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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 )

Many corners, no centre

Pune’s civic elections reveal how Maharashtra’s alliances have hollowed themselves out

Pune: Pune’s municipal election, once a contest shaped by familiar coalitions, has turned into a political free-for-all. The collapse of both the ruling Mahayuti and the opposition Maha Vikas Aghadi has produced four-way contests across all wards, leaving voters to navigate a crowded ballot and parties to improvise alliances on the fly. The city’s election has become a microcosm of Maharashtra’s larger political disarray: fluid loyalties, exhausted ideologies and an increasingly transactional politics.


On paper, the Bharatiya Janata Party (BJP) remains the single largest force, contesting 157 seats on its own, with an additional nine seats allocated to allies and sponsored candidates, taking its tally to 165. Yet numerical strength masks underlying strain. The BJP has declined to renominate 42 of its sitting corporators, triggering a wave of defections that has scrambled local equations. Many rejected aspirants have sought refuge in the Nationalist Congress Party (NCP) or one of the Shiv Sena factions, less out of conviction than electoral survival.


Strange Contests

Both factions of the NCP (led by Sharad Pawar and his nephew Ajit Pawar) are contesting over 100 seats each, an extraordinary spectacle for a party that once prided itself on discipline and unity. Most candidates loyal to the NCP alliance are contesting under the familiar clock symbol, but the symbolism disguises a deeper confusion about leadership and direction. Ajit Pawar’s camp has drawn in allies such as the Republican Party led by Sachin Kharat, while Sharad Pawar’s faction has struggled to keep its urban cadre intact.


The Shiv Sena, split between Deputy Chief Minister Eknath Shinde’s faction and Uddhav Thackeray’s Shiv Sena (UBT), is similarly divided. Shinde’s group has fielded 111 candidates, while the UBT faction is contesting 70 seats. The Congress, contesting 90 seats, finds itself in an awkward three-party understanding with the Sena (UBT) and the Maharashtra Navnirman Sena (MNS), an alliance born less of ideological convergence than mutual weakness. Even this arrangement is porous: in around 20 wards, Congress and Sena (UBT) candidates are locked in ‘friendly’ contests that are friendly in name only.


Smaller parties add to the clutter. The MNS is contesting 44 seats, hoping to reclaim some relevance in its home turf. The Vanchit Bahujan Aghadi, allied with the Congress in Mumbai, has gone its own way in Pune. The Aam Aadmi Party and the Bahujan Samaj Party are also in the fray, further fragmenting the vote.


Beneath the shifting alliances lies a more striking continuity: dynastic politics thrives even amid chaos. Sons and daughters of established politicians have found tickets across parties, often following their elders’ ideological migrations. Surendra, son of an NCP (Sharad Pawar faction) MLA, has joined the BJP along with his wife, both now candidates. The son of a former Shiv Sena (UBT) heavyweight has also crossed over to the BJP and been rewarded with a nomination. Similar stories abound across parties, suggesting that while alliances collapse, political inheritance remains remarkably stable.


The churn has elevated ward-level battles into personal duels between former corporators, many now facing off against erstwhile colleagues under rival banners. Senior city leaders from nearly every major party - the BJP, Congress, both NCP factions, both Senas, the MNS and the AAP - have entered the fray themselves, signalling how high the stakes have become.


Pune’s election may decide who controls the city council, but its larger significance lies elsewhere. It shows a political system where alliances are brittle, ideology thin and loyalty provisional. In such a landscape, four-way contests are not an exception but the new normal. Regardless of whoever wins, the city’s governance is likely to be as fragmented as the campaign that preceded it.

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