Jeff Beehler, the glue that holds the Team System team together, blogged about a fundamental part of designing software at Microsoft - the Software Design Review (SDR). Read this post (SDRs - getting customer feedback early and often) if you want to have some insight into one of the ways we validate our designs with customers early in the software development life cycle.
For three days last week we spent time with 30 customers representing a number of companies from around the world sharing with them some ideas we have about the future of VSTS. We typically conduct a number of these Software Design Reviews (SDRs) during the lifecycle of the product to get customer feedback early and often to ensure that we're hitting the sweet spot within our particular market. While we certainly get feedback through other means through the lifecycle, there's something very powerful about getting face-to-face with customers and getting direct feedback both positive and negative in real time.