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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 )

Broken Cities, Hollowed Polls

The battle for Maharashtra’s civic polls has reduced a test of urban service delivery to a tawdry spectacle of defections, deal-making and power without purpose.

As 29 municipal corporations in Maharashtra head to the polls, the political discourse should ideally be anchored in the gritty realities of everyday life like water woes, sanitation, crumbling infrastructure and traffic congestion. Yet, the run-up to these elections has traded civic accountability for a vulgar scramble for power. The public infighting and blatant opportunism served to underscore how local self-government is being hollowed out.


Between the frantic brawls for tickets and the shifting loyalties, the core mission of urban administration has been lost. This spectacle lays bare a disturbing crisis of purpose where municipal bodies are no longer viewed as vehicles for governance. When the ballot box is treated as a trophy to be captured, it is the citizen who loses the right to a liveable city.


Municipal corporations are meant to be the closest point of contact between citizens and the state. Their mandate is not ideological grandstanding but service delivery. Yet, the political churn preceding these elections suggests that governance has been relegated to the margins. Candidates switching parties at the eleventh hour have become emblematic of a political culture where ideology is elastic and loyalty conditional.


Politics of Convenience

The BJP, which attracted the highest number of aspirants for these elections, has also seen the maximum defections and instances of rebellion. While the party’s organisational machinery and leadership interventions have contained the immediate damage, this should not be mistaken for the absence of risk. Suppressed resentment among denied aspirants often reappears in subtler forms like lukewarm campaigning, covert sabotage or post-election instability. Adding to the unpredictability is the way state-level alliances have splintered and realigned at the local level. In several civic bodies, factions of the NCP have charted their own course, contesting separately or in selective coordination, while though being a part of the Mahayuti government at the state level, the Shinde-led Shiv Sena and Ajit Pawar’s NCP have joined forces in select Municipal Corporations to challenge the BJP.


While the Mahayuti partners have engaged in friendly contests in some municipal corporations, the opposition Mahavikas Aghadi (MVA) has descended into disarray, failing to forge any coherent action plan or common front. Meanwhile, Raj Thackeray’s MNS and Uddhav Thackeray’s Shiv Sena have joined forces in certain contests, creating an unusual convergence of erstwhile competitors.


The opportunistic movement of candidates has turned what should have been a serious democratic exercise into a farce. When political identities are shed and adopted overnight, voters are left struggling to decipher what parties and candidates actually stand for.


This erosion of credibility is compounded by the conduct of political alliances. Parties that are partners in power at the state level have openly turned adversarial in local elections, trading accusations and invective, even as they continue to share power in Mumbai. The contradiction is glaring. Alliances appear driven not by shared vision or policy coherence but by convenience, reinforcing public cynicism about the sincerity of political commitments. Equally disturbing are reports of tainted candidates, manipulation of nomination processes, swallowing or locking away of forms and candidates being elected unopposed. The constant reshuffling exposes how local politics prioritises short-term gain over principle, forcing citizens to make sense of a maze of opportunism.


Voters as Spectators

Amid this frenzy of political manoeuvring, the common voter has been reduced to a bystander. In a real circus, spectators marvel at acrobats and ‘boneless’ performers for their skill and flexibility, enjoying the spectacle. In Maharashtra’s political circus, all the acrobatics serve ambition, not ideals, leaving citizens frustrated and powerless. Ironically, Municipal politics should be closest to people’s everyday concerns. Urban governance demands serious debate on water security, waste management, climate resilience, public transport and public health. Yet, these issues are almost entirely absent from campaign discourse, overshadowed by ego clashes and partisan point-scoring, while campaigns are dominated by personal attacks and crude rhetoric that few voters care about.


The consequences of dysfunctional local governance are not abstract. The recent Indore incident, where people reportedly lost their lives due to contaminated drinking water, is a grim reminder of what failure at the municipal level can mean. In its aftermath, corporators, administrators and bureaucrats engaged in a familiar blame game. The removal of the Commissioner offered the appearance of accountability, but the larger structural questions of oversight, planning and political responsibility remain unanswered. Indore underscores a fundamental truth that local bodies are not arenas merely to be conquered for political leverage but service-delivery institutions whose failures can have fatal consequences. Treating them as extensions of party power rather than as institutions of governance is a dangerous distortion of their purpose.


What is missing in Maharashtra’s political discourse is a credible, long-term vision for making cities liveable. Instead of competing over ideas to improve urban life, parties are locked in a contest for control. Unsurprisingly, citizens remain sceptical that anything will change once the votes are counted. The cynicism surrounding these elections may not be new, but it has reached a point where voter disengagement becomes a real risk.


If local democracy is to regain meaning, voters will have to look beyond emotional appeals and partisan loyalties. The choice before them is not merely between parties, but between a politics of spectacle and a politics of service. Municipal elections are not a rehearsal for higher office but about the quality of life in cities. Maharashtra’s local body polls have exposed how far politics has drifted from this basic truth. Reclaiming municipal institutions from the grip of political theatrics will not be easy. But it is a task that must begin with informed and vigilant voters.


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

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