How can Agile kill a project

I'll continue to talk about software engineering from previous post (How can Waterfall kill a project). People can learn from the failure of many waterfall projects in the wrong way. Let's see how agile can go wrong in the same situation.

A company has come up with this great idea to build car, boat, and truck (assuming they never exist before) to get to the emerging market. Being an innovative company, they really want to push the technology boundary.

Learning from the failure of the waterfall process, they decided to adopt agile methodology and build cars first without worrying about boats and trucks. With this simplified requirement, the project went smoothly. They delivered cars to the market on time within budget. Everyone is happy.

When the market starts to heat up and competition pour their products into the same market, manufacturing only cars is no longer profitable. So the company decide to continue their adventure by building the boats. With the success in delivering cars, one would reasonably think building boats should be much easier until one developer points out that they require about the same amount of the budget for building cars. Product manager asks why and the developer provides this answer: "Developing the engine is the part that consumed majority of the resource. The engine built for the cars is embedded into the car frame and cannot be reused for the boats since the car frame is not suitable for building the boats. To develop the boats, we'd have to develop the engine again." The company did their calculation. If they invest in building the boats with about the same cost, by the time their boats hit the market competition may also deliver similar thing. Since manufacturing cars is no longer profitable, manufacturing boats with the same cost may suffer the same fate. So the decision is made not to build boats less to say trucks. Since manufacturing cars is no longer profitable, the manufacturing line is closed. Everyone is sad.

In retrospect, what could have been done differently? Why didn't they design an engine that works for cars, boats, and trucks? Wait a minute! Are we going back to the failed waterfall process?

I'd learn the lesson differently. Agile tends to give developers tunnel vision and leads to under-engineering of the product. Taking away the design step in the engineering process only makes this situation worse. Agile or not, you still should follow the same design/engineering principle: separation of concerns. Had the engine been designed in such a way that it is not concerned about how it is mounted (in this case embedded in the car frame), it could have been reused for the boats even though it may not be capable of driving a truck yet.