The principle of iteration is central to design thinking. Just as evolution allows complex structures to develop over time in nature, iteration is at the core of good design, building on simple foundations to develop more complex designs. This is achieved by progressively exploring, testing and refining a design over time, often with very fast cycles of iteration. Iteration is often broken into two phases: design iteration and development iteration.
Design iteration occurs when a designer is exploring, testing and refining design concepts (in research the equivalent might be storyboards or animatics rather than film in advertising testing). Each cycle typically narrows the range of possible options until one of them fulfils an agreed set of criteria. [Note that without a set of criteria or defined endpoint, iteration can be endless as each cycle opens up new opportunities.] Prototype concepts are typically tested with target users, with both success and failure providing important feedback on the design, identifying what does and does not work. The final output from this phase is a finalised design concept.
Development iteration happens when a product is being built, when something has to be reworked because of some flaw in the concept. This can be wasteful and costly, but is necessary if a design is not working. It is usually much more efficient to identify design flaws at the design iteration stage.
In any endeavour, it is always better to plan for an iterative approach, as long as clear criteria are set with a defined endpoint (i.e., a clear vision of what the final solution should look like). Nothing in life is ever perfect first time, and iteration is an important concept in developing optimised solutions in any walk of life.
Universal Principles of Design by Lidwell, Holden & Butler
Product Design and Development by Ulrich & Eppinger