Agile methodology: what it is and how to use it well

Published Wednesday 4 March 2026

Table of contents

• What is agile project management?
• The benefits of using agile techniques in business
• Which business types can benefit from agile methodologies?
• The 12 agile principles in business
• The different types of agile frameworks
• Traditional vs agile project management methodologies
• How to implement agile methodologies in your business
• How to measure your success with agile KPIs
• Can software help manage agile teams?
• Run your business with agile confidence
• FAQs on agile methodology

Key takeaways

• Break your projects into short 2-4 week cycles called sprints, where you set specific goals, build and test your work, then review progress before moving to the next cycle.
• Choose the right agile framework for your team size and needs: use Scrum for structured sprints with defined roles, Kanban for visual task tracking and flexibility, or XP for frequent releases with close customer feedback.
• Form cross-functional teams with mixed skills and clear roles, including a product owner to set priorities, a facilitator to remove obstacles, and team members who collaborate on delivering the work.
• Track your agile success using key metrics like sprint burndown charts, cycle time measurements, team satisfaction surveys, and customer feedback to identify improvements for future cycles.

What is agile project management?

Agile project management is a way of managing projects that breaks work into small, manageable cycles called sprints, which typically last 2–4 weeks. Teams set goals for each cycle, then build, test, and review their work before moving to the next one.

Unlike traditional project management, which follows rigid plans towards fixed targets, agile prioritises:

• Collaboration: regular communication between team members and stakeholders
• Flexibility: adapting quickly to changing requirements
• Continuous delivery: releasing working products frequently rather than in big launches

Agile projects typically move through phases of planning, designing, developing, testing, deploying, and reviewing.

The benefits of using agile techniques in business

Agile helps small businesses work smarter by improving speed, quality, and team alignment. Here are the key benefits:

• Adapt faster: respond to market changes and customer feedback without derailing your project
• Deliver value sooner: release working products quickly so customers see results early
• Improve quality: catch and fix issues through regular testing cycles
• Strengthen communication: keep teams and stakeholders aligned with frequent check-ins
• Reduce risk: identify problems early by delivering in small, manageable increments

Which business types can benefit from agile methodologies?

Agile works for most businesses, not just tech companies. It's a good fit if:

• your projects involve ongoing deliverables rather than one-off launches
• your requirements may change as you learn more
• your customers are closely involved in shaping the product or service

Agile is popular across many industries; for example, research shows that 86% of marketers plan to shift their teams to agile. Other common industries include:

• software and technology
• engineering and construction
• marketing and advertising
• finance and banking
• healthcare and pharmaceuticals
• government and aerospace

If your team needs to manage rapid change and deliver work in phases, agile can help.

The 12 agile principles in business

The agile manifesto outlines 12 principles that guide agile teams. These principles focus on delivering value, embracing change, and keeping teams aligned.

Early and continuous delivery

Deliver value to customers early, then keep improving based on their feedback.

Responding to changing requirements

Welcome changes even late in a project. Adapting to customer needs and market shifts keeps your business competitive.

Frequent delivery

Release updates regularly to improve quality, reduce risk, and gather feedback early.

Close collaboration

Connect across teams through daily standups or regular check-ins. Frequent communication keeps everyone aligned and helps surface issues quickly.

Motivated team members

Give your team the support and trust to make decisions. Motivated teams produce higher-quality work and find creative solutions.

Face-to-face communication

Direct communication reduces misunderstandings. When teams connect regularly, they share expertise and solve problems faster.

Working product is the primary measure of progress

Focus on tangible outputs, not just plans. Regularly review your product to make sure it meets customer needs and business goals.

Sustainable development

Build workflows that let your team work at a steady pace. Avoiding burnout keeps quality high over the long term.

Technical excellence and good design

Prioritise quality from the start. Good design makes it easier to adapt when requirements change.

Embracing simplicity

Cut unnecessary work. Focus your team's effort on tasks that add real value for customers.

Self-organising teams

Let your team make decisions and own their work. Empowered teams apply their expertise more effectively.

Regular reflection and improvement

Set aside time to review what's working and what isn't. Continuous improvement is central to agile success.

The different types of agile frameworks

Agile frameworks are structured approaches that put agile principles into practice. Each framework suits different team sizes, project types, and working styles.

Here are three popular frameworks for small businesses.

Scrum

Scrum is a framework that organises work into short cycles called sprints, typically lasting two to four weeks.

How Scrum works:

• Sprints: Fixed time periods where teams complete a set amount of work
• Clear roles: Product owner sets priorities, scrum master facilitates the process, and the team delivers the work
• Regular reviews: Teams assess progress after each sprint and adjust priorities

What to consider:

• Scrum requires regular collaboration and buy-in from the whole team
• Short sprints can shift focus away from long-term goals if not managed carefully

Kanban

Kanban is a visual framework that tracks tasks on a board, showing what's to do, in progress, and complete. It's a highly effective system, with 87% of Kanban adopters reporting it's more effective than their previous work management methods.

How Kanban works:

• Visual board: Tasks move across columns as they progress through stages
• Work-in-progress limits: Teams finish current tasks before starting new ones
• Bottleneck identification: The board shows where work is stuck

What to consider:

• Kanban requires disciplined time management
• Without clear limits, teams can take on too many tasks at once

Extreme programming (XP)

Extreme programming (XP) is a framework focused on frequent releases and rapid customer feedback.

How XP works:

• Short release cycles: Deliver working updates quickly and often
• Customer involvement: Get regular feedback to guide development
• Low backlog: Keep unfinished work minimal by releasing frequently

What to consider:

• Requires significant team effort and close collaboration
• Needs regular customer availability for feedback
• Can be resource-intensive for small teams

Traditional vs agile project management methodologies

Traditional (waterfall) project management follows a linear path: research, design, build, then launch. Each phase must finish before the next begins, and changes are difficult once work starts.

Agile project management is cyclical. Teams work in sprints, continuously developing, testing, and improving throughout the project lifecycle.

Key differences:

• Planning: Waterfall requires detailed upfront planning. Agile plans in short cycles.
• Change: Waterfall resists changes mid-project. Agile welcomes them.
• Delivery: Waterfall delivers at the end. Agile delivers working increments throughout.
• Feedback: Waterfall gathers feedback after launch. Agile gathers it continuously.

How to implement agile methodologies in your business

Bringing agile to your business takes planning, but you don't need to overhaul everything at once. Be aware of potential roadblocks like resistance to organisational change, which almost half of practitioners cite as the greatest obstacle to adoption. Follow these five steps to get started.

1. Educate and train your team

Introduce your team to agile principles and explain how they'll improve your work. Run an introductory workshop with real-life examples to help everyone visualise the change.

Follow up with hands-on training on agile practices and any tools you'll use.

2. Choose an agile framework

Match your framework to your team size, project complexity, and collaboration style:

• Scrum: works well for teams that can commit to regular sprints and defined roles
• Kanban: suits teams that need flexibility and visual progress tracking
• XP: best for teams with close customer access and capacity for frequent releases

Consider your resources before committing. Some frameworks require more time and collaboration than others.

3. Form cross-functional teams

Cross-functional teams bring together people with different skills to work on the same project. This lets your team handle various aspects of work without waiting on other departments.

Build small teams with a mix of expertise. Support them with a culture that encourages collaboration, learning, and independent decision-making.

4. Define roles and responsibilities

Define clear roles so everyone knows their responsibilities:

• Product owner: sets priorities and represents customer needs
• Scrum master (or facilitator): keeps the process running smoothly and removes obstacles
• Team members: deliver the work and collaborate on solutions

Make sure each person understands how their role contributes to the team's success.

5. Plan work in iterations

Break your project into manageable chunks and plan work in sprints or iterations. Use tools like digital kanban boards to track progress.

Hold regular reviews at the end of each sprint to:

• share completed work with stakeholders
• gather feedback on what's working
• identify improvements for the next cycle

Each review should produce clear actions for the next sprint.

How to measure your success with agile KPIs

Agile key performance indicators (KPIs) help you track whether your team is improving and delivering value. For example, for executive-level measurement, about one-third of agile practitioners utilise Objectives and Key Results (OKRs) linked to larger project epics. Here are key metrics to monitor:

• Sprint burndown: Tracks work completed versus time remaining in each sprint
• Cycle time: Measures how long tasks take from start to finish
• Team satisfaction: Gauges morale through regular surveys
• Quality: Tracks customer feedback and defect rates

Review these metrics regularly to spot trends and identify areas for improvement.

Can software help manage agile teams?

Project management software helps agile teams stay organised and aligned. The right tools can:

• Visualise workflows: Use kanban boards and dashboards to track progress
• Centralise information: Store sprint plans, tasks, and documents in one place
• Automate admin: Reduce manual updates and status reporting
• Support communication: Keep conversations linked to specific tasks

Popular agile tools include Jira, Trello, Asana, and Monday. Choose software that fits your team size, budget, and preferred framework.

Run your business with agile confidence

Agile methodologies help small businesses adapt faster, deliver value sooner, and keep teams focused on what matters. Whether you choose Scrum, Kanban, or XP, the key is starting simple and building momentum.

Managing the financial side of agile projects is just as important as managing the work itself. With Xero, you can track project costs, manage team expenses, and maintain real-time visibility into your business performance.

Support your next project and get one month free to see how Xero can help you manage your business with confidence.

FAQs on agile methodology

Here are answers to common questions about implementing agile in your small business.

Is agile suitable for non-IT projects?

Yes. Agile works for any project that involves planning, testing, and iterative delivery. While it started in software, agile is now common in:

• marketing and advertising
• manufacturing
• engineering and construction
• finance and banking
• healthcare and pharmaceuticals

If your project benefits from regular feedback and phased delivery, agile can help.

How can you manage agile teams remotely?

Use digital tools and clear communication. Remote agile teams succeed when they:

• hold regular video standups and check-ins
• use collaboration tools like Asana, Trello, or Monday to track work
• set clear sprint goals so everyone knows what to deliver
• define expectations for availability and communication
• recognise completed work to maintain team morale
• give team members autonomy to manage their own schedules

Can sole traders use agile methodologies?

Yes. Agile principles work even when you're a team of one. Apply them by:

• breaking your work into weekly or fortnightly sprints
• setting clear goals for each cycle
• reviewing what worked at the end of each sprint
• using a kanban board to visualise your tasks and priorities

Digital tools like Trello or Asana make it easy to track progress without a team.