Iteration Zero
Iteration Zero is the term used when a team that is attempting to do incremental development does not plan on developing any working software in their first increment. Notice the distinction here between iteration and increment- iterative development implies delivering the same thing over and over again to get it closer to being right (as opposed to "right the first time"), incremental development is delivering something in pieces (as opposed to "all at once"). When you get involved with the beast called "Agile", there are a lot more people in favor of incremental development than iterative development. So, in a lot of cases we are talking about Increment Zero, rather than Iteration Zero.
That whole "not delivering any working software" thing makes Iteration Zero seem inherently non-Agile. On the other hand, if you have team without computers or similar issues, it's hard to sign up for any business value. So what do you do in Iteration Zero? Peter Schuh seems to view it as a project inception phase, but then other people want to set out additional time before Iteration Zero to do all of that work. The Energized Work people seem to do tons of things in their Interation Zero. Earl Beede sees it as an admission of the failure of the original Agile principles. I would say it is more along the lines of giving in to no progress.
The real deal is that you have to set low goals for your first increment- plan on a zero velocity until you get something done. A co-worker of mine once made the remark that our organization at the time was "incapable of releasing a Hello World HTML page to the production environment." I think a customized "Hello, World" is a good increment one goal- put up an HTML user interface sketch. You might get some valuable feedback, such as, "we didn't want a web app". A lot of the prep work I see really doesn't take advantage of Real Options theory or You Aren't Gonna Need It. On the other hand, you do need to get started on something, you might just have to accept that not much will get done.
Iteration Zero seems to be a slippery slope. Particularly if you let it take months, at that point you are sliding down the slope really fast. I haven't really seen it used effectively, but that doesn't mean it can't be. I am always looking for data to change my mind.
To sum it up, my current recommendation is don't start with Iteration Zero, start with Velocity Zero.
