(First published at Forbes on Jan 21, 2013, by Gregg Fairbrothers and Catalina Gorla, Contributing Writers)

We’ve been talking about market validation with Urko Wood, an expert in growth strategy and innovation who helps companies determine where to focus and what to do to drive growth through innovation.

Urko, in the previous column, you told us you thought the Lean Startup approach encourages people to do the wrong thing better. But doesn’t Lean Startup bring empirical science to innovation?

No, I don’t think so. What would you say is better science, to prescribe a treatment plan without a solid diagnosis and then try to learn from your failures, or to do a diagnosis first and then based on that prescribe the best treatment plan? Clayton Christensen calls this marketing malpractice, because it’s attempting to prescribe treatment before conducting a diagnosis on the customers’ needs.

The key is to understand which approach makes sense for you in your specific circumstances. In consumer software, the world that Ries comes from, I can see how the lean startup approach can have some merit because the cost of running experiments is so low and they can be done very quickly. Additionally, if you have a solution looking for a market, then putting it out into the market to see who bites makes sense, too. That can work in software, sometimes. But I doubt it’s always the case even in software, and it’s definitely not true for expensive tangible products like a heavy equipment manufacturer. If you know who your customer is, then you should figure out what they are trying to get done and where they’re struggling. Nail that first and then your chances of developing a great solution go up tremendously. Maybe you’ve heard the old adage that “a problem well-defined is half-solved?” Well another version of that is “a customer need well-defined is half-satisfied.” Then, the very next question is: “Who is going to pay for this?”

What about Thomas Edison? Didn’t he say “I have not failed. I’ve just found 10,000 ways that didn’t work?” Wasn’t he doing what Ries is advocating in Lean Startup?

That’s another great question, and another misappropriation of a famous quote! Edison was not doing the same thing as lean startup, and here’s why. In her book Innovate Like Edison, Sarah Miller Caldicott, Edison’s great grand niece says Edison learned early in his career what folly it is to try to develop a solution without first validating the customer need.[1] There’s a well-known, funny story about this.  Basically, Edison had to learn the hard way about finding a market need first.

His first patented invention was a vote recorder for use by legislative bodies such as Congress. He may have been spurred by reports in the Telegrapher that the Washington, D.C., City Council planned to install an electric vote recorder and that the New York State legislature was considering one as well. Edison was issued U. S. Patent 90,646 on 1 June 1869. A fellow telegrapher named Dewitt Roberts bought an interest in the invention for $100 and took it to Washington, D.C. to exhibit to a committee of Congress. The chairman of the committee, unimpressed with the speed with which the instrument could record votes, told him that “if there is any invention on earth that we don’t want down here, that is it.” The slow pace of roll call voting in Congress and other legislatures enabled members to filibuster legislation or convince others to change their votes. Edison’s vote recorder was never used.

Supposedly Edison said afterward that was the last time he would ever invent something without first knowing there was a need for it.[2]  His second invention was his Universal Stock Printer (1871), an improvement on Edward Calahan’s stock ticker in (1867). There was a proven need not only for this product, but also for Edison’s improvements.  He later sold it to a General Marshall Lefferts, President of the Gold and Stock Telegraph Company for $40,000. (He was thinking of asking $3,000, but had the good sense to let the General make the first offer[3]).

Edison’s thousands of experiments were conducted only after he thoroughly understood what his target customers were trying to accomplish. He took the time to first validate the market demand and then and only then did he turn to running his experiments to develop the best solution. That’s really what Edison was doing and that’s what most entrepreneurs and companies should do as well. We can all learn from that.

So again, remind us about this process of market validation.

It’s a simple two-step process. First, identify what problem you are solving for your customer. This is validating market demand. Second, use what you learned to develop a solution that addresses the problem. This is validating the solution by getting a product in the hands of your customers and learning how good it is at doing a job your customer finds valuable.

Footnotes:

[1] Gelb, Michael J. and Sarah Miller Caldicott.  Innovate Like Edison. (New York: Penguin Group, 2007).

[2] Dyer, Frank Lewis. Edison, His Life and Inventions.  (New York: Harper & Bros., 1910): 42.

[3] Dyer, ibid: 53.