The Technical Due Diligence Gold Mine
There’s someone else who should be included in a technical due diligence assessment.
Someone other than the engineers, the technicians, the management team, the technical advisers, the industry veterans…
This person is often completely overlooked, but he or she will give a more impartial view of the product, often understanding its limitations better than the engineers who created it. And, ultimately, this person has a greater influence over a product’s success or failure.
This “gold mine” of information and insight is, of course, the customer; the person who consumes the technology made by your proposition company.
For Remarkable Innovation, customer interviews have provided some of the most enlightening insight during technical due diligence projects. Product flaws, missing features, unusual behaviour and so on all come pouring out of the woodwork, as well as valuable information about how the product needs to evolve to satisfy future demand.
Customer interviews are not always straightforward. The proposition company may not want its customers to be aware of the investment it is potentially about to receive. We’ve done tech diligence projects in the past where our assessors were presented as consultants. As far as the interviewee was concerned, we were employed by the proposition company to gather feedback on their product.
So customer interviews need to be handled delicately and, of course, in order to get the most out of these interviews they must be conducted by a technical expert who can “speak the language” of the customer and properly explore the capabilities of the product with them. When we do these interviews, we always send the member of the due diligence team with the most knowledge of the technology.
Here’s a brief list of what the customer interviews should cover:
This is perhaps the most important part of the interview. A customer will be substantially more honest and blunt about the extent and impact of any technical shortcomings than engineers at the proposition company. The interview should cover any problems that the customer has experienced with the product, and how these have impacted the usefulness of the technology.
Competitive Environment
A customer will also give a much more objective view of the competitive landscape. It’s useful to ask what other options were considered at the purchase stage and why these were rejected. What factors will influence the buying decision in the future, and what would cause the customer to move to a competing technology?
Use of the Product
Often the way a product is used does not match the expectations of its creators. Is the customer using the product for its intended purpose and to the limit of its capabilities?
Future Trends
The interview should explore how the customer’s business will evolve in the coming years, and how this will affect their technical requirements. Using this information, the assessor can then examine how well equipped the proposition company is, in terms of personnel, facilities and technology, to satisfy those future requirements.
Testing
Sometimes the customer will have performed specific testing of the technology that goes beyond that performed by the proposition company. The interview should cover whether or not any such testing has been done, and what the results of it were.
Service and Support
Good product documentation, technical support, customer training and so on are all important to the ongoing success of a technology company. Talking to customers will give a very clear impression of how well the proposition company is doing in this area.
Requirements
Customers will often have very exacting demands and it is important to know what these are before examining the proposition company. What specific requirements does the customer has for the performance of the technology? For example, the equipment run life, maximum throughput, capability to integrate with existing infrastructure and operting conditions etc. Is specific customisation of the product required?
The benefits are clear: armed with all of this information about the customer, the assessor will know exactly which areas are critical to commercial success when it comes to examining the proposition company itself.
Customers are a gold mine of information. It’s just a question of digging.