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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 )

Strange bedfellows

BJP hugs Congress, AIMIM; panics after uproar

Thane: Eyebrows were singed and blood pressures spiked when the Bharatiya Janata Party suddenly decided to hug its “sworn enemies” in Ambernath (Thane), and in Akot (Akola) – after the December 20 municipal council polls there.

 

The BJP became snug under its saffron blanket with the Congress and Ajit Pawar’s Nationalist Congress Party – all to politically leave the Mahayuti ally, Shiv Sena led by Deputy Chief Minister Eknath Shinde, out in the cold.

 

Similarly in Akot, the BJP cozied up under the All India Majlis-E-Ittehadul Muslimeen (AIMIM)'s green quilt, without a shred of guilt, to shoo off the Congress-Vanchit Bahujan Aghadi and others from bagging the civic body.

 

In Ambernath, the Shiv Sena had emerged as the single-largest party with 27 seats in the 60-Ward house, and in Akot, the BJP achieved the same feat with 11 seats in the 35-Ward house.

 

Predictably, leaders across these parties rushed to douze the hayfires. A shaken Congress state chief Harshwardhan Sapkal suspended local leaders in Ambernath, including the local party chief Pradeep Patil, the executive committee and around a dozen elected municipal councillors.

 

A dazed AIMIM state chief Imtiaz Jaleel, declared there was “no question of joining hands with the BJP”, and added grimly: “We have sought a report from the local party leaders, and after getting all details, we shall initiate appropriate disciplinary action,” a grim Jaleel said.

 

Smarting under red-hot chilli criticism flung by Shiv Sena (UBT)’s Sanjay Raut and Aam Aadmi Party’s Preeti Sharma-Menon, Chief Minister Devendra Fadnavis shot out an earful to the local party leaders in Ambernath and Akot.

 

“We shall not tolerate the alliances with Congress and AIMIM. These partnerships must be broken. If the local (BJP) units have worked out such deals, they are wrong and violate norms. We shall take stringent action against them,” warned Fadnavis. Later, BJP State President Ravindra Chavan slapped a notice on the Akot party units seeking an explanation.

 

Ideological Somersaults

Since 2019, the state has witnessed many such brazen ideological somersaults that have left political parties and voters shocked and awed.

 

It started when the (undivided) Shiv Sena joined the Congress and (united) NCP to form the Maharashtra Vikas Aghadi (MVA) which ruled the state for two-and-half years.

 

In the current civic elections season, even the MVA has fractured with Congress going solo or with local allies like Prakash Ambedkar’s Vanchit Bahujan Aghadi, while the Shiv Sena (UBT) and NCP (SP) have embraced the once-untouchable MNS.

 

Adding to this is the flurry of local leaders-activists hopping parties, leaving voters bemused and bewildered, even as the parties fumbled to save their ideological credibility.

 

Ambernath: Shoving out the winner

Indulging in political creativity, the BJP, Congress and NCP floated the Ambernath City Development Front, uniting the BJP, Congress and NCP, intended to keep the Shiv Sena out of power at all costs.

 

Ambernath falls in the Kalyan Lok Sabha seat of Dr Shrikant Shinde, son of Deputy CM Eknath Shinde, who is already at loggerheads with BJP state chief Ravindra Chavan, hailing from Dombivali town, also in Thane district. BJP-Shiv Sena fought against each other in the civic polls last month.

 

In the 59-member Ambernath Municipal Council, the Shiv Sena won 23 seats, BJP 16, Congress 12 and NCP four. BJP’s Tejashree Karanjule was elected president through direct polls. Post-alliance, the BJP-Congress-NCP touched 32 seats, edging out the Shiv Sena which in its undivided form had ruled here for almost 35 years.

 

 Akot: Bulldozing to grab power

The BJP, AIMIM formed the Akot Vikas Manch, which included Shiv Sena, Shiv Sena (UBT), NCP and NCP (SP) and Prahar Janshakti Party to wrest the 35-member house from potential claimants.

 

The BJP won 11 and AIMIM five, and along with others, the AVM claimed a majority with 25 municipal councillors, and the Congress, VBA floundered with just 8 seats.

 

The AVM was formally registered with the SEC. In the polls, BJP’s Maya Dhule was elected mayor defeating AIMIM’s Firozabi S. Rana.

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