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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 )

Encroachment Politics

Delhi
Delhi

An anti-encroachment drive should ideally be a modest municipal exercise. Instead, the one near Delhi’s Ramlila Maidan has become another case study in how routine governance is repeatedly converted into controversy. Acting on a Delhi High Court order, the Municipal Corporation of Delhi began removing unauthorised structures adjoining the Syed Faiz Elahi mosque and a nearby graveyard at Turkman Gate. Following frenzied speculation that the mosque was about to be demolished, an irate mob which gathered within hours pelted stones with such fury that several police personnel were injured in the melee.


In November, the High Court had directed the MCD and the Public Works Department to clear nearly 39,000 sq ft of encroachments at Ramlila Ground. Notices were issued in December. The civic body demarcated the land, stating that the mosque itself, occupying 0.195 acres, lay outside the proposed action, while adjoining structures did not.


A pattern, evident in the Turkman demolition drive is that the moment a surveyor’s tape or a bulldozer appears anywhere near a mosque, a predictable escalation follows. Recent years have witnessed the hysteria at Sambhal to other pockets of Uttar Pradesh, Madhya Pradesh and Rajasthan, where even preliminary surveys have repeatedly been met with violence.


The Delhi Police’s search for a local YouTuber, Salman, accused of using social media to mobilise residents during the Turkman Gate violence, adds a revealing layer to the episode.


The episode was clearly not just misinformation spreading organically but amplification with sinister intent. The rise of such hyperlocal ‘influencers’ who livestream civic action as communal threat raises an obvious question: who sustains them? How is it that what begins as a municipal notice decreed by the court gets rapidly reframed online as “Muslims under attack” - a narrative that travels effortlessly from fringe channels to mainstream commentary?


Equally telling is the reflex of a section of left-liberal opinion that reads routine civic enforcement through a permanent lens of minority peril. For such people, court orders are stripped of all legal context and recast as ‘cultural aggression.’


Leaders from the Samajwadi Party were quick to describe the Turkman Gate violence as an “action–reaction,” arguing that rumours made such an outcome inevitable. This formulation is revealing as it conveniently shifts responsibility away from those who threw stones and towards an abstract sense of hurt, as though misinformation were a mitigating circumstance. It also reflects a broader political habit of part of certain Opposition parties who have thrived on vote-bank and identity politics which is to treat any administrative action involving minority neighbourhoods, however legal, as inherently provocative.


Agreed that the Turkman Gate still carries memories of the Emergency-era demolitions of the 1970s, when coercive clearances left deep scars. One can contend that that past may explain local anxiety. However, that has no connection with the current episode where the bulldozers had come to raze patently illegal structures nor does it excuse political leaders who trade in insinuation instead of reassurance. In fact, reports showed that the bulldozers exposed more than illegal structures. A number of local street vendors, who spoke out after the Turkman Gate action, revealed how money was extorted at the dargah even from poor and helpless people for marriages and rituals.


Parties such as the Congress and the Samajwadi Party have long positioned themselves as guardians of minority interests. In practice, that guardianship, too often, has taken the form of mobilising fear. By hinting that routine enforcement is a ‘communal’ act, they turn legal disputes into identity conflicts.


What truly corrodes minority interests is not the bulldozer but the politics that treats Muslims as a permanent emergency who are too volatile for normal governance and too aggrieved for civic rules. By validating the stone-pelting as a ‘justified’ reaction, such parties infantilise the very voters they claim to protect, reducing them to a mob to be mobilised rather than citizens to be represented.


Urban India has an encroachment problem that cuts across communities and classes. Addressing it will be contentious. The choice is between managing that contention through law and administration, or inflaming it through rumour and political opportunism. The events at Ramlila Maidan suggest that too many still prefer the latter. 


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