Agile or Traditional: Scrum, Kanban, and Waterfall for SMEs

Agile or traditional: why the question is often framed wrongly in SMEs

A machine builder introduces a new inventory management system, an engineering firm develops a digital offering for existing clients, a trade business sets up a second branch. In all three cases, sooner or later someone says: “Shouldn't we do this the agile way?” Behind it there is usually the hope of finishing faster and the worry of working past reality with a rigid plan.

This article therefore answers a more precise question: how does an owner recognize which project method fits which undertaking? To do so, we first clarify the three terms, then introduce a simple thinking model, examine what studies say about the effect of agile methods, and finally derive a decision rule for your own company.

The method follows from the uncertainty of the undertaking, not from the fashion of the year.

What are waterfall, Scrum, and Kanban?

A project is a one-time undertaking with a goal, a beginning, and an end. It differs from ongoing work that repeats constantly, such as handling inquiries. This distinction matters because one of the three methods is not really a project method at all.

• Waterfall refers to the traditional, plan-based approach. The undertaking is fully planned at the outset and then carried out in consecutive phases: requirements, planning, execution, testing, acceptance. A phase begins when the previous one is finished. In technical terms this is also called predictive project management, because it rests on a prediction of the path.
• Scrum is the best-known agile framework. The team works in short, fixed periods called sprints, usually lasting two weeks. Each sprint ends with a reviewable interim result that is discussed with the client. Open requirements are kept in an ordered list, the backlog. Scrum has three roles: the product owner, who sets the order; the Scrum master, who looks after the process; and the team.
• Kanban comes from production control at Toyota. All tasks appear as cards on a board, the columns represent the path of the work, and a limit on parallel work, the WIP limit, ensures that things get finished before new ones start. As the article on OKR, Kanban, and weekly planning shows, Kanban fits ongoing work with many small items above all.

There are also hybrid approaches. They combine a rough overall plan with fixed milestones and agile periods where requirements are unclear. The name sounds like a compromise. In practice it is the normal case, as the findings below show.

The thinking model: two questions based on the Stacey matrix

The organizational researcher Ralph Stacey developed a grid that sorts decisions by two characteristics: how much agreement there is about the goal and how certain one can be about the path to it. In project practice, a simplified version has spread, the Stacey matrix. It is not an empirically tested model but a thinking aid that separates two uncertainties.

For a company, the two axes can be asked as two questions. First: how clear is the goal? Can the client describe today how they will recognize the finished result? Second: how familiar is the path? Has the company done something comparable before, and are the technology and process proven? The answers yield four situations.

The table shows why the question “agile or traditional” falls short. The answer does not depend on the company but on the individual undertaking. Kanban does not appear in the table because it is not an answer to a single project. It manages the ongoing work alongside, for example in sales, as the article on Kanban in sales describes.

What do studies show about agile projects?

The largest early study comes from Serrador and Pinto (2015). They analyzed an international survey of 1,002 projects from various industries and tested whether the extent of agile working is related to project success. They measured success on two levels: efficiency, meaning keeping to time, budget, and scope, and stakeholder satisfaction measured against the organization's goals. Agile working was positively related to both, most clearly to stakeholder satisfaction. Two side findings matter more to owners than the main finding. The majority of projects worked in a hybrid way, neither purely agile nor purely traditional. And the quality of the vision, meaning how clearly goal and purpose were formulated, strengthened the effect, though only at a marginal level of significance.

A preliminary meta-analysis by Koch, Drazic, and Schermuly (2023) combines 41 studies with a total of 73,825 people. For job satisfaction and commitment to the organization, the authors found small positive effects of agile project work on average, and medium to large ones for performance and innovative behavior. A literature review by Oliveira, Ferreira da Silva, Penha, and other authors (2024) covering 138 articles on project management in small and medium-sized enterprises concludes that traditional, agile, and hybrid approaches are used side by side there. Most of the limitations described related to the particularities of small companies or to traditional, plan-based frameworks.

What a study from German mechanical engineering adds

A survey by Albert (2025) is particularly revealing for the German Mittelstand, the country's backbone of small and medium-sized, often family-owned firms. He surveyed over 600 employees from the development and design departments of nine German mechanical engineering companies. Scrum was by far the most frequently named method there. Albert wanted to know under which conditions agile working actually makes daily work easier. Better communication, focus on core tasks, the absence of contradictory demands, more self-organization in the team, practiced sprints, experience with agile methods, and recognition of work were each related to it.

Two observations from the study are particularly useful for owners. First, different groups expected different things: management often saw agility as a means to shorter delivery times and lower costs, while engineers hoped for quiet, uninterrupted work phases and less bureaucracy. Second, Albert points to a form of agile work that Ziegler and colleagues call “restrained empowerment.” Teams are supposed to organize themselves but keep receiving new work packages or changed priorities from above. The result is resignation instead of speed.

Two readings: agile superiority or the right tools?

Two conclusions can be drawn from the findings. The first reading says: agile methods are superior to the traditional approach, so a company should work in an agile way as much as possible. The positive relationships found by Serrador and Pinto and the medium to large effects on performance found by Koch and colleagues support this.

The second reading says: agile methods work where uncertainty prevails and the team has the necessary room to act. This is supported by the fact that the majority of projects worked in a hybrid way, that the clarity of the vision strengthened the effect, and that Albert ties the effect to conditions that not every company can or wants to create.

I consider the second reading the more robust one. The studies measure the extent of agile working in projects that chose their method themselves anyway. They do not show that a construction project with a fixed bill of quantities would improve through sprints. A sober rule follows from this: agile working pays off where the goal only becomes clear along the way. Where goal and path are settled, a good plan is faster than any iteration.

How to choose the method for a project in five steps

1. Separate projects from ongoing work

   Check whether the undertaking has an end. Without an end it is ongoing work and belongs on a Kanban board, not in a project plan.

2. Ask the goal question

   Ask the client to describe in one sentence how they will recognize the finished result. If they cannot, the goal is unclear.

3. Ask the path question

   Ask the team whether it has done something comparable before. New technology, new suppliers, or a new market mean an unfamiliar path.

4. Assign the situation and choose the approach

   Assign the project to one of the four situations of the Stacey matrix. With mixed answers, plan hybrid: a fixed frame with milestones, agile periods for the unclear parts.

5. Review after the first period

   After four to six weeks, ask whether the assessment still holds. A project can move from complex to complicated as soon as the goal becomes clear.

The advantage of agile periods shows above all in when the client first sees something usable. The following worked example compares a 16-week project in three approaches.

The article on planning projects in small teams describes how to plan milestones and responsibilities. How to keep budget, time, and scope in view along the way, whichever method you choose, is covered in the article on project controlling for small businesses.

Typical mistakes when introducing agile methods

• The project has an unclear goal or an unfamiliar path. Otherwise a good plan is enough.
• One person decides on the order of requirements and is available for it.
• The running period is not interrupted by new assignments from outside.
• The client takes time to look at and evaluate the interim results.
• The team knows what it uses the method for: early correction, not more speed at any price.

The last point deserves attention. Albert describes how management and employees mean different things with the same word. Anyone who introduces agility to increase pressure while promising the team self-organization creates a contradiction that the team notices quickly. A short review at the end of each project is therefore worthwhile, as described in the article on project closure and lessons learned. That is where it becomes clear whether the method helped or only created new meetings.

Conclusion: which project method suits a small or midsize business?

The guiding question was how an owner recognizes which method fits which undertaking. The answer is: by two questions. If the goal is clear and the path familiar, the traditional approach with a clean plan is faster and cheaper. If the goal is unclear or the path new, short periods with reviewable interim results, as Scrum provides, help. For most undertakings in small and midsize companies, the answer lies in between, and then a hybrid approach is not a makeshift solution but what the majority of the projects studied do anyway. Kanban belongs alongside, for the ongoing work that has no end. Agile methods do work, then, but only with a clear purpose and real room for the team to act.

First steps for this week

1. Write down the three largest undertakings currently running or planned in your company.
2. Ask both questions for each: how clear is the goal? How familiar is the path?
3. Assign each undertaking to one of the four situations and compare it with the approach you actually use.
4. Choose the undertaking with the least clear goal and plan a first two-week period for it with a reviewable interim result.
5. Decide who sets the order, and protect the period from new assignments.

After two weeks you will see whether the interim result has made the goal clearer. If so, the period paid off. If the goal was already clear before, a plan would have been the better choice.