Agile methodology: How it works and benefits your business
Agile helps small businesses boost speed, quality, and flexibility. Learn key principles and frameworks to succeed.
Published Thursday 4 September 2025
Table of contents
Key takeaways
- Implement agile methodology by starting with team education and training, then selecting an appropriate framework (Scrum, Kanban, or Extreme Programming) that matches your business needs and team capabilities.
- Organize work into short iterative cycles called sprints (typically 2-4 weeks) to deliver value quickly, gather regular customer feedback, and adapt to changing requirements throughout the project lifecycle.
- Form cross-functional teams with diverse skills and clearly defined roles to enable independent project management and quick access to expertise across different areas.
- Measure success using key performance indicators such as sprint burndown charts, sprint completion rates, team satisfaction scores, and customer feedback quality to continuously improve your agile processes.
What is agile project management?
Agile project management is a flexible approach that completes work in short cycles, prioritising collaboration and adaptability over rigid planning.
Unlike traditional methods that follow fixed plans, agile focuses on:
- Iterative delivery: Working in short sprints to deliver value quickly
- Customer collaboration: Regular feedback and involvement throughout the process
- Responding to change: Adapting requirements as business needs evolve
The typical agile process includes planning, design, development, testing, deployment and review in repeated cycles.
Which business types can benefit from agile methodologies?
Agile methodologies work best for businesses that need flexibility and regular customer input. Your business is a good fit for agile if you have:
Project characteristics:
- Ongoing deliverables with changing requirements
- Uncertain or evolving project scope
- Close customer collaboration throughout development
Industry applications: Agile works across industries including software, engineering, construction, advertising, finance, healthcare, pharmaceuticals, aerospace, and government.
The approach helps teams manage rapid change and deliver value incrementally, making it ideal for dynamic business environments.
Benefits of using agile techniques in business
The benefits of using agile techniques in business include:
- teams have the space to adapt, learn and respond to change quickly and effectively
- faster releases deliver value to customers quickly, improving satisfaction; one study highlighted a case where agile implementation reduced from almost 100 days to just over 60, a significant improvement in delivery time
- working in an iterative way improves quality
- regular collaboration improves team dynamics and strong communication, including with stakeholders
- delivering updates in sprints improves risk management across the project
- Teams have the space to adapt, learn, and respond to change quickly and effectively
The 4 core agile values
Agile values are the fundamental beliefs that guide all agile practices:
- Individuals and interactions over processes and tools
- Working software (or products) over comprehensive documentation
- Customer collaboration over contract negotiation
- Responding to change over following a plan
These values shape how agile teams approach their work and make decisions.
The 12 agile principles in business
Agile methodology is built on 4 core values and 12 detailed principles – collectively known as the 'agile manifesto'. Understanding both helps you apply agile effectively in your business.
1. Early and continuous delivery
This principle prioritises the customer by delivering value to them early and then continuously improving it. One way to apply this principle is to use customer feedback to modify and improve your product or service.
2. Responding to changing requirements
Agile teams embrace change, even in late stages of a project. Responding to changing customer needs and shifts in the market helps businesses innovate and stay competitive.
3. Frequent delivery
Agile businesses regularly improve their products or services to enhance quality, mitigate risk, gather feedback early, and stay competitive.
4. Close collaboration
Agile working emphasises collaboration across all areas of the business. Connecting regularly – such as by holding daily standup meetings – encourages transparency and discussion of important issues. This helps people make decisions and stay aligned between a project's goals and its implementation.
5. Motivated team members
Motivated teams find creative solutions, produce higher-quality outputs and get the job done. Teams are motivated when they work in a supportive environment for teams by ensuring they have the support and trust to make decisions, move fast and innovate.
6. Face-to-face communication
Direct communication unifies a team and helps to minimise misunderstandings. Cross-functional teams that regularly connect in person can find solutions and share expertise quickly.
7. Working product is the primary measure of progress
This agile principle puts tangible outputs and meaningful results first. Agile teams regularly review products or services to make sure they meet customer needs and achieve business objectives. This helps them maintain trust with customers and stakeholders and keeps them competitive in the market.
8. Sustainable development
Agile frameworks support ongoing and indefinite improvement. It's crucial to build a workflow that allows team members and stakeholders to work at a steady pace over time. This supports a healthy work-life balance and lessens the risk of burnout.
9. Technical excellence and good design
Striving for technical excellence and good design encourages teams to adapt quickly to new requirements, design scalable solutions, and focus on the customer.
10. Embracing simplicity
This principle advocates low complexity and eliminating unnecessary work. This enhances efficiency and focuses teams and resources on critical tasks that add real value for customers and the business.
11. Self-organising teams
An agile business empowers its teams to make decisions, innovate, own the work and apply their expertise and creativity, as extensive research shows that team effectiveness is determined by a specific set of factors. Promoting self-organised teams fosters investment in projects and optimises resources to meet business and customer needs.
12. Regular reflection and improvement
One of the key benefits of agile working is continuous improvement to the product or service. Teams must set aside time to reflect on successes and find ways to boost efficiency and change behaviours.
The different types of agile frameworks
There are several agile frameworks that apply specific approaches to project planning, management, and delivery.
Scrum
Scrum is a popular framework that helps businesses tackle complex problems and diverse tasks, with market research showing that 81% of organizations used Scrum or a hybrid version of it in 2021.
Scrum organises work into short cycles with specific deadlines, known as 'sprints', that typically last between two and four weeks.
The framework assigns clear roles – such as the product owner, scrum master, and development team – and encourages collaboration.
Teams deliver results and adjust priorities quickly in a 'structured yet flexible' environment. They can respond to changes in the market or customers' needs by reviewing work after each sprint.
Regular collaboration takes time and buy-in from the whole team. Keep long-term objectives in sight, as sprints can encourage a focus on short-term goals.
Kanban
The Japanese word 'kanban' translates roughly as 'signboard' or 'visual card'. Kanban organises tasks into visual cues on a physical or digital board, signalling when tasks are started, underway, or complete.
A kanban board provides a great overview of work underway to achieve business goals. It helps teams visualise workflow, track progress, and identify bottlenecks. Research aggregating 20 primary studies found the most robust results for Kanban's benefits were improved work visibility, control of project activities, and a better flow of work. By showing the work in progress, teams are encouraged to complete tasks before starting new ones.
Extreme programming (XP)
Extreme programming (XP) is a less-regimented agile framework that emphasises regular releases of work in short sprints.
Extreme programming allows you to deliver results and make changes fast. You can work in short bursts to produce quality output, satisfy customer needs and keep your product backlog low. Rapid change can also reduce costs over time by eliminating the need for major updates.
While extreme programming enables continuous improvement and fast project development, it can:
- Be resource intensive
- Take lots of effort, collaboration and creativity, and rapid feedback from the customer to be successful
Traditional vs agile project management methodologies
Traditional project management is linear – it follows a strict plan towards a clearly defined target. The phases of research, scope, design and development happen one after the other, and teams provide management and support after launching. This method – the 'waterfall' approach – relies on the predictability of people, tools, and outcomes in each phase.
Agile project methodology is cyclical, emphasising adaptability, flexibility, and evolution of a product or service towards a target. Teams learn and adapt across the lifecycle of the product or service. Working in sprints, they continue to develop, test, and review after launching.
How to implement agile methodologies in your business
Implementing agile methodologies transforms how your business delivers projects by creating flexible, collaborative teams that respond quickly to change.
The implementation process involves five key phases: education, framework selection, team formation, role definition and iterative planning.
1. Educate and train your team
Team education builds the foundation for successful agile adoption. Start with awareness, then build practical skills.
Initial awareness:
- Run an introductory workshop covering agile principles and benefits
- Share real-life examples relevant to your industry
- Explain how agile will improve your specific business processes
Skill development:
- Provide hands-on training for agile practices and tools
- Focus on the framework you've chosen (Scrum, Kanban or extreme programming)
- Ensure everyone understands their role in the new approach
2. Choose an agile framework
Find an agile framework that best suits your business needs by assessing the strengths of each framework against your business goals and team capabilities.
Keep in mind the resource requirements for these frameworks. For example, XP methodology requires a robust team and regular collaboration.
3. Form cross-functional teams
Cross-functional teams help you optimise collaboration, creativity and problem-solving in your projects.
Create small teams that include members with various skills and expertise. This allows your agile teams to manage different aspects of a project independently, and access expertise outside of their skill set quickly and regularly.
To help these teams succeed, you'll also need to support and foster a work culture of collaboration, learning, and self-management.
4. Define roles and responsibilities
Clearly define roles within your agile teams. Typical roles in Scrum, for example, include the product owner, scrum master, and development team.
Make sure everyone knows their responsibilities and how they'll contribute to the team's success.
5. Plan work in iterations
Using the principles of your chosen framework, divide the project into chunks and plan the work in sprints or iterations. Use tools that help your team operate in an agile environment, such as a digital kanban board.
Carry out regular reviews to share and showcase completed work, gather feedback, and make changes. Your reviews should generate actionable insights as part of continuous improvement.
How to measure your success with agile KPIs
Measuring agile success helps you identify what's working and where to improve. Track these key performance indicators to monitor your team's progress:
Essential agile KPIs:
- use sprint burndown charts to show work completed versus time remaining in each sprint
- measure sprint success rate as the percentage of planned work completed within each cycle
- track team satisfaction with regular survey scores measuring morale and engagement
- collect customer feedback quality through ratings and comments on delivered work
Review these metrics after each sprint to make continuous improvements.
Can software help manage agile teams?
The right software streamlines agile processes and reduces administrative work. Digital tools support your agile transformation by automating routine tasks and improving team collaboration.
Key software capabilities:
- track projects visually with kanban boards and dashboards for real-time progress monitoring
- manage sprints by planning, tracking and reviewing sprint cycles
- communicate as a team using centralised messaging and collaboration features
- store information in a single source of truth for project and sprint data
Make agile work for your business
- Adopting an agile approach helps your business stay flexible, respond to customer needs, and deliver value faster. It's about continuous improvement, not just for your products, but for your processes too. By focusing on collaboration and adaptability, you can build a more resilient and efficient business.
- Ready to get a clearer view of your business performance? With real-time insights and simple reporting tools, Xero makes it easy to track your progress and make smarter decisions. Try Xero for free.
FAQs on agile methodology
Here are some common questions and answers most small business owners may have about agile methodology.
Is agile suitable for non-IT projects?
Yes, agile works effectively beyond IT projects. Any industry managing complex projects with changing requirements can benefit from agile approaches.
Non-IT industries using agile:
- develop campaigns and create content in marketing and advertising
- develop products and improve processes in manufacturing
- plan projects and coordinate stakeholders in construction
- develop treatment protocols and manage facilities in healthcare
- launch products and manage regulatory compliance projects in finance
Agile succeeds in these industries because it handles uncertainty well and keeps stakeholders engaged throughout project lifecycles.
How can you manage agile teams remotely?
Although agile working favours face-to-face connection and collaboration some best practices for managing remote teams using agile methodologies are to:
- hold regular, open communication over video, phone and messaging to foster collaboration
- use digital collaboration tools like Zoom, Asana and Google Meets
- ensure each team member understands the goals and outcomes of each sprint
- set clear expectations for each team and team member
- acknowledge achievements and completion of tasks and goals
- encourage autonomy and flexibility in your team to achieve the tasks and outcomes of each sprint
Can sole traders use agile methodologies?
While agile typically applies to teams and larger projects, you can still work with an agile mindset and approach as a sole trader.
- Choose the agile methodology that best suits your business
- Organise your tasks into sprints or iterations
- Focus on continuous improvement and adaptation
Use a digital tool that guides your agile working and provides visual support, such as a kanban board.
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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