Smart City Initiatives are aiming on creation of a sustainable model for cities with the aim to improve quality of life of their citizens. A smart city represents an interdisciplinary field requiring high level of cooperation among experts from different fields and a contribution of the latest technologies in order to achieve the best results in the city’s key areas. Such approach requires an effective cooperation across many fields, from technical or economic through legislation to social areas. Success of the smart city concept is not thinkable without an effective engagement of the end users, i.e. citizens of the smart cities. The traditional systems engineering methodologies fail and new approaches are urgently needed. A new Hybrid-Agile Methodology (HAM) is introduced and its advantages with respect to smart city projects are discussed. However, application of methodologies cannot be successful without principal changes in how are all engaged parties thinking.