I don't believe that's a closed loop. The purpose of commercial products is to sustainably deliver value to purchasers. Until that is achieved, the feedback loop is open.

There could be some design firms that actually go that far, but I've never heard of a project like that. I do agree it's better when design shops attempt to test their design hypotheses through prototypes and user testing, as that does leaven the dreams with a dose of reality. We do a bunch of that for exactly that reason. But we never mistake a successful user test for actual success.

Obviously product based feedback is "better" on some levels, but it can get in the way of learning the answer to some questions quickly I'd much rather just get the answer quickly ;-)

As I play with experiment/hypothesis model I'm more convinced that increments-of-learning rather than increments-of-product help me more - at the early stages anyway. Since many of the folk I talk to seem to be really bad at validating business questions via early customer contact I think there's an opportunity for external folk to come in and help.

I'm really interested to see what agencies like Proof (http://proof-nyc.com/) organise themselves and their work with clients. I know my relationship with some clients is more like design/UX coaching rather than more traditional agency type work.