Why Spotify Did Not Use the Spotify Model
The agile organizational model of the Swedish music and video streaming service Spotify has been the talk of the town for some time now. Many banks, including Commerzbank and ING, are basing their organizational structure on the Spotify model (Schmiedinger, 2020). But what actually distinguishes the model? And what is the truth behind the statement that Spotify itself has not used the model at all?
The following article explains what squads, tribes, chapters and guilds are all about and how this agile organizational model differs from conventional organizational forms. It also explains its advantages and disadvantages and examines the truth behind the claim that Spotify itself has not used the Spotify model.
The Spotify Model Explained
The original model dates back to 2012 and was adapted by Spotify several times in subsequent years to meet its changing needs (Schmiedinger, 2020). The hype around the Spotify model has continued unabated since then – if it was initially used predominantly by startups, it became the basis for ING’s agile organizational structure from 2015 onwards. The Spotify model consists of four structural components, which are illustrated in Figure 1.
Squads: A squad is a multidisciplinary team that works in a self-organized manner. As a rule, squads consist of eight to ten people who represent all the competencies required to implement a product increment. This team is responsible for a specific aspect of a product, such as designing an app functionality. There is no leadership role within the team, but each squad has a product owner who prioritizes the work at hand (Obogeanu-Hempel, 2021).
Tribe: Several squads form a tribe. The maximum number of employees in a tribe is 100. Cross-cutting topics, such as “user experience,” are bundled in a tribe to ensure an intensive exchange between the members of different squads who, for example, are all working on the topic of user experience but in connection with different products (Deloitte, 2018).
Chapter: Squads within a tribe are connected by chapters. This organizational unit serves as an exchange platform for developers with similar tasks, for example to discuss challenges or new findings. The discussions are moderated by the chapter lead. In addition, the chapter lead has the task of developing team members and overseeing HR issues, such as setting salaries. The chapter lead is similar in function to a line manager, with the difference that he or she is also part of a squad and thus also involved in the daily tasks of the team (Deloitte, 2018).
Guilds: The fourth organizational unit is the guilds, which are informal interest groups for exchanging and pooling chapter-independent knowledge, such as knowledge about test automation. Participation in the interest groups is voluntary (Schmiedinger, 2020).
Advantages of the Spotify model
The advantages of this agile organizational structure consisting of self-organized and cross-functional teams are obvious (Diehl, 2021; Deloitte, 2018):
1. Increased innovation capability
By networking team members with different professional backgrounds and experience, and by promoting knowledge transfer between different teams, employees’ ability to innovate and be creative is fostered.
2. Increased productivity
The high level of autonomy, the strong networking of different teams, and opportunities to take on responsibility are decisive motivating factors for individual team members. This increased motivation results in increased productivity.
3. Living an error culture
Regular reflection on past projects and existing processes and the derivation of improvement activities in the team promote a healthy approach to risks. Employees see mistakes as something positive and reflect on them transparently in the team in order to learn from them.
These benefits illustrate why the Spotify model is so popular. However, this model should not simply be used as a blueprint for agile adaptation of a company’s own organizational structure for two key reasons. First, an enterprise structure must always be adapted to the individual enterprise context. Second, Spotify does not organize itself using the model these days.
Why Spotify Did Not Use the Spotify Model
In his article “Failed #SquadGoals. Spotify doesn’t use “the Spotify model” and neither should you”, former Spotify employee Jeremiah Lee (2020) explains why Spotify has largely discarded this organizational structure. According to Lee, there are four key reasons for this:
1. Relabeling of a matrix structure
At its core, the model is a matrix structure, not labeled as such. Each chapter is a functional area (e.g., development, test, design) with a line manager in charge. A squad represents a cross-functional team that is also present in other matrix organizations. These new designations of already familiar elements of a matrix organization caused confusion among many employees.
2. Challenging matrix management
Each squad, actually each team, has several functional managers for each chapter, i.e. functional areas such as testing, development and design. Disagreements within the team therefore often have to be resolved between multiple managers and, if no consensus is reached, passed on to the manager of the tribe. This led to a very high level of complexity and confusion regarding responsibilities.
3. Team autonomy
The Spotify model is designed on the premise of ensuring maximum team autonomy. Team autonomy is important and helpful in a fast-moving startup, but can pose challenges for a larger company. As Spotify grew, the company needed greater team alignment to manage rapid growth and avoid duplication and complexity.
4. Agile competence
When the Spotify model was introduced in 2012, Spotify delegated decision-making and control over the agile processes and practices used to the respective squads. However, the problem was that there were not enough agile coaches available to support the squads in their agile transformation. In addition, many employees did not have sufficient knowledge of agile principles and practices to implement them effectively.
These points make it clear that the selection of the appropriate agile organizational structure depends to a very high degree on the current circumstances within a company. Here, too, the conclusion can be drawn: One size does not fit all. This has two consequences: It does not lead to success to simply adopt successful concepts from other companies 1:1. In addition, the agile credo of self-reflection also applies to the organizational structure. Companies should constantly check whether their organizational structure meets their requirements and supports them in developing the best products and services for their customers.
Sources
Deloitte (2018). Organisation neu denken Flexible Organisationsmodelle für das digitale Zeitalter. Organisation-neu-denken-flexible-organisationsmodelle-2018.pdf (deloitte.com)
Diehl (2021). Das Spotify Model als Blaupause für eine agile Organisation. Spotify Model – Beispiel für agile Organisationen – Andreas Diehl (#DNO) (digitaleneuordnung.de)
Lee (2020). Failed #SquadGoals. Spotify doesn’t use “the Spotify model” and neither should you. Spotify’s Failed #SquadGoals (jeremiahlee.com)
Obogeanu-Hempel (2021). Das Spotify Modell: Wunderwaffe oder überbewertet? Das Spotify Modell: Wunderwaffe oder überbewertet? | MarketScreener Schmiedinger (2020). Das Spotify-Modell – so führen Sie das Framework in Ihre Projektorganisation ein. https://www.projektmagazin.de/artikel/spotify-modell-projektorganisation
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