02 · Process · Development Lifecycle

The Development Lifecycle Framework

This one reads how your team builds. It splits the work of shipping with agents into six stages and names 34 tasks inside them. Each task is small enough to hand to one person this week. Start at the stage that hurts, not at stage one.

34
Tasks
6
Stages
v1
Working draft
The six stages, spec to compound
Stage 01
Specify & Constrain
The spec IS the implementation instruction

Write the thing the agent builds from. Say what done looks like. Say what the agent must not touch.

Stage 02
Build the System of Context
Your context is your moat

Give the agent the notes it needs, the decisions, the patterns, the parts of the codebase that matter. This is the part a competitor cannot copy.

Stage 03
Orchestrate & Generate
Type less. Think more.

Hand the work out and keep hold of the shape. You run several agents at once, fence each one, and cap what each one spends.

Stage 04
Validate, Eval & Craft
Truth metrics over vanity metrics

Check the work before it ships. Write the test before the generator. Measure what you care about, not what is easy to count.

Stage 05
Ship & Manage Economics
Token budgets alongside sprint budgets

Ship it, then watch the bill. Cost per action, cheap work on cheap models, pinned versions, a price that clears the cost.

Stage 06
Learn & Compound
Every cycle makes the next one faster

Feed what you learned back in. The retro rewrites the spec, the notes, and the rules for next time. That is what makes the next round faster.

Three things that run through every stage

These three are not stages of their own. They sit inside all six. Ignore any one of them and every stage gets worse.

What the model calls cost

The bill for running the model touches every stage. Architecture choices set it. A sprint plan needs a spending limit the way it needs a date. Production needs someone watching the number. Your price has to sit above your cost.

Impacts: Architecture · Sprint Planning · Production · Pricing
Who does what

A product manager writes a spec that doubles as a prompt. An engineer directs agents instead of typing every line. A designer checks whether the result is any good. Job titles stop predicting the work. What someone knows, and how well they judge, predicts it better.

Impacts: Hiring · Team Structure · Performance Reviews · Career Ladders
The time you lose to bad AI work

Every re-prompt, every hand-assembled pile of context, every review of output that was never going to work. It does not show up in any tracker. We expect it to cost more than old-fashioned technical debt within a couple of years, and that is a prediction, not something we have measured.

Impacts: Developer Productivity · Context Quality · Team Velocity · Burnout
Stage 01 of 06

Specify & Constrain

The spec IS the implementation instruction

Write structured specs with explicit acceptance criteria, preconditions, and examples. Define harness constraints - what agents can and cannot touch, and the patterns they must follow.

How you know this stage is working
  • Martin Fowler and OpenAI both confirm: harness engineering keeps agents productive. The constraint layer is where humans add the most value.
The 6 tasks inside Specify & Constrain
01Specify & Constrain
Create structured spec template

Design a spec format that doubles as an agent prompt: preconditions, acceptance criteria, input/output examples, anti-examples. Machine-readable, not narrative prose.

02Specify & Constrain
Define harness constraints document

Document what agents can/cannot modify, architectural patterns they must follow, file boundaries, and safety rails. The harness matters more than the prompt.

03Specify & Constrain
Set measurable acceptance criteria per feature

Every spec needs quantifiable pass/fail criteria. 'Improved performance' is not a criterion. '< 200ms p95 latency' is. Vague specs produce vague outputs.

04Specify & Constrain
Write anti-examples for critical paths

Define what NOT to do for each major feature area. Anti-examples prevent agents from taking common wrong paths and reduce iteration cycles.

05Specify & Constrain
Version specs alongside code

Store specs in version control next to the code they describe. Specs are living artifacts that evolve with the product, not static documents in a wiki.

06Specify & Constrain
Establish spec review process

Specs get reviewed before generation begins. A 30-minute spec review prevents 3 days of agent re-work. Include PM, engineering lead, and domain expert.

The spec IS the implementation instruction

Stage 02 of 06

Build the System of Context

Your context is your moat

Context engineering replaces architecture docs. Curate what agents know, select models per task, and define architectural constraints as living documentation.

How you know this stage is working
  • ICONIQ research: 49% of AI companies differentiate through application-layer innovation, only 14% through proprietary models. Context is the leverage point.
The 5 tasks inside Build the System of Context
07Build the System of Context
Define context hierarchy

Establish three tiers: project-level context (architecture, conventions), feature-level context (domain rules, dependencies), and task-level context (specific requirements, examples).

08Build the System of Context
Build context indexing pipeline

Set up embeddings and vector storage for your codebase, docs, and domain knowledge. Agents should retrieve relevant context automatically, not rely on manual copy-paste.

09Build the System of Context
Implement multi-model routing rules

Not every task needs the most expensive model. Define routing: fast models for boilerplate, frontier models for architecture decisions, specialized models for domain tasks.

10Build the System of Context
Document architectural constraints as context

Replace static architecture docs with living constraints that agents consume directly. Include: tech stack decisions, naming conventions, file structure rules, API patterns.

11Build the System of Context
Establish context pruning schedule

Context degrades over time. Set a cadence (weekly or per-sprint) to review, update, and prune stale context. Outdated context is worse than no context.

Your context is your moat

Stage 03 of 06

Orchestrate & Generate

Type less. Think more.

Orchestrate agents so output is coherent and architecturally sound. The developer's job shifts from writing code to directing agents while maintaining architectural judgment.

How you know this stage is working
  • Cursor CEO Michael Truell warns against 'shaky foundations' - structure matters more, not less, when agents generate the code.
The 5 tasks inside Orchestrate & Generate
12Orchestrate & Generate
Set up parallel agent delegation workflow

Define how to decompose features into parallel agent tasks. Each task should be independently executable with clear boundaries. Resolve merge conflicts as a human-in-the-loop step.

13Orchestrate & Generate
Establish mission control pattern

One human orchestrator manages multiple agent threads. Track what each agent is working on, what's blocked, and what needs human architectural decisions.

14Orchestrate & Generate
Define scope boundaries per agent task

Each agent task gets explicit file/module boundaries. Overlapping scope between agents creates merge hell. Scope isolation is non-negotiable.

15Orchestrate & Generate
Set token budgets per task type

Establish token spend limits by task category. Bug fix: X tokens. New feature: Y tokens. Refactor: Z tokens. Track actual vs. budget to calibrate over time.

16Orchestrate & Generate
Reserve architectural decisions for humans

Agents generate code. Humans make architectural calls: when to abstract, when to duplicate, when to take on tech debt intentionally. Document these decisions.

Type less. Think more.

Stage 04 of 06

Validate, Eval & Craft

Truth metrics over vanity metrics

AI-generated code has 1.7x more major issues and 2.74x more security vulnerabilities. Validation is where you earn quality. Distinguish functional correctness from craft quality.

How you know this stage is working
  • CodeRabbit analysis of 1M+ PRs: AI code has 1.7x more major issues, 2.74x more security vulnerabilities. Validation isn't optional - it's the bottleneck.
The 6 tasks inside Validate, Eval & Craft
17Validate, Eval & Craft
Build eval pipeline before generation pipeline

You cannot improve what you cannot measure. Stand up automated eval (correctness, security, performance, style) before scaling agent-generated output.

18Validate, Eval & Craft
Define truth metrics per feature area

Truth metrics measure real outcomes, not activity. Shipping velocity means nothing if regression rate climbs. Pair every speed metric with a quality counter-metric.

19Validate, Eval & Craft
Implement the Intercom counter-metric pattern

For every metric you optimize, track its counter-metric. Ship faster → track regression rate. Reduce cost → track quality score. This prevents optimizing into a corner.

20Validate, Eval & Craft
Separate functional review from craft review

Functional: does it work correctly and securely? Craft: is it elegant, maintainable, consistent with product quality bar? Both matter, but they're different review passes.

21Validate, Eval & Craft
Set up security scanning for AI-generated code

AI code has 2.74x more security vulnerabilities. Run SAST/DAST on every agent-generated PR. Flag patterns like hardcoded secrets, SQL injection, XSS, and auth bypasses.

22Validate, Eval & Craft
Establish design review for craft differentiation

AI can match 80% of quality. The last 20% - the craft that differentiates your product - requires human design review. Schedule these as a deliberate practice.

Truth metrics over vanity metrics

Stage 05 of 06

Ship & Manage Economics

Token budgets alongside sprint budgets

A stage that didn't exist in traditional SDLC. Inference costs can jump from $200/month in development to $10,000/month in production. Economics are a first-class engineering concern.

How you know this stage is working
  • Kyle Poyar documented 1,800+ pricing changes among top 500 SaaS/AI companies in 2025. Credit-based models jumped 126% YoY. Pricing is product strategy.
The 6 tasks inside Ship & Manage Economics
23Ship & Manage Economics
Implement cost-per-action tracking

Measure what each AI feature costs per user action, not just aggregate token spend. A $0.03 action at 10K DAU is $300/day. Make cost visible to engineering and product.

24Ship & Manage Economics
Build inference cost dashboard

Real-time visibility into token spend by feature, model, user tier, and action type. Shared across engineering, product, and finance. No surprises in the cloud bill.

25Ship & Manage Economics
Implement tiered model routing for production

Route requests to the cheapest model that meets quality requirements. GPT-4 for complex reasoning, GPT-3.5 for classification, local models for formatting. Save 60-80% on inference.

26Ship & Manage Economics
Align inference costs with pricing tiers

Your AI features have marginal cost. Price accordingly: credit-based, usage-based, or tier-gated. Don't eat inference cost on your lowest tier.

27Ship & Manage Economics
Pin model versions in production

Model updates can silently change behavior. Pin specific model versions, test before upgrading, and maintain rollback capability. Treat model changes like dependency updates.

28Ship & Manage Economics
Set per-customer token budgets

Heavy users can blow through your margin. Set per-customer or per-tier token budgets with graceful degradation when limits are reached. Rate-limit expensive operations.

Token budgets alongside sprint budgets

Stage 06 of 06

Learn & Compound

Every cycle makes the next one faster

The flywheel stage. Feed outcomes back into context, harness constraints, and delegation patterns. Teams that compound learn faster than teams that just ship faster.

How you know this stage is working
  • Dan Shipper at Every: 15 people, 5+ products, 7-figure revenue, 100% AI-written code - via compounding engineering, not heroic effort.
The 6 tasks inside Learn & Compound
29Learn & Compound
Implement post-cycle retrospective for AI workflow

After each sprint/cycle: What specs produced best agent output? Where did context fail? What harness constraints need updating? This is your compounding mechanism.

30Learn & Compound
Measure Emergence Rate

Track cycle velocity improvements over time. If each cycle isn't getting faster or higher-quality, your compounding loop is broken. This is the single most important AI-native metric.

31Learn & Compound
Build library of proven spec templates

When a spec produces excellent agent output, templatize it. Over time, your spec library becomes your competitive advantage - new features start from proven patterns, not blank pages.

32Learn & Compound
Track and reduce cognitive debt

Cognitive debt (Karpathy): the hidden cost of poorly managed AI interactions. Track: time spent re-prompting, context assembly time, review cycles per feature. Reduce systematically.

33Learn & Compound
Update harness constraints from production data

Production incidents and quality issues feed back into harness constraints. Every bug prevented by a constraint is a cycle saved in the future.

34Learn & Compound
Prune and refresh context quarterly

Context degrades. Stale embeddings, outdated conventions, deprecated patterns - all poison agent output. Schedule quarterly context audits like you schedule dependency updates.

Every cycle makes the next one faster