Agile methodology: what it is and how to use it at work

Published Wednesday 4 March 2026

Table of contents

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

Key takeaways

• Implement agile by starting with team education and choosing the right framework for your business - Scrum works best for teams that can commit to fixed sprints, while Kanban suits continuous workflows without strict deadlines.
• Organise work into short cycles of 1-4 weeks where you plan, build, test, and review in each sprint, then use regular retrospectives to identify what worked and what needs improvement for the next cycle.
• Form small cross-functional teams with mixed skills and give them autonomy to make decisions independently, as this approach is used by 74% of successful agile companies and leads to faster problem-solving.
• Track your agile success using key metrics like sprint burndown to spot bottlenecks early, team velocity to improve planning accuracy, and quality indicators to ensure your iterative process catches problems before they become costly.

What is agile project management?

Agile project management is a way of managing work in short, repeatable cycles called iterations or sprints. Instead of following a rigid plan from start to finish, agile teams plan, build, test, and review their work in phases, adjusting as they go.

Agile prioritises four core values:

• Individuals and interactions over rigid processes
• Working products over extensive documentation
• Customer collaboration over fixed contracts
• Responding to change over following a set plan

This approach helps small businesses adapt quickly, deliver value faster, and keep customers involved throughout a project.

Traditional vs agile project management methodologies

Traditional (waterfall) project management follows a linear path: research, scope, design, build, then launch. Each phase must finish before the next begins. This works well when requirements are fixed and predictable.

Agile project management follows a cyclical path: plan, build, test, review, then repeat. Teams work in short sprints and adapt as they learn. This works well when requirements may change or customer feedback shapes the outcome.

Here are the key differences between the two approaches:

• Planning: Waterfall plans everything upfront; agile plans in short cycles
• Change: Waterfall resists mid-project changes; agile welcomes them
• Delivery: Waterfall delivers at the end; agile delivers incrementally
• Feedback: Waterfall gathers feedback after launch; agile gathers it throughout

The 12 agile principles in business

The Agile Manifesto outlines four core values and 12 supporting principles that guide agile teams. The four values prioritise people, working products, collaboration, and adaptability. The 12 principles below translate those values into practical guidance for your business.

Early and continuous delivery

Deliver value to customers early, then improve based on their feedback. This keeps customers engaged and ensures your product evolves with their needs.

Responding to changing requirements

Agile teams welcome change, even late in a project. Adapting to shifting customer needs or market conditions helps you stay competitive and avoid wasted effort on outdated plans.

Frequent delivery

Release updates in short cycles. Research shows these iterations typically last from one to four weeks, which reduces risk and helps surface problems early. Frequent delivery reduces risk, surfaces problems early, and keeps your offering competitive.

Close collaboration

Agile teams collaborate across all areas of the business, not just within departments. Regular check-ins, like daily standups, keep everyone aligned on priorities and surface issues early.

This transparency helps teams make faster decisions and stay focused on shared goals.

Motivated team members

Give your team the support and trust to make decisions independently. Motivated teams produce higher-quality work, solve problems creatively, and move faster.

Face-to-face communication

Direct communication reduces misunderstandings and speeds up problem-solving. Whether in person or via video call, regular face-to-face conversations help cross-functional teams share expertise and stay aligned.

Working product is the primary measure of progress

Working output is the primary measure of progress, not plans or documentation. Regularly reviewing what you've built ensures it meets customer needs and keeps stakeholders confident in your direction.

Sustainable development

Build workflows your team can maintain long-term. A steady, sustainable pace prevents burnout and keeps quality consistent across projects.

Technical excellence and good design

Focus on quality and thoughtful design from the start. Well-built solutions are easier to adapt when requirements change and scale as your business grows.

Embracing simplicity

Keep things simple by eliminating unnecessary work. Focus your team on tasks that add real value for customers and cut anything that doesn't.

Self-organising teams

Empower your team to make decisions and own their work. Self-organising teams apply their expertise creatively and take greater responsibility for results.

Regular reflection and improvement

Schedule regular retrospectives to reflect on what worked and what didn't. Use these sessions to identify process improvements and adjust team behaviours for the next cycle.

The agile development cycle

The agile cycle is a repeating process of planning, building, testing, and reviewing work in short timeframes called sprints or iterations. Each cycle typically lasts one to four weeks.

Here's how a typical agile cycle works:

1. Plan: Identify what to work on in the next sprint based on priorities and capacity
2. Build: Complete the planned work as a team
3. Test: Review the work for quality and alignment with requirements
4. Review: Share completed work with stakeholders and gather feedback
5. Reflect: Discuss what went well and what to improve in a retrospective

After each cycle, the team applies what they learned and starts the next sprint. This continuous loop helps teams improve over time and adapt to changing needs.

Which business types can benefit from agile methodologies?

Agile works for most small businesses, not just software companies. Any project with evolving requirements, ongoing deliverables, or close customer involvement can benefit from an agile approach.

Agile suits certain types of projects better than others. It's a good fit for projects that:

• require phased planning and regular deliverables
• have requirements that may shift as you learn more
• involve frequent customer feedback or collaboration

Many industries have adopted agile methodologies successfully. Industries using agile include:

• Professional services: advertising, consulting, finance
• Technical fields: engineering, software, healthcare
• Project-based work: construction, manufacturing, government

The common thread is teams that need to manage change, deliver incrementally, and improve continuously.

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 simple framework that helps businesses tackle complex problems and diverse tasks.

Scrum organises work into short cycles with specific deadlines, known as 'sprints'. According to one study, these sprints involve a period of work averaging 14–20 days, which aligns with the typical two-to-four-week duration.

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.

Note that regular collaboration takes time and buy-in from the whole team. Teams should remember to 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, identify bottlenecks, and centralise information on work deliverables. And by showing the work in progress, teams are encouraged to complete tasks before starting new ones.

Kanban depends on teams being organised in their time management. Otherwise, teams could struggle with task overload and the kanban minimalist structure.

Extreme programming (XP)

XP is a less-regimented agile framework that emphasises regular releases of work in short sprints.

XP allows businesses to deliver results and make changes fast. Teams work in short bursts to produce quality output, satisfy customer needs and keep product backlog low. Rapid change can also reduce costs over time by eliminating the need for major updates.

While XP enables continuous improvement and fast project development, XP can:

• require significant resources
• require significant effort, collaboration, creativity, and rapid customer feedback to succeed

The benefits of using agile techniques in business

Agile techniques offer several advantages for small businesses managing complex or evolving projects. Research shows that successful agile transformations give organisations a three times higher chance of becoming a top-quartile performer compared to their peers.

• Faster adaptation: Respond to market changes or customer feedback without derailing your project
• Quicker value delivery: Release updates frequently so customers see results sooner
• Improved quality: Catch and fix issues early through iterative testing and review
• Stronger collaboration: Keep teams and stakeholders aligned with regular communication
• Better risk management: Reduce exposure by delivering in small increments rather than one large launch

How to implement agile methodologies in your business

Implementing agile in your business involves training your team, defining clear roles, and shifting to iterative workflows. Follow these steps to get started.

1. Educate and train your team

Introduce your team to agile principles through a workshop or training session. Explain the purpose, benefits, and how agile will change day-to-day work.

Use real examples from your industry to help your team visualise the approach. Follow up with hands-on training on the specific tools and practices you'll use.

2. Choose an agile framework

Match your framework choice to your team size, project type, and collaboration style.

• Scrum suits teams that can commit to fixed-length sprints and defined roles
• Kanban suits teams managing continuous workflows without fixed deadlines
• XP suits teams with strong technical skills and capacity for frequent collaboration

Consider the time and resources each framework requires before committing.

3. Form cross-functional teams

Create small teams with a mix of skills and expertise. According to McKinsey, this cross-functional approach is the most widely applied agile concept, used by 74% of companies. These teams can handle different aspects of a project independently and access diverse perspectives quickly.

Support these teams with a culture of collaboration and self-management. Give them the autonomy to make decisions and learn from each iteration.

4. Define roles and responsibilities

Define clear roles within your agile teams so everyone knows their responsibilities.

Each team member should understand their responsibilities clearly. Common Scrum roles include:

• Product owner: Sets priorities and represents customer needs
• Scrum master: Facilitates the process and removes obstacles
• Team members: Execute the work and collaborate on solutions

Adapt these roles to fit your business structure and team size.

5. Plan work in iterations

Divide your project into small chunks and plan work in sprints, typically one to four weeks each. Use tools like digital kanban boards or project management software to track progress.

At the end of each sprint, hold a review to showcase completed work and gather feedback. Use a separate retrospective to discuss what worked, what didn't, and what to change next time.

How to measure your success with agile KPIs

Key performance indicators (KPIs) help you track whether agile is working for your team. Monitor these metrics to measure progress and identify areas for improvement.

• Sprint burndown: Shows work completed versus work remaining in each sprint. Use it to spot bottlenecks early.
• Velocity: Measures how much work your team completes per sprint. Track it over time to improve planning accuracy.
• Team satisfaction: Gauges morale and engagement through regular surveys. High satisfaction often correlates with better output.
• Quality metrics: Tracks defects, rework, or customer feedback. Fewer issues indicate your iterative process is catching problems early.

Simplify agile project management with Xero

Agile methodology helps small businesses adapt quickly, deliver value faster, and build stronger teams. But managing the financial side of agile projects, like tracking costs, monitoring budgets, and forecasting cash flow, requires the right tools.

Xero gives you real-time visibility into your business finances, so you can make informed decisions at every stage of your projects. With automated workflows and connected apps, you spend less time on admin and more time on the work that matters.

Get one month free and see how Xero supports your agile business.

Can software help manage agile teams?

Yes, software makes agile easier to manage. The right tools reduce admin work, centralise project information, and help teams collaborate effectively.

The right software can streamline your agile processes significantly. Agile project management software can:

• organise tasks into sprints or kanban boards
• track progress with visual dashboards
• store all project information in one place
• support team communication and feedback loops
• integrate with other business tools like accounting software

Popular options include Jira, Trello, Asana, and Monday. Choose software that fits your team size, budget, and workflow preferences.

FAQs on agile methodologies

Here are answers to some common questions about agile methodologies.

Is agile suitable for non-IT projects?

Yes, agile works for any project with evolving requirements and regular deliverables. Industries like marketing, construction, finance, and healthcare all use agile approaches successfully.

How can you manage agile teams remotely?

Use video calls for daily standups and sprint reviews, and digital tools like Asana or Trello to track progress and manage your remote team. Set clear sprint goals and give remote team members the autonomy to manage their own work.

Can sole traders use agile methodologies?

Yes. Organise your tasks into short sprints, review your progress regularly, and use a kanban board to visualise your workflow. The core agile principles of iteration and continuous improvement apply to any business size.

What is agile vs Scrum?

Agile is a project management philosophy based on iterative work and continuous improvement. Scrum is one specific framework for implementing agile, using fixed-length sprints and defined roles like product owner and scrum master.

What are the four core values of agile?

The Agile Manifesto defines four core values: individuals and interactions over processes, working products over documentation, customer collaboration over contracts, and responding to change over following a fixed plan.