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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 )

‘Green’ oases amid ‘Saffron’ surge

AIMIM and ISLAM parties rock in civic polls

Mumbai: Amid Maharashtra’s sweeping saffron surge, a counter-current has quietly but decisively come to the fore – in the form of a fledgling Indian Secular Largest Assembly of Maharashtra (ISLAM) Party and the All India Majlis-e-Ittehadul Muslimeen (AIMIM).

 

Shocking punters and pundits, both parties with a Muslim base have etched striking footprints in the elections to 29 municipal corporations, marking a dawn of reshaping minority politics in the state.

 

Interestingly, a total of 29 Muslim candidates are elected to the BMC, including Congress (14), AIMIM (8), SS (UBT)’s 3, SP and NCP (2 each).

 

‘Kite’ Soars

For the 99-year-old AIMIM, the election is a milestone as the party crossed the 125-seat mark across Maharashtra, registering strong gains in urban centres where it was once scorned, as the Muslims search for a new ‘messiah’.

 

In Chhatrapati Sambhajinagar, it won 33 of 115 wards, improving from 24 in 2017, and presenting itself as a formidable civic force working for the commoners, as the ‘Kite’ (poll symbol) climbed higher.

 

More significantly, AIMIM will make a thundering entry to the Brihanmumbai Municipal Corporation (BMC) with 8 seats, including 2 non-Muslims, in the 227-member house – up from just 2 wins in 2017 -  considered a big leap of faith in India’s financial capital.

 

This gladdened the hearts of AIMIM President, Barrister Asasuddin Owaisi, state chief Imtiaz Jaleel and Spokesperson Waris Pathan termed their party’s performance as a ‘vindication’ of their hard work and acceptance among the Muslims and minorities, and a slap for those who dismiss them as BJP’s B-Team.

 

ISLAM Bulldozes

The minority-dominated Malegaon delivered a major political earthquake as the 15-month-old ISLAM Party emerged as the single largest in Malegaon Municipal Corporation, capping 35 of 84 seats; the AIMIM bagged 21.

 

Celebrating the mandate by zooming around in the ‘Autorickshaw’ (party symbol), ISLAM Party President Aasif Shaikh Rasheed, struck a conciliatory yet confident tone. Staking claim to the post of Mayor as the largest party, he kept a window open for suitable adjustments “in the interest of unity and development.”

 

The AIMIM-ISLAM parties’ performance indicates a quiet political churning – Muslim voters feeling betrayed by all parties are now examining viable options - parties or leaders who promise them ‘salvation’.

 

With AIMIM’s 21 seats, the ISLAM Party and its ally SP (5) is hoping to install its Mayor, as the Mahayuti ally Shiv Sena managed 18 seats; Congress 3; and BJP a paltry 2.

 

Rasheed’s own political journey has been quite a whirlwind ride - from a Congress MLA to NCP leader, then an independent candidate, and now heading the ISLAM Party – with hopes to end Malegaon’s anxious search for credible local Muslim leadership.

 

SP ‘Cycle’ punctured

Once trusted as a Muslim-Dalit political platform in Maharashtra, the Uttar Pradesh-based SP is faltering with a decline in its overall performance.

 

This has rattled the state SP chief Abu Asim Azmi, a 4-time MLA, as the AIMIM bagged 7 seats in his backyard of Mankhurd-Govandi.


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