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....

min read

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 )

Reliable Teams Don’t Wait – They Own, Starts With You

Rashmi Kulkarni
Apr 20, 2025
3 min read

Your team’s reliability is not a personality trait. It’s a design decision.

A few months ago, I worked with a hospitality business in the US that ran weekend events, weddings, and overnight stays. The founder described their team as young, sharp, and always on the move.

They were all that, but they were also always on edge.

Behind the scenes, everything depended on her. Shift planning, escalations, client complaints, and even tip payouts. If she didn’t answer a Slack message, progress would be stalled. When she skipped a weekly huddle, decisions backed up. And when she took a Thursday off, Friday morning started with a mini fire drill.

She did not build a team; she built a queue – with faces.

Not because she didn’t trust her team. But because she never replaced herself in the system.

The Founder Fallback Loop

We call this the fallback loop.

The structure exists, and the SOPs exist. However, the team doesn’t own the system because the founder is still the system.

That’s the hidden execution gap inside many scaling businesses. Leaders introduce tools, hire managers, and build dashboards - but stay tightly coupled to every decision.

So teams get into the habit of waiting.

Waiting for feedback. Waiting for approvals. Waiting for the founder to pop in and "just tweak a few things."

The team isn’t unreliable. The structure isn’t weak. The fallback loop is still open.

What Reliability Actually Looks Like

Reliability isn’t about control, it is about rhythm. Rhythm is built when ownership is clear, roles are visible, and founders stop being the backup plan.

In that same hospitality business, we rebuilt the execution model:

• Shift planning moved to a shared tool

• Weekly ops check-ins were led by the floor manager, not the founder

• Escalations had defined paths - no more weekend Slack pings

• Tip payouts were automated with logic-based templates

The result was…

Decisions stopped bouncing.

Team members stopped deferring.

The founder started taking Thursdays off without triggering panic.

They didn’t just become faster, they became predictable.

Reliable Teams Don’t Need Reminders. They Need Design

Founders often say they want reliable teams. However, reliability isn’t something you hire for, it is something you design for.

That design includes:

• SOPs that clarify what "done" looks like

• Role clarity that prevents duplication

• Check-ins that happen without needing permission

• Escalation rules that don’t default to "just ask the founder"

And most importantly: a founder who doesn’t break the system they asked the team to trust.

Because the moment you jump back in to "just fix it," you’re not reinforcing reliability. You’re rewriting the rules.

Ask yourself

Reliable teams don’t wait. They move, own, and lead only when the founder steps out of the fallback loop.

If your team works well only when you’re watching, ask yourself:

• Have I given them clarity?

• Have I replaced myself in the loop?

• Have I protected the system I asked them to follow?

Because team reliability isn’t an outcome, it’s a pattern. And it always starts with you.

Next week, we begin our series: Let Go to Grow. We’ll explore what happens when founders overstay inside the system, override their own structures, and unknowingly kill the very rhythm they built.

It is not about adding more tools. It is about learning when to step back - and stay back.

(The author is Co-founder at PPS Consulting and a business operations advisor. She helps businesses across sectors and geographies improve execution through global best practices. She could be reached at rashmi@ppsconsulting.biz)

1 Comment

Chittaranjan Padave

Apr 26, 2025

The Founder Fallback Loop - Concisely summarized !! Certainly thrust has to be over Leadership Development aligned with Org's vision, so the business outcomes by the Project Team are as per expectations.