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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 Slow Death of an Aging Freighter

The sinking of MSC Elsa-3 exposes troubling questions about aging ships, weak inspections and maritime risk off India’s coast.

In the early hours of May 25, the MSC Elsa-3, a 28-year-old Liberian-flagged container feeder, sank mysteriously in moderate seas off the Kerala coast. She was on a short eight-hour voyage between Vizhinjam and Kochi, a relatively undemanding run for any seaworthy vessel. But Elsa-3 was not just any vessel. She had changed names nine times since her launch in 1997 - her first being Jan Ritscher - and appeared to be long past her prime. Her final journey ended 15 nautical miles from land, within India’s ‘contiguous zone,”’ an area where the state may act to protect its customs and environmental interests. It now also finds itself acting to address the fallout of what may have been a preventable disaster.


While carrying only 640 containers (less than half of her 1,730 TEU capacity), the Elsa-3 developed a 26-degree list to starboard before capsizing and sinking. The weather, by most accounts, was moderate, but hardly the sort that could fell a healthy vessel. Which begs the obvious question that how could a ship built to cross oceans fail on a coastal hop?


Parallels are being drawn to the 1987 Herald of Free Enterprise disaster in the English Channel, where a ferry capsized just 700 metres off the coast of Zeebrugge. That case revealed grave negligence. With Elsa-3, no definitive answers are yet available, but the circumstances are damning. Maritime experts point to several plausible causes.


One potential explanation is structural failure. A weakness in the hull could have allowed water to flood compartments, compromising buoyancy and triggering a catastrophic chain reaction. If the engine room was breached, the ship could have suffered a blackout, paralyzing all automated stability systems. Another culprit could be inaccurate container weights. Misdeclared containers can distort a ship’s balance, subjecting the hull to unsustainable shear and bending forces. In worst-case scenarios, they may tip the vessel past the point of no return, disabling its ability to self-correct - a principle known in nautical terms as ‘righting moment.’


Then there’s the phenomenon of synchronized rolling. If a vessel’s natural rolling rhythm coincides with wave patterns, it can amplify tilting to dangerous extremes. Navigational adjustments usually mitigate this risk. But that requires functioning systems and alert officers. The Elsa-3 was reportedly handicapped by an inoperative ballast transfer pump, which is a vital mechanism that allows the crew to counterbalance flooding or instability by shifting water between internal tanks. Whether this was due to equipment failure, human error, or both, is not yet clear.


For now, attention has turned to cleanup and salvage. The ship’s owners have contracted T&T Salvage, a U.S.-based specialist, to recover 360 tonnes of fuel oil and 84 tonnes of diesel from the sunken vessel. They will also attempt to retrieve any floating debris and rogue containers that are potentially lethal hazards for other vessels in the heavily trafficked shipping lanes of southern India. The Directorate General of Shipping (DGS), India’s maritime regulator, has issued alerts to mariners and local fishermen to steer clear.


But the monsoon complicates matters. Salvage operations now face the fury of southwest winds and rising seas. On the upside, the wreck lies relatively close to shore. Moreover, many of the containers on board were reportedly empty, which should ease recovery. Tugs towing recovered debris will benefit from the prevailing swell patterns, the one small mercy in an otherwise grim task.


Financially, the ship’s scrap value is modest. At a market rate of $340 per metric tonne, Elsa-3’s remains may fetch between $3 million and $3.5 million. That makes full salvage uneconomical. However, breaking up the hull and recovering high-value sections is feasible and likely. Whether the ship's insurers or owners foot the full cost remains to be seen.


The DGS, for its part, is taking no chances. It has set a hard deadline of July 3 for the salvage operation’s completion and is reportedly monitoring progress in 12-hour cycles. This unusual level of vigilance suggests that the Elsa-3 disaster may have rattled regulators. India’s maritime infrastructure, still rapidly expanding in anticipation of 2047’s centennial vision, has little patience for old, risky vessels limping between ports.


Officials have hinted that port inspections for aging ships will now be tightened. That would be a long-overdue corrective. The industry is riddled with substandard shipowners operating on thin margins and heavy appetite for risk. Ageing vessels are cheaper to charter and operate, especially under flags of convenience like Liberia’s. But the real cost in environmental risk, human lives and national credibility, is far higher.


In that sense, Elsa-3 may prove an inflection point. Much like the Herald of Free Enterprise forced European regulators to revamp safety checks, this incident could prompt Indian authorities to scrutinize the global shipping underbelly calling at its ports. It is a reminder that the ocean may be vast, but the margin for error is perilously narrow.


(The author, a former merchant navy sailor, is presently a shipping and marine consultant and member, Singapore Shipping Association)

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