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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 )

The Chintzy Warcraft

“A Chinese-made jet brought down the Indian aircraft,” the Pakistani disinformation on Operation Sindoor made headlines in leading Western prints. Some reported two jets downed, while others claimed that five crashed, all without any real evidence to back their stand. Nonetheless, China capitalised on these baseless reports to market its defence equipment. “There is no better advertisement than a real combat situation,” the Chinese experts exclaimed. The grapevine spread, and in just two days, the stock value of the Chinese jet-maker crept up by 36%. But the hype did not last long. Following the clear briefings by Indian defence chiefs and a fiery speech by Prime Minister Modi, Chinese stocks plummeted much like their faulty aircraft.


China is one of the world’s top five exporters of war machines, mainly luring developing countries with its low-cost pricing and flexible financing. Western nations often accuse China of providing arms to insurgent groups and terrorists. All those lacking access to Western supplies turn to China for their arms needs, as China pays no heed to their background, financial credibility, human rights records or its potential vulnerability to Western embargoes.


At a time when the world has fragmented into conflict zones that developed voracious appetites for all sorts of arms, China’s cheaper weapons and favourable trade terms have failed to boost its overseas demand.


The SIPRI March 2025 Fact Sheet states that from 2015-19 to 2020-24, America’s share in global arms exports rose by 21%, France’s arms exports grew by 11%, and Italy saw a remarkable surge of 132%. In contrast, the share of Russian military exports declined by 64% for obvious reasons. As for China, despite a surge in the global arms trade and Russia’s shift in focus towards domestic sales, Chinese weapons failed to grab rising export opportunities. The report reveals that Chinese arms exports have reduced by 5.4%. China’s vast defence budgets, modernisation claims and aggressive export strategies failed to appear in its export figures. Some may contend that China is strengthening its home arsenal. But the reports on China’s high debt levels and its deepening fiscal deficits have other stories to tell. Apparently, the subpar performance of its war machines is the key reason stalling China’s progress in securing global arms deals.


Importers of Chinese-made military equipment often encounter difficulties due to poor quality, frequent malfunctions, and complex repair processes. In 2022, the Myanmar Air Force had to ground its entire fleet of Chinese JF-17s due to structural flaws. Pakistan, the co-producer (?) of the JF-17, also struggles to procure spare parts for its large fleet! Maintaining these fighter jets is challenging because they are designed and developed (reverse-engineered) by China, assembled in Pakistan, and equipped with Russian engines rendering them unreliable in combat scenarios. It is no surprise that the aircraft experienced crashes during the Russia-Ukraine war due to technical glitches. Bangladesh and Nigeria, the two long-standing customers of Chinese warcraft, have also encountered similar difficulties with Chinese planes. And yet, for a long time, China tried to sell not a new but the same faulty toy in the most profitable arms market, the Middle East! These efforts have largely fallen flat, indicating significant reservations about Chinese-made fourth-generation jets.


For years, China has been projecting its military might by keeping its defence data secret and making pompous claims about its technology on the global stage. The latest instance of this is of its PL-15 missiles. This Chinese PL-15 had drawn comparisons to advanced missiles developed by Europe and the United States. It was deployed for the first time during Operation Sindoor. And voila! In a real-combat situation, the Chinese missile missed its target, failed to detonate, and glided intact on Indian plains. During Operation Sindoor, the Chinese HQ-9 and HQ-16, a cheap copy of the Russian air defence system, were triggered by Indian dummy aircraft and destroyed by the Indian missiles in no time! The Chinese YLC-8E, a so-called super radar capable of detecting American 5th-generation fighter jets, was blown by India’s 4th-generation war machine. Pakistan’s Chinese Radar and ADS now lie in ruins.


Several old news reports indicate that Iran and Saudi Arabia were keen on acquiring Chinese 4th/ 4.5-generation warplanes. Similar reports have emerged recently following Trump’s historic return to the Middle East! With a few trillion worth of agreements, the American President returned on a free (?) Boeing, without a word on the American F-35, a 5th-generation fighter plane that the petroleum states are eager to buy. America wants to safeguard its advanced aircraft from Chinese espionage; many experts contend that the oil region may lean towards China for 5th-generation fighter jets. However, considering the Chinese equipment debacle in Operation Sindoor and ongoing US civil nuclear cooperation talks in the Middle East, Chinese warplanes may not enter the Middle Eastern fleet anytime soon.


When India’s dummy aircraft spotted Pakistani radars, when ‘BrahMos’ and ‘SCALP’ missiles destroyed them with speed and precision and when India’s ‘Rudram’ silenced enemy systems, India’s military might and wisdom left the world awe-struck! Our indigenous surveillance system, ‘NETRA’, became eyes to all three military domains and tracked enemy fighters far beyond Indian skies. Meanwhile, ‘Akash’ with AI-enabled ‘AkashTeer’ served as an impenetrable shield, bringing down Turkish drones like Autumn leaves. Indian missiles rained down on an airbase just a few kilometres from Pakistani Army headquarters and damaged the runways hosting Chinese fighters. When our missiles and drones picked out enemy targets unhindered like free-flying hawks, the world was awe-struck. The Atmanirbhar Bharat exposed the vulnerability of not just Turkey, Chinese, and Pakistani machines but also the multibillion-dollar Western defence systems that Pakistan got during the Afghanistan crisis. Operation Sindoor busted the myth of China’s military might, a devastating blow to its arms export dreams. India’s defence stock surged, boldly stating that the Chintzy warcraft can only show a sky circus.


(The writer is a foreign affairs expert. Views personal.)

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