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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 Storm at Europe’s Gates

Nearly 800 years ago to this month, in the spring of 1241, the Mongol armies surged into Europe like a flood without banks. Two battles, fought within days of each other - at Legnica (in Poland) on April 9 and Mohi (in Hungary) on April 11 - stand as markers of that tempest. These were moments when the destiny of Europe hung on a knife’s edge.


At Legnica, in Silesia, a hastily assembled army of Poles, Germans and Bohemian knights met the vanguard of Mongol forces under the brilliant general Subutai, the military genius of Chinggis Khan. The outcome was swift and brutal: Duke Henry II ‘the Pious’ was killed; his army, a patchwork quilt of feudal levies and Teutonic knights, was utterly decimated.


Two days later and hundreds of miles to the southeast, near the Sajó River at Mohi, the main Mongol force led by Batu Khan and Subutai unleashed a masterclass in battlefield manoeuvre against King Béla IV of Hungary. Here, the annihilation was even more complete. The Hungarian army, the largest that Europe could muster at the time, was encircled and destroyed with such surgical efficiency that medieval chroniclers struggled to convey its horror.


Yet, despite these staggering victories, the Mongols did not press on to the Atlantic. Europe, battered but breathing, survived.


Were Legnica and Mohi true turning points, then? Yes, but in a paradoxical way. Their significance lies not in what they changed, but in what they revealed and what might have been.


The Mongol campaigns, as Timothy May notes in ‘The Mongol Art of War’ (2007), were the closest Europe ever came to becoming part of the Mongol world empire. Mohi and Legnica demonstrated beyond any reasonable doubt that no European army of the time could withstand the Mongols in open battle. The continent’s defences built around sluggish feudal levies and heavy cavalry charges were woefully inadequate against the Mongols’ fluid tactics, composite bows and feigned retreats.


The Mongols weaponized their reputation of terror. Castles fell without sieges; towns surrendered only to be razed. Anthropologist Jack Weatherford, in his superb Genghis Khan and the Making of the Modern World (2004) emphasizes how the Mongol conquests in Persia and Kievan Rus had already taught survivors that resistance meant annihilation, while submission brought only fleeting reprieve.


Had the Mongols pressed westward, history might have taken a radically different turn. René Grousset, the great French historian argues in his classic The Empire of the Steppes (1970) that nothing could have prevented their reaching the shores of the Atlantic.


Urban civilization in western Europe, already fragile after centuries of Viking raids and internal warfare, might have collapsed entirely under Mongol occupation. Christianity, dominant but still regionally diverse, could have fractured under the strain of Mongol religious tolerance (and indifference), which fostered Islam, Buddhism and Nestorian Christianity under its umbrella. Latin Christendom might have become a borderland of a vast Mongol-led Eurasian superstate, spanning from China to Brittany.


Why, then, did the Mongols stop?


The answer lies partly in a stroke of fortune. In December 1241, news reached the Mongol commanders that the Great Khan Ögedei had died in Karakorum. Following Mongol political custom, the princes were required to return east to participate in the kurultai, the council to elect a new Khan. As a result, the Mongol forces withdrew from Europe almost as suddenly as they had arrived.


Had Ögedei lived another few years, had Subutai crossed the Rhine, the face of Europe might look very different today.


Imagine the counterfactuals of a ‘Mongol Europe’ - its cities flattened, its monastic centers of Chartres and Cologne plundered, the great universities of Paris and Bologna reduced to ash. Without Christendom’s strongholds, would Islam have spread northward, filling the vacuum left behind? Would the Renaissance ever have sparked, or would Europe’s cultural energies have been scattered to the winds like the ruins of Baghdad and Samarkand?


However, historian Peter Jackson, in his ‘The Mongols and the West’ (2005) warns against too linear a reading. Formidable as they were, the Mongols faced limits of terrain, supply and governance.


In the wake of the Mongol withdrawal, Europe stumbled toward reinvention. Out of the wreckage came new forms of fortification, diplomacy and even a slow awakening to the need for inter-kingdom coordination. Importantly, the concept of a unified Christendom, however imperfectly realized, owes something to the Mongol spectre that momentarily darkened its skies.

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