One could write "We used to work by waterfall" but it is a little awkward and unnatural in my view. More likely would be:
We used to organize our work by the waterfall method
We used to use the waterfall method
We used to follow the waterfall procedure
We used to do waterfall development
Any of "process", "system", "procedure", "pattern", or "protocol" could be used in place of "method" in the aboe examples. Other terms could also be used.
By the way almost no one does pure waterfall development, and this has been true for decades. Virtually everyone uses some version of an iterative cycle. The scrum people like to contrast their system with waterfall development. This is a bit like an ad for a new printer explaining how much better it is than using a sip pen. It is true but not very relevant. I write as one who has been a full time professional software developer for several decades, and is officially scrum-certified.