When RDF Doesn't Allow Lean: A 1st-Hand Account

by Ashwin Limaye

I would like to question the compatibility of "reality distortion fields" (RDFs) and lean startups through my personal experience working at the Management Innovation eXchange (MIX) this summer. MIX was an ambitious idea – building an online platform to share management ideas, bring together leading CEOs, managers and thinkers and ‘reinvent management for the 21^st century’.

Prima facie, MIX had three major ingredients of a lean startup: Leverage, Iterations and Low burn. The MIX generated phenomenal leverage: the founder was a highly-regarded management thinker, the CEO held contacts within a large consulting Firm and the ‘friends and advisors’ comprised prominent CEOs and business professors. Together, they brought rich contact lists, an initial customer base and sponsors who were able to offer favorable deals such as funding for the web development team and informal partnerships with leading industry associations. The MIX was quite lean: a five person team, two of them wealthy enough to not draw salary, one an intern and all of them working out of their own home or office space donated by a generous corporate sponsor. With major costs covered, the team had enough cash in the bank to last 12 months. Most importantly, the MIX team iterated: The team started with a basic, admittedly cumbersome product launched in April 2010 and made heavy use of google-analytics, expert input and customer interviews over the next 4-6 months to refine the portal and add new features to improve the user experience.

Despite all the above, the MIX was unable to generate the kind of takeoff the team expected. User growth was slow, response rates low, referral rates even lower, and while usage was high, contribution rates were merely 3-4%.

In hindsight, I believe that living in an RDF was the fuel that drove us yet also the smoke that blinded us. Building a web portal for knowledge sharing was hardly new. To drum up the interest of investors and partners, we needed a grand vision: “Management is becoming outdated and should no longer be the exclusive of grey haired CEOs and academics … time to for new ideas to come forward … Management 2.0… ”. It kept us motivated around the basic hypothesis that managers out there have new ideas and will find value in sharing and debating them and helped us rope in some elements crucial for success – sponsors, supporters who sent out the initial invites and thinkers who provided content (blogs, videos, etc) for free.

But the target customer did not swarm to the MIX to register and contribute, despite the fact that they said they loved the idea and visited often. Blinded by our own reality, we missed out on some critical customer testing, setting extremely high standards for our customers in believing that they would take time to pen down their management experiences and idea, and that they would have the editorial competence necessary to make insightful, well-structured contributions. That they might not should have been a hypothesis but instead became a ‘customer selection criteria’. We forgot to let the customer define the product. Another assumption induced by RDF was that of virality: we thought an excited customer would get us many more, kicking in the network effect needed to ‘wikipedia’ our concept. Only a customer living in our reality would have contributed thus, and most of them did not.

I contend that for such ‘big-idea’ startups, the RDF becomes an essential component of their energy and existence and necessitates behaviors and decisions that cannot be ‘lean’. Maybe a non-lean approach –more marketing dollars and a decision to trust one’s gut and unveil the final product – is better suited and more likely to succeed. Whatever it may be, it doesn’t look lean to me.