Making agile work in regulated environments: why Water-Scrum-Fall isn’t a compromise

Water Scrum Fall isn't a new concept. It's been around for years as a way to describe organizations that blend waterfall planning with agile execution, often criticized as a compromise or failure to embrace agile principles fully. At Hyperbolic, the perspective is more positive; Instead of avoiding them, we've learned how to make them work effectively when developing software for clients who operate in regulated industries where pure agile transformation isn't always practical. In these environments, the need to maintain big picture oversight, meet rigid compliance requirements, and navigate complex regulatory frameworks can make traditional agile approaches challenging to implement successfully.

Our experience developing software for clients in pharma, healthcare, and government has taught us that the key isn't choosing between agile and waterfall, but understanding when and how to apply each approach within the same project.

Our Approach to Hybrid Implementation

The foundation of successful Water Scrum Fall is explicit boundaries. When we develop software for clients in regulated industries, we identify which parts of the development process genuinely require waterfall discipline and which can benefit from agile practices. Regulatory submissions, compliance documentation, and audit requirements often need the predictability that waterfall provides. Our team coordination, technical execution, and user feedback cycles can operate more flexibly.

We typically maintain traditional project governance at the organizational level while introducing agile practices at the team level. This means stakeholder communication, regulatory coordination, and high-level reporting continue to follow established waterfall processes, while our teams gain the flexibility to make tactical decisions about priorities, scope, user experience, and day-to-day coordination within those organizational constraints.

Our development teams adopt sprint planning, daily standups, and retrospectives, but we do so within a framework that respects our clients' compliance obligations and regulatory timelines. The result is more responsive development without compromising the governance structures that regulated industries require.

The Role of Functional Specifications in Water Scrum Fall

Functional specifications play a critical role in our Water Scrum Fall methodology by serving as the bridge between waterfall's structured planning and agile's iterative approach. In traditional waterfall projects, functional specifications are comprehensive, detailed documents that are defined completely at the project's outset. In pure agile development, they're often replaced entirely by user stories and acceptance criteria.

In our Water Scrum Fall approach, functional specifications become living documents that balance fixed requirements with iterative development. We begin with high-level specifications that satisfy regulatory requirements for documentation and approval processes, but evolve them throughout the project lifecycle based on learnings from each sprint.

These hybrid functional specifications maintain the formal structure and traceability that auditors and regulators expect, while allowing our teams to refine implementation details as we gain deeper understanding of user needs and technical constraints. The specifications serve as both the regulatory artifact required for compliance and the evolving blueprint that guides our development work.

The key is treating functional specifications as products themselves that require maintenance and iteration. We update these documents regularly to reflect validated learnings while preserving the comprehensive upfront analysis that regulatory frameworks demand. This approach ensures that regulatory requirements remain continuously validated against the working software we deliver rather than theoretical specifications, while still providing the documentation trail that compliance audits require.

Making Documentation Serve Both Methodologies

One challenge we consistently encounter is reconciling waterfall's documentation requirements with iterative development. Our solution treats documentation as a product that evolves alongside the code while maintaining the comprehensive structure that regulatory approval processes require.

We create requirements documents that can be updated iteratively while preserving the detailed upfront planning that compliance audits expect. User stories connect to regulatory requirements through formal traceability matrices, but our teams can adjust implementation details as we learn more about user needs and technical constraints.

This hybrid documentation approach often improves compliance outcomes because regulatory requirements are continuously validated against the working software we deliver rather than theoretical specifications, while still providing the paper trail that auditors need.

The Power of Constrained Retrospectives

Retrospectives become particularly valuable in Water Scrum Fall environments because they help our teams optimize within regulatory boundaries rather than trying to eliminate them. We use regular retrospectives to distinguish between genuine compliance requirements and organizational habits, but always within the context of maintaining the waterfall governance structures our clients require.

Our teams can experiment with process improvements in our sphere of control while building evidence for approaches that won't compromise our clients' regulatory standing. This creates measured evolution in our development practices that respects compliance obligations while eliminating inefficiencies that don't serve regulatory purposes.

Why This Works for Our Clients

Our clients choose to work with us because they need better software products without abandoning the predictability that their stakeholders and regulators expect. They want the quality and responsiveness that modern development practices provide, but delivered within the structured framework that their industry requires and their executive teams understand.

We work with organizations that have tried working with pure agile development teams and found the lack of upfront planning incompatible with their regulatory submission timelines. We also support clients who have worked with traditional waterfall developers but want to reduce the risk of receiving products that miss user needs, without requiring their own teams to undergo cultural transformation.

The business results our clients see include software products that better balance user needs with regulatory requirements because we can adjust implementation while maintaining approved scope, reduced project risk because we identify problems within structured review cycles that align with their governance, and improved stakeholder confidence because they get predictable milestones combined with regular demonstrations of working software.

Building Better Products Through Hybrid Development

Our Water Scrum Fall approach often helps clients achieve better product outcomes without disrupting their core business operations. Through our development process, clients build better relationships with their end users through the regular feedback cycles we facilitate, make more informed investment decisions because they can see working software sooner, and reduce project risk through the incremental delivery and validation we provide.

Some clients who experience success with our hybrid approach choose to expand our collaboration to additional products in their portfolio. Others discover that our hybrid methodology represents their optimal way of balancing innovation with regulatory compliance for all their product development needs. Both outcomes serve their business objectives when they're based on evidence about what actually drives better customer outcomes and business results.

At Hyperbolic, we focus on delivering products that fit our clients' market position and regulatory environment. We don't insist on pure agile development when our hybrid approach better serves client's business needs. Our goal is delivering better products that succeed in the market through whatever combination of practices makes sense for the competitive and regulatory reality our clients operate within.