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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 )

Axis of Pretence

When Beijing and Islamabad lecture the world on bullying, the joke is not lost on Asia.

China and Pakistan have discovered a new cause in jointly opposing “hegemonism,” “bullying behaviours” and the formation of “small circles.” Their joint communiqué, issued after the seventh round of their foreign ministers’ strategic dialogue in Beijing, was a sermon on multilateral virtue aimed squarely at India and its partners in the Quad. It was also a masterclass in geopolitical hypocrisy.


Both sides reaffirmed their devotion to the UN Charter, free trade and sovereign equality, while denouncing bloc politics and violations of national sovereignty. The target was unmistakable: India’s expanding partnerships with Japan and Australia, and Washington’s open endorsement of India as a stabilising force in the Indian Ocean Region.


China’s moralising would be comical were it not so consequential. Few countries have done more to normalise coercion in Asia. From the South China Sea, where Vietnam and the Philippines face relentless pressure, to the Himalayas, where Bhutan’s claims are quietly eroded, China’s diplomacy often arrives backed by coastguard cutters, economic leverage or “salami-sliced” military facts on the ground. Even its trade policy has acquired a punitive edge, deployed to discipline smaller states that displease Beijing.


Pakistan, long the region’s most reliable exporter of instability, was no less brazen in its contribution to the lecture. Such bravado rings hollow from a state whose security doctrine has for decades rested on nurturing jihadist proxies, from the mountains of Kashmir to the massacre at Pahalgam, and then denying responsibility with ritualised indignation.


Pakistan’s refusal to abandon terror as an instrument of statecraft, or to explain why a country perpetually pleading victimhood abroad continues to depend on militancy at home and patrons abroad for relevance, shapes the communiqué’s most revealing passages.


Even as Beijing and Islamabad rail against “small circles,” they are busily assembling their own. The newly advertised trilaterals with Afghanistan and the China-Bangladesh-Pakistan framework echo a strategy that dates back to the Cold War, when China first embraced Pakistan as a useful southern flank against India after the 1962 war. Since then, exclusion has been policy, not accident. Regional architectures that sideline New Delhi have long appealed to a partnership built less on shared values than on a shared interest in hemming in Indian power. Bloc politics, it seems, are objectionable only when others practise them. When conducted under Chinese auspices, exclusion is rebranded as “regional cooperation.”


The double standard grows starker on terrorism. The two sides urged the world to avoid “selective approaches” and condemned “double standards,” even as China went one better on the hypocrisy scale by lavishing praise on Pakistan’s “significant contributions and huge sacrifices” in combating terrorism.


For years Beijing has shielded Islamabad at the United Nations, placing technical holds on the designation of Pakistan-based militants and treating terrorism less as a regional scourge than as a diplomatic inconvenience so long as its immediate interests are not threatened.


China’s engagement with Afghanistan has been narrowly instrumental: containing unrest in Xinjiang, preventing spillover into its western provinces and safeguarding prospective investments. Neither approach has been animated by any serious commitment to a rules-based regional order. Yet both now speak the language of accountability as though it were newly discovered.


The subtext of the communiqué is strategic insecurity. China bristles at a Quad that complicates its maritime ambitions and legitimises balancing behaviour across the Indo-Pacific. Pakistan, accustomed to defining itself in opposition to India, resents a neighbour whose partnerships amplify its influence far beyond South Asia and steadily erode Islamabad’s claim to strategic relevance. Together, they cloak their unease in the rhetoric of multilateralism, hoping to recast voluntary alignment as aggression and defensive cooperation as conspiracy.


India’s partnerships, by contrast, are neither coerced nor clandestine. They are transparent, issue-based and welcomed by countries that have learned, often the hard way, the costs of Chinese assertiveness and Pakistani adventurism. Beijing and Islamabad will continue to describe their relationship as “ironclad” and to set ever-new goals for their “all-weather” partnership. In Asia’s crowded theatre, hypocrisy is common. But rarely has it been so meticulously rehearsed or so conspicuously on display. 


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