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It’s Back: Agile Methodology for Hardware Development

By October 30, 2023No Comments

Agile project management is best known for its use in software development. But lately this methodology has been returning to its roots as a tool for manufacturing organizations to transform their hardware product development processes. A recent article from McKinsey, “It’s coming home: The return of agile hardware product development” discusses the resurgence of agile-for-hardware and suggests five key changes that can help organizations reap the benefits of the agile approach.

About Agile Methodology

Though Agile has been most associated with software development, there’s no reason it can’t work for any project management process, especially one with any potential for change or modification. One of Agile’s benefits is that it is designed to incorporate change and adapt to it—as McKinsey puts it, Agile “harnesses change as a competitive advantage, not a liability.” Agile is based on rapid learning, fast decision cycles, and above all, adapting to new information. It also embraces the idea that we learn through experimentation and failure, and advance more quickly the faster we fail—the “fail fast” concept.

This approach stands in stark contrast to the traditional “waterfall” or “stage-gate” method of project management, especially for building physical objects, whether they’re consumer goods or large structures. In the waterfall approach, teams work serially, fully completing each stage of a project—requirements, design, implementation, verification, maintenance—before moving on to the next. This works well for constructing a skyscraper, when you’re unlikely to add 10 feet to the width of the building partway through the build. But it’s less suited for software or even hardware development, when new information necessitates changes mid-stream, when planned approaches don’t work, or when specific materials aren’t available. Or when the market changes in the middle of your development.

Agile makes space for change by organizing work in small chunks and performing it in a loop of design-develop-test-feedback, with daily opportunities for team discussion and collaboration. It organizes people in cross-functional, stable, unfragmented, dedicated teams that sit together and move from task to task together, working with and helping each other every day. McKinsey explains that instead of teams continually iterating through the standard team development stages of “forming, storming, norming, performing,” an agile approach to cross-functional collaboration means teams instead are formed once and spend their time “performing.” They add, “In such highly interconnected systems, we’ve seen that a setup with modular (yet linked) teams outperforms traditional linear planning.”

Many manufactures are proving Agile’s benefits. McKinsey cites a Chinese B2B supplier that moved some two dozen teams to Agile and within two years reduced their new-product average time-to-market by 20%. In the past 5 years, McKinsey has also surveyed more than 20 companies across a range of sectors that reported a performance increase for a variety of metrics. Most significantly, “time-to-market and simplicity improved by as much as 60% in some cases.”

Making the Change to Agile

Though beneficial, the move to Agile isn’t always an easy process. A McKinsey survey in 2020 showed organizations’ biggest hurdle was changing the status quo or disrupting the paradigm of “how we work now.” What the move requires is a mindset change and a commitment throughout the organization to approach Agile as a comprehensive and iterative transformation. You might not get it right at the outset, but true to Agile principles, if you embrace constant change, flexibility, adaptation, and improvement, your organization can thrive.


To get there, McKinsey suggests tailoring five main areas of your organization to your unique business:

  • Strategy. Establish a shared organizational purpose or “North Star” to help your employees feel personally and emotionally invested and guide organizational decision-making.
  • Structure. Reshape your teams to be stable, focused, and expert at specific skills. This will improve continuity and institutional knowledge across products, as well as allow workers to develop and play to their strengths.
  • Process. A combination of Agile processes for the day-to-day work and planning with traditional, stage-gate (serial) processes for bigger-picture and milestone targets can be useful while making the transition to Agile, or even beyond.
  • People. Encourage and enable employees on Agile teams to take ownership of their work. In one example, increasing team ownership resulted in teams prioritizing better, which increased their delivery rate and output predictability. “Since the transformation, about 80% of deliverables are completed on time,” McKinsey reports, compared to only 30% before the shift to Agile.
  • Technology. Make use of tools to support teams and this transformation, such as support for building modular designs that are easier to change, collaboration tools for information-sharing at scale, and digital and additive manufacturing tools that enable faster design steps and iteration.

The benefits of an Agile transformation for hardware development outweigh the challenges, but manufacturing leaders would be wise to address the five areas McKinsey points out. A smaller pilot program can be a good approach to prove the concept and identify any issues or resistance at your organization before rolling out a multi-year project to make the comprehensive change

For more details on how and why you should transform your hardware organization to Agile project management, read McKinsey’s article.

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