Overview of Spotify
What is Organization Structure and Why does Spotify Need it?
The company is essentially a marketplace that allows customers to access creators’ music and other digital content through a network-like platform. This requires structural flexibility to grow rapidly while competing with digital content distribution efforts from Amazon, Apple, Google, Pandora, and others. As a fundamental element of business development and design, the corporate structure enables Spotify to expand rapidly, strengthening its competitive advantages over other companies.
To understand the company’s organizational structure, it is beneficial to consider how the structure relates to other aspects of the business. For example, the connections between different functional areas create competitive advantages through knowledge sharing and clustering in Spotify’s corporate structure. In this regard, knowledge and related assets are at the core of the music streaming platform’s business and competitive advantages.
Spotify’s corporate structure features an organizational design with a system for agile software development, as well as human resource agility. The management of the company provides sufficient flexibility to overcome growth barriers and challenges while addressing the different preferences and characteristics of music markets. In this way, Spotify exemplifies operational effectiveness achieved through a flexible organizational structure along with strategies and approaches such as agile development. The on-demand music streaming company may require strategic changes in the future, which could be accompanied by structural support for the company.
Spotify Organization Structure and Function
A key feature of Spotify’s N-form corporate structure is the sharing and integration of knowledge within the company and its members. Employees are grouped into “squads,” which in turn are grouped into “tribes” to maximize the benefits of pooling related knowledge and skills and to arrive at new insights of higher value to the digital content platform company.
Another structural feature of the organization is the existence and use of permanent and temporary groupings of Spotify employees for the purpose of operational development and improvement. Thus, there are groups in the corporate structure known as “guilds.” They are composed of employees from different groups or tribes and share certain commonalities, such as programming language, music interests, or variables related to improving Spotify’s value chain and core competencies.
Spotify’s organizational structure supports management approaches that emphasize the value of each employee. Corporate headquarters, human resources managers, operations managers, and other executives employ strategies and tactics that consider the valuable contributions of employees, such as ideas for new features and functionality of the company’s music streaming apps for mobile and non-mobile devices.
This feature of the company’s structure goes some way toward employee recognition, which is essential for encouraging employees to embody Spotify’s corporate culture. Considering the need to share and integrate knowledge, the organizational chart of the online content streaming company also provides horizontal lines of communication and interaction in its organizational structure. This factor structurally supports the actual dissemination of knowledge between workgroups at Spotify, e.g., knowledge about new cultural trends affecting music consumption in regional markets.
To facilitate the integration and sharing of knowledge, Spotify’s organizational structure provides for managers and executives to be highly involved in the development of the music streaming business. For example, managers are involved in permanent or temporary project-based working groups, such as for mobile app development, which emphasizes the value of each employee and the perspective of equality.
Strategic Implications of Spotify Organization Structure
The structural features are directly related to Spotify’s corporate mission and vision, which give rise to the strategic goals of providing profitable opportunities for artists and enjoyable experiences for listeners. For example, the company’s organizational structure enables employees to work together to continuously improve the quality of the music streaming service. In addition, Spotify’s business model, generic competitive strategy, and intensive growth strategies are factors that drive the evolution of the company’s structure. For example, the platform business model and rapid business development require a high degree of organizational flexibility. This flexibility is achieved through Spotify’s N-shaped organizational structure.
Spotify Technology S.A.’s organizational structure also provides communication channels that support its human resources strategies. The company’s strategic goals of developing an agile culture for agile software development are facilitated by the structural component of lateral communication channels. In addition, the corporate structure has strategic implications for Spotify’s value chain. For example, the company’s core resources and capabilities in the value chain are effectively leveraged through the flexible grouping of the workforce as structural support for operations.
Key Takeaways of Spotify Organization Structure
This case study on Spotify directs attention to the relatively uncommon application of the N-form corporate structure. This application contrasts with other multinational firms that tend to exhibit a hierarchical structure of the unitary type.
Spotify understands the beneficial characteristics of its organizational structure.
This understanding is notable in the music streaming company’s flexibility to adjust to current business needs in the international on-demand digital content market. In addition, this structural analysis uncovers the relationship between Spotify’s corporate structure and the application of agile software development.
For example, exhibiting features of a matrix organizational structure, the online company’s N-form corporate structure ensures sufficient organizational flexibility. Consequently, this flexibility gives rise to Spotify’s organizational agility to apply agile software development principles in music platform business operations and development. Flexibility is a critical factor for integrating music market nuances into the company’s growth and expansion strategic plans.
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