People looking at Agile from the outside sometimes jump to the mistaken conclusion that it is a chaotic, seat-of-the-pants approach to development. Far from it; Agile methods of software development employ what is called an empirical process model, in contrast to the defined process model that underlies the waterfall method.
The traditional waterfall approach treats software development as a defined process. It assumes that everything can be known upfront, and that the team simply needs to execute to plan. Scrum references an iterative, four-step approach to process improvement sometimes referred to as the Deming Cycle, after William Edwards Deming, the statistician and business visionary widely credited with seeding the exponential improvements in Japanese manufacturing after WWII.
The four steps of the Deming Cycle are:
Each sprint cycle includes all four steps, and the iterative repetition of these steps, commonly referred to by the mantra of “Inspect and adapt,” is what leads to continuous improvement.