in the 2024 assembly election the BJP-led Mahayuti returned with a handsome mandate.


The coup de grâce, at least symbolically, was delivered when Ajit Pawar - Sharad Pawar’s mercurial nephew and long-time heir apparent - crossed over with a chunk of the NCP to join the Mahayuti. It weakened the elder Pawar’s party, stabilised the new government and suggested that even Maharashtra’s most seasoned operator could be wrong-footed. For perhaps the first time in decades, Sharad Pawar looked momentarily unsettled.


Long Duel

Yet to assume that this is a simple story of one strategist outplaying another is to misunderstand Maharashtra’s politics. Many observers argue that Pawar and Fadnavis are engaged in a more subtle, long-term game in which both benefit from the steady erosion of the Shiv Sena, in both its Uddhav Thackeray and Eknath Shinde incarnations. In this telling, urban bodies, cooperatives and financial networks are the real prizes.


It is against this backdrop that the recent decision by the two NCP factions to come together for municipal corporation elections in select cities has caused such a stir. Images of Sharad Pawar and Ajit Pawar sharing a stage again have been read breathlessly as a family reunion. But it is nothing of the sort. This is a coldly calculated tactical arrangement.


Municipal corporations in Maharashtra are not minor prizes. They control budgets that run into thousands of crores and anchor grassroots patronage networks. Winning cities means shaping the political weather long before assembly or parliamentary polls. For Sharad Pawar, cooperating with his nephew at the local level helps prevent Congress and the Uddhav Thackeray-led Sena from entrenching themselves in urban power centres. For Ajit Pawar, it offers a chance to rebuild local legitimacy without surrendering the advantages of office.


Nor would it be the first time Pawar has used tactical alignments to ‘correct’ equations. He has never been squeamish about issue-based understandings with ideological rivals if the arithmetic demands it. The municipal pact is less about healing a family rift than about retaining bargaining power in an increasingly polarised landscape.


Personal relationships add another layer. Pawar’s easy camaraderie with Gautam Adani, India’s most controversial tycoon, has long irritated his allies. When Adani made a conspicuous appearance at Pawar’s birthday celebrations in Delhi that was attended awkwardly by Rahul Gandhi, it sent a message that the wily NCP patriarch does not subscribe to the Congress’s absolutist rhetoric against big business. Days later, Adani’s visit to Baramati, the Pawar family bastion, reinforced the point. The entire clan turned out to welcome him.


Was this a warning to Congress and the Sena, both of which have built political capital attacking Adani? Or merely a reminder that, in Pawar’s worldview, pragmatism trumps posture?


There is also the question of succession. Is the municipal rapprochement a prelude to a fuller reconciliation, with Sharad Pawar eventually handing the reins to his nephew?


The debate has sharpened amid murmurs about Supriya Sule, Pawar’s daughter and MP, whose critics question her ability to command the party organisation in Maharashtra. While Sule remains influential in Delhi, her grip on the state apparatus is less secure.


For Sharad Pawar, the coming urban elections serve multiple ends. They help protect his legacy, keep rivals guessing and ensure that the NCP - split though it may be - remains relevant. For Ajit Pawar, they offer a chance to step out from his uncle’s shadow while still benefiting from his tacit endorsement.


None of this amounts to reconciliation in the sentimental sense. It is politics in its purest, most transactional form. In Maharashtra, permanence is an illusion. Alliances dissolve overnight and rivals rediscover each other by morning. And the Pawars understand this better than most.


(The writer is a political observer. Views personal.)

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