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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 )

Mayhem In Mumbai

Mayhem

In Maharashtra’s tangled electoral theater, Raj Thackeray’s Maharashtra Navnirman Sena (MNS) has again found itself caught in an uneasy tug-of-war with its nominal allies in the ruling Mahayuti coalition. In a high-profile debut, Raj’s son, Amit Thackeray, who is set to contest the Mahim Assembly seat, now finds himself facing a daunting challenge in a constituency marked by political crosscurrents and veiled grudges. The ruling MLA Sada Sarvankar of CM Eknath Shinde’s ruling Shiv Sena, has refused to back off despite previous intimations by the BJP that it would convince Sarvankar to withdraw.


Earlier, following Sarvankar’s intransigence, Raj Thackeray openly castigated Chief Minister Eknath Shinde and Deputy Chief Minister Ajit Pawar. His ire, stemmed from Shinde’s refusal to rein in Sarvankar, who flatly refused to step aside in favour of Amit.


Yet, despite venting his spleen on Shinde, Raj spared the BJP from any direct rebuke, hinting that his bonhomie with the saffron party remained intact.


However, the BJP appears to be doing a delicate balancing act over backing Amit Thackeray in Mahim.


While endorsing MNS candidates for only one seat—the Shivdi Assembly seat, where Raj Thackeray’s lieutenant Bala Nandgaonkar is contesting—it has maintained an ambiguous stance on supporting Amit in Mahim.


BJP’s Mumbai President Ashish Shelar clarified that their endorsement is limited strictly to Shivdi, effectively withdrawing the once-discussed support for Amit. Despite Deputy Chief Minister Devendra Fadnavis’s efforts to broker a truce, BJP’s MLC Pravin Darekar highlighted that any backing for Amit in Mahim hinges on the Eknath Shiv Sena’s co-operation - a condition that underscores the BJP’s unwillingness to risk its alliances over Mahim.


This latest development has left Raj Thackeray navigating an uncertain political landscape with less than a fortnight to go for the polls. While the MNS leader campaigned fervently for Eknath Shinde’s son, Shrikant Shinde, in the recent Lok Sabha elections, Shinde’s refusal to reciprocate the same for Raj’s son in connection with the Mahim Assembly seat is likely to have stoked Raj’s frustrations.


For Amit, the upcoming contest marks a critical political debut as he faces not only Sarvankar but also the Uddhav Thackeray-led Shiv Sena (UBT) candidate Mahesh Sawant, creating a high-stakes triangular contest in central Mumbai. The MNS’ twin debacles in the 2014 parliamentary and Assembly elections left the party in utter disarray, with the slide continuing through the 2017 civic election as well as the 2019 State and national elections.


Following its rout in the 2019 Maharashtra Assembly election, an atrophied MNS had changed its ideological direction from its nativist stance by veering towards Hindutva politics, signalled by Mr. Raj Thackeray’s 2020 adoption of a saffron flag incorporating Chhatrapati Shivaji’s royal seal or ‘Rajmudra’.


The BJP’s reluctance to commit unequivocally to the MNS points to a larger strategy. By keeping its support conditional and focused on Nandgaonkar in Shivdi, the BJP retains leverage without alienating the Shinde faction—a tactical move to safeguard its alliance in Maharashtra’s fragmented political climate. For the BJP, Raj Thackeray’s Marathi vote bank remains valuable, but not indispensable.


The BJP thus benefits from Raj’s ideological alignment (the latter had offered unconditional support to the Mahayuti in the Lok Sabha), given his pivot towards Hindutva in the recent past. For the MNS and its leader, though, the Mahayuti’s ambivalence towards Raj Thackeray leaves the latter in a state of permanent political limbo.

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