Short iterations are the practice of breaking up a release into 1-4 week development cycles that each produce a shippable increment of work. Some of the benefits of short iterations include working software that you can show to people in order to get their feedback and having nothing in progress at the end of the iteration so you can change your plans to take into account market changes, feedback from customers, or information you discovered while implementing that iteration. Also, all of the tests for the functionality implemented during the iteration have been written and run and you have a well known starting point for the next iteration.
There are some assumptions hiding in this practice. It assumes that you believe that incremental design is possible and that you believe that any refactoring you have to do in subsequent iterations is worth the benefits as described above.
So, if you were starting a company with your own hard-earned cash, would you use short iterations or wouldn't you?
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