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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 )

Jaishankar’s Historic Visit: A Path to Dialogue and Economic Cooperation?

Updated: Oct 21, 2024

Jaishankar’s Historic Visit: A Path to Dialogue and Economic Cooperation?

Jaishankar’s visit to Pakistan, the first by an Indian foreign minister in almost a decade, was a remarkable diplomatic event. He was welcomed with the kind of formality that underscored Pakistan’s desire to present itself as a stable and secure nation. Many, including Nawaz Sharif, saw this as an opportunity to break the ice and create a pathway for dialogue between the two countries.


Nawaz Sharif praised Jaishankar’s visit as a “good opening” and stressed the need for both nations to engage in meaningful dialogue and “bury the past” to build a better future. He argued that both countries are bound by geography and history and that neither can change its neighbour. His call for a reset in relations is not new, but the timing of it, during Jaishankar’s historic visit, gave his words extra weight.


Sharif also reflected on Indian Prime Minister Narendra Modi’s unexpected visit to Lahore in 2015, which had kindled hopes of peace. Unfortunately, relations soured soon after, exacerbated by a series of terror attacks in India that were linked to Pakistan-based groups. Sharif lamented the missed opportunities for peace since Modi’s visit, stressing that the region cannot afford another 70 years of animosity.


What makes Sharif’s appeal particularly compelling is his focus on the economic potential of improved relations between the two countries, which could unlock unprecedented opportunities for trade, investment, and regional stability. His vision is not just about ending conflict but about lifting millions out of poverty through shared economic prosperity.


The timing of this message could not be more crucial. The global economy is in flux, with emerging markets like India and Pakistan facing challenges from inflation, unemployment, and external debt. In such an environment, regional cooperation could offer a way out. The SCO summit, where Jaishankar and Pakistani officials discussed trade and humanitarian issues, highlighted the economic stakes involved. According to Sharif, the two nations must prioritise their economic futures over historical grievances.


One of the main obstacles to peace has been the Kashmir dispute. When India revoked the special status of Indian-administered Kashmir in 2019, Pakistan responded by downgrading diplomatic ties and suspending bilateral trade. Sharif’s call to sideline the issue temporarily in favour of a more pragmatic engagement aligns with his long-held belief that peace and prosperity should take precedence over territorial disputes.


At the SCO summit, Indian Foreign Minister Jaishankar followed a strictly diplomatic script focused on trade, humanitarian, and social issues. However, his presence in Islamabad signalled a potential softening of India’s hardline stance on Pakistan, at least on multilateral engagement. Although there were no formal bilateral talks, the atmosphere at the summit suggested a cautious willingness on both sides to re-engage, even if only through multilateral platforms like the SCO.


Pakistan went out of its way to ensure that Jaishankar’s visit was smooth and devoid of tensions that have marred previous engagements. Islamabad’s handling of the summit demonstrated a clear desire to be seen as a responsible and constructive player on the global stage. The fact that Jaishankar could participate in the summit without any significant diplomatic incidents was a victory in itself.


For Sharif, this moment was the culmination of his long-held belief that India and Pakistan must find a way to coexist peacefully. His three terms as prime minister were marked by repeated attempts to engage India, despite setbacks and opposition from hardliners within Pakistan. Sharif’s vision has always been one of economic integration and mutual benefit. He has consistently argued that the two nations if they could overcome their political differences, could create a more prosperous South Asia.


Sharif’s call for a reset in relations is not without challenges. Both nations have deep-rooted political, military, and ideological differences that will not be easily overcome. The memories of past conflicts, including the three wars fought since their partition in 1947, remain in the collective consciousness of both countries. The issue of terrorism, which India accuses Pakistan of fostering, is a significant stumbling block. However, Sharif’s message is clear: these obstacles should not be allowed to define the future.


Together, India and Pakistan represent over a billion people. If they could set aside their differences and focus on economic cooperation, it could spur growth, create jobs, and lift millions out of poverty. The South Asian subcontinent, long seen as a region of conflict, could instead become a beacon of economic opportunity and stability.


The SCO summit provided a platform for dialogue, demonstrating both nations’ ability to engage in diplomacy within a multilateral framework. Nawaz Sharif’s remarks reignited hope for reconciliation, with his focus on dialogue and economic cooperation offering a vision for a more prosperous South Asia. Jaishankar’s visit was a symbolic step forward. If both nations heed Sharif’s call, they could unlock immense potential and bring prosperity to the region.


(The author is a senior journalist based in Islamabad. Views personal.)

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