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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 )

What if Clive had lost at Plassey?

Updated: Jan 27, 2025

Plassey

History is fickle. Some battles leave scars that fade faster than anticipated; others cast shadows long before anyone realizes their magnitude. The Third Battle of Panipat in 1761, where Ahmad Shah Abdali crushed the Marathas, seems to be a colossal turning point in Indian history, but is not. For within a decade, the Marathas, under the indomitable Mahadji Scindia, reclaimed much of their power. In contrast, the Battle of Plassey in 1757 seemed, at first glance, inconsequential. Casualties were minimal, and it passed without the immediate fanfare of a historic reckoning. Yet, over time, Plassey emerged as a defining moment - not just for India, but for the world.


But what if history had taken a different turn? Counterfactual musings about Plassey unravel a labyrinth of possibilities. Bengal’s Nawab Siraj-ud-Daulah had allied with the French, aiming to thwart the East India Company’s growing influence. His undoing was not British military genius but treachery - Mir Jafar, his commander-in-chief, defected, handing Robert Clive an improbable victory. Had Mir Jafar stayed loyal, Siraj’s forces might have triumphed, the British probably expelled and India’s history rewritten.


In this alternate timeline, Bengal’s fate diverges sharply. A Franco-Bengali alliance, buoyed by Bengal’s vast wealth, would have stymied British expansion. The East India Company, stripped of its lucrative foothold, might have retreated to Bombay and Madras, curtailing its imperial ambitions. Europe’s balance of power, and by extension global imperialism, would have looked starkly different.


The political implications are equally tantalizing. Without a unified British Raj, India’s future might have mirrored Europe’s - a mosaic of sovereign states locked in alliances and rivalries. The Marathas, Sikhs and Mysore might have risen as dominant regional powers leading to the emergence of a multipolar subcontinent.


In reality, Siraj-ud-daulah was hardly an enlightened ruler, utterly despised for his erratic governance and cruelty. Even without British intervention, Bengal’s fractious nobility would anyway have sought to unseat Siraj. The French lacked the resources to dominate the subcontinent. Their failure to consolidate power in Pondicherry suggests that a Franco-Bengali regime would have struggled to sustain itself against internal dissent and external threats.


Interestingly, for several eminent Bengalis like Sir Jadunath Sarkar, India’s foremost historian, Plassey was a deliverance, not a calamity. Writing in the second volume of The History of Bengal (1948), Sarkar lauded the British victory: “In June 1757, we crossed the frontier and entered into a great new world.” Bengal under British stewardship experienced a Renaissance after Muslim—a cultural, intellectual, and social awakening broader than Europe’s post-Constantinople revival, Sarkar argued, remarking that the British had rescued Bengal from the “blight of medieval theocratic rule,” transforming a neglected corner of the subcontinent into a vanguard for India’s modernization.


Closer to home, Siraj’s victory would have had profound ripple effects. Without British consolidation in Bengal, the ‘Bengal Renaissance’ – the flowering of intellectual, artistic and social reform movements might never have materialized and reformers like Raja Ram Mohun Roy and Ishwar Chandra Vidyasagar might have remained obscured in a landscape untouched by Enlightenment ideals. Bengal, rather than becoming a pathfinder for India’s modernization, could have languished under fragmented, medieval rule.


Plassey, as it happened, marked a watershed. It transformed the East India Company from a trading enterprise into a political empire-builder. Bengal’s fertile lands and lucrative trade networks became the financial bedrock for Britain’s expansion. Had Clive been defeated, this imperial enterprise might have been delayed or derailed altogether.


Plassey’s significance lies not just in what happened but in what might have been. For Bengal, it was the beginning of a transformation—a Renaissance borne of conquest. For the world, it was the dawn of an empire whose shadow still looms large.

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