When buying into in a company any investor worth their salt will undertake some investigation into the quality of the opportunity before them. They do their homework. But are they being as diligent as they could be?
Stages in the due diligence process includes detailed investigation of the key areas of a business: its management team, its finances, its HR practices, its operational competency, its technological prowess and so on. I have come across one or two references to more market-oriented language, but they weren’t exactly unequivocal in whether they nailed down my concerns about whether a business’s offerings to the world are actually founded on addressing some fresh insight into a new problem space and were making a great contribution to competitive advantage.
When you make an investment decision in your personal life, say a new laptop, you take a range of similar factors into account. You think about the people you are buying from (sales staff really know their stuff, and the guys at the technical counter answered all your questions), the value for money it affords (bit more expensive than the run-of-the-mill laptops but a brand with a great reputation), how well it operates (very reliable, the OS never seems to fall over) and how well made it is (build quality is superb: milled from a solid piece of aluminium!).
You also make decisions about factors around how well it meets your other needs, and whether one might better meet them than another (everything is so intuitive and you never seem to lose your way). You take great delight when you realize it also solves a problem you didn’t realize you had (like not having to mouse over to the scroll bar and click and drag to move within a pane, just put two fingers on the mouse pad and your done).
I got all excited when I came across ‘Know Your Customer’ which is “the due diligence and bank regulation that financial institutions must perform”. It turns out that this is not a legal mandate to ensure that the services an organization provides its customers are the most apt in terms of meeting their needs. It’s concerned with ensuring the customer is who they say they are and are not engaged in ‘identity theft, money laundering or terrorist financing’.
So, as a natural companion to the quality of a solution (Technical Due Diligence – TDD), I’d like to make a case for Problem Due Diligence: PDD. At 100% Open, we’d love to help you assess the quality of the problems you are looking at and maybe find you one or two more you hadn’t considered. You never know, you might just find the opportunities that lead you to become known tomorrow for a quality of problem AND solution, as Apple is today (you knew the laptop was an Apple right?).
by David Townson