Can there be too much customer in customer experience?

Most of my career has been spent trying to convince organisations that they need to listen to their customers in order to improve their business. Interestingly I have found recently that I have needed to remind organisations that they need to balance the needs of their customers with their business. Something I thought I would never hear myself say!
One of the first rules that I learnt about design - is don't do it in a vacuum. That is you need to find inspiration and stimulus for design away from your desk. You also need to talk to other people, especially the people that will be affected by your design.
Primarily you need to consider the people who will use your design; so ideally you'll want to consult with them to understand how they might use it and what their pain-points are around what they use today in order that you can improve the experience of using the design. However for some user-centred practitioners this is where they stop; they fail to involve any other interested parties.
This can pose a real danger when the designs are then presented to the business and the business says 'OK, well that might be all well and good for the customer but it's going to cost $1m+ and as there is little value/return on investment for the business then we're not doing it.'
Or equally when the designs are 'thrown over the fence' to the development team who then place the pretty document on a shelf for prosperity because they can't implement the design.
I certainly don't want to be constrained by technology or business factors when I am trying to innovate, but I do believe that there should be a balance between 'desirability' (customer requirements), 'viability' business requirements and 'feasibility' (technical requirements).
In my experience the best results come as a result of timely collaboration between the three.