I spent most of last year at Salesforce.com as the UI Manager trying to
understand Agile, and how UCD fits in to it.  There was a lot to like about
the methodology, and a lot to dislike.  I think that at it's core, Agile
tries to recreate the best of what we all aspire to at startups or on small
team projects: openness, transparency, collaboration, communication, and
fast implementation.  However, as everyone identified, it hasn't
traditionally been used/useful in product development organizations as much
as IT specific ones.

After 5+ years of purely deterministic waterfall process at eBay, I continue
to feel that Agile methodologies are a way to allow UX to have a seat at the
product table, incorporating user needs early in the process, and
incrementally improving existing features each release.

Agile also removes an awful lot of the CYA aspect of waterfall.  You tend
not to hear "The requirements weren't clear, so we didn't build it" or "Why
can't you just implement it the way I spec'ed it" as much when you have to
face each other every day to give status. If a spec is blocking
implementation, you know about it that day.  If a developer isn't
implementing correctly, you should be able to catch it early.

That being said, Agile gets thrown around a lot, and is used to excuse some
very bad behavior.  Agile doesn't mean that you don't plan.  In fact, I'd
argue that you need a much clearer idea of what you're aiming for, because
the iterations come so much faster.  If you don't have a product roadmap,
how can you possibly prioritize you backlog?
Agile doesn't mean that you ignore doing research.  Every quality project
I've worked on needed an upfront investigative component to uncover user
needs and market opportunities - no matter what the methodology.  In Agile,
this tends to be a Phase or Sprint Zero.

There seems to be an emerging consensus around parallel, asynchronous
development within Agile between the developers and UX folks.  Design and
Development run side by side feeding forward concepts and prototypes for
future sprints, and testing implemented code as needed.  Lynn Miller and
Mark Detweiler have both written about this methodology in some peer
reviewed journals.  I encourage everyone to read them.

This year at CHI there's going to be quite a bit on Agile and UCD, including
a workshop run by the Autodesk folks: http://agileucd.editme.com/, and a
panel by the Salesforce.com team: http://www.chi2008.org/ap/57.html.
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