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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 )

When the Tap Cannot Be Trusted

The Indore water tragedy exposes a chronic failure of urban governance that sits uneasily with India’s 2047 development ambitions.

The recent deaths in Indore following the consumption of contaminated drinking water shocked the country not merely because lives were lost, but because they were lost in a city celebrated for cleanliness and civic management. The incident led to hundreds of hospitalisations and multiple fatalities, with official and unofficial counts differing. This was not an unforeseeable accident but a predictable failure.


Across Indian cities, similar episodes occur with troubling regularity. They surface briefly in headlines and then fade from attention until the next outbreak. Indore should therefore be seen as a revealing example of a deeper and persistent urban public-health problem. Such incidents also sit uneasily with India’s stated ambition of becoming a developed nation by 2047.


The immediate technical explanation in Indore, sewage contamination of drinking water, is well understood by engineers and public-health professionals. Cross-connections between water and sewer lines, pressure drops associated with intermittent supply, ageing infrastructure, poor maintenance, and delayed response to citizen complaints together create conditions in which contamination becomes a probability.


India possesses the scientific knowledge and technological capability to prevent such events. Chlorination protocols, residual chlorine monitoring, microbial testing using faecal indicator bacteria, pressure management, leak detection and network mapping through GIS are standard tools. When outbreaks occur despite these tools, the diagnosis shifts from technology to governance and institutional culture.


In many cities, drinking water and sewage are managed by the same authority, often called a water and sewerage board. The name itself is harmless, but repeated contamination episodes raise an uncomfortable question. Are these services merely administered together, or are they becoming dangerously entangled in practice through weak separation, poor mapping, and inadequate protection of networks?


Structural Weaknesses

Water infrastructure in Indian cities is largely invisible. Buried pipelines attract little public or political attention compared to roads, flyovers or buildings. Maintenance budgets are cut, replacement projects postponed and the system is expected to function silently until it breaks.


Second, routine monitoring is weak and uneven. In many cities, water-quality testing is sporadic, results are not shared in a way citizens can understand, and early warning signs such as foul smell, turbidity, or unusual taste are treated as irritants rather than alerts. In the Indore episode, residents had complained about water quality before the outbreak escalated.


Third, institutional responsibility is fragmented. Water supply agencies, municipal bodies, public health departments, and local laboratories often operate in silos. When contamination occurs, accountability becomes blurred and response time suffers. Water contamination is a public health emergency. Such emergencies demand clear command structures and rapid decision-making.


Most importantly, public health is undervalued until it becomes a crisis. Diarrhoeal disease is still widely seen as routine or seasonal, despite overwhelming evidence that it is largely preventable.


Indore illustrates how quickly a local failure becomes a citywide emergency. Reports indicate that more than a thousand people fell ill and many required hospitalizations. For a modern city, such numbers should be a warning that the system is not merely under stress, but structurally unsafe in specific zones.


A crucial difference between India and many Western countries must be acknowledged here. Tap water in India is generally not considered safe for direct consumption.


In much of Europe and North America, people drink water straight from the tap with confidence because safety is built into the system and verified continuously. In India, even in large cities, drinking from the tap is often seen as risky. As a result, India has become one of the world’s largest markets for household water purification systems, including RO, UV, and multi-stage filters. This growth is driven by health concerns and lack of confidence in municipal supply.


Perilous Situation

This should concern policymakers for two reasons. First, household purification shifts the burden from public systems to private households, meaning safety depends on purchasing power. Second, household devices do not protect everyone equally and do not address failures in schools, hospitals, street food preparation, and public spaces.


Other countries have faced water-contamination crises and responded decisively. In Milwaukee in the United States, a 1993 outbreak of Cryptosporidium sickened hundreds of thousands despite advanced treatment facilities. The episode led to stronger monitoring, better pathogen-related safeguards, and clearer public-health communication. The lesson is that modern infrastructure is not enough if surveillance and risk management are weak.


In Walkerton in Canada, contamination of drinking water by E. coli in 2000 caused deaths and widespread illness. A public inquiry reshaped water governance by strengthening operator certification, mandatory testing, transparent reporting, and clear accountability.


India does not need to import foreign models blindly. But it must adopt the principle that water safety is a continuous, verified outcome, and not an assumption. India urgently needs to shift from crisis-driven response to preventive water safety management. Drinking water must be treated explicitly as a public-health service, not merely an engineering utility. Cities should implement water safety plans at ward and city levels, identifying hazards, control points, and response triggers. Above all, sustained investment is required in pipeline replacement and physical separation of sewer and drinking-water corridors, even though such investments rarely produce quick political dividends.


This transformation cannot be left to administrators alone. Scientists can help design affordable, robust monitoring systems, interpret microbial data for decision-makers, and integrate hospital disease trends with water-quality signals to detect outbreaks earlier. Engineers must focus on network integrity by mapping pipelines accurately, managing pressure, detecting leaks early, and designing systems that prevent backflow and contamination. Teachers and educators play a crucial role in building public awareness by teaching the basics of water safety.


For a nation that envisions itself as developed by 2047, the credibility of that vision will rest as much on everyday essentials as on grand technological achievements. A tap that delivers safe water reliably, without fear, is one of the simplest and strongest signals of true development.


(The author is an ANRF Prime Minister Professor at COEP Technological University, Pune; former Director of the Agharkar Research Institute, Pune; and former Visiting Professor at IIT Bombay. Views personal.)

 


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