Spotify Model And Why It Matters In Business

The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.

Concept OverviewThe Spotify Model is a management framework for organizing Agile development teams within an organization. It was developed by Spotify to scale Agile practices and foster a culture of innovation, collaboration, and autonomy. While it originated in the context of software development, it has been adopted by various industries and organizations as a model for agile scaling and team collaboration. The model is characterized by a combination of squads, tribes, chapters, and guilds, which provide a flexible and decentralized structure for agile teams.
Key PrinciplesThe Spotify Model is guided by several key principles:
1. Autonomous Squads: Teams, known as “squads,” are cross-functional and self-organizing, responsible for end-to-end product development.
2. Alignment and Autonomy: Squads balance autonomy with alignment to organizational goals and missions.
3. Tribe and Squad Structure: Squads are grouped into “tribes,” each with a specific focus or mission.
4. Chapters and Guilds: Chapters represent similar roles across squads and are guided by “guilds” that promote knowledge sharing and expertise development.
5. Continuous Improvement: A culture of continuous learning and improvement is encouraged at all levels.
6. Servant Leadership: Leaders act as servant leaders, supporting squads and fostering a collaborative culture.
Organizational UnitsThe Spotify Model introduces specific organizational units:
1. Squads: Squads are small teams (typically 5-8 members) focused on specific product areas or features. They have end-to-end responsibility and autonomy.
2. Tribes: Tribes are collections of squads with a shared mission or domain. They align their work with the larger organizational strategy.
3. Chapters: Chapters group individuals with similar roles across squads (e.g., designers, developers). They provide expertise and mentorship.
4. Guilds: Guilds are informal communities of interest where members from various squads come together to share knowledge, best practices, and skills.
Spotify CultureThe Spotify Model places a strong emphasis on organizational culture, fostering values such as innovation, collaboration, and trust. It encourages a culture of experimentation, learning from failures, and continuous improvement. The model also emphasizes transparency, openness, and active communication to align teams and support decision-making.
ImplementationImplementing the Spotify Model involves:
1. Squad Formation: Create cross-functional squads with autonomy and clear missions.
2. Tribe Structure: Group squads into tribes based on shared goals or missions.
3. Chapter and Guild Formation: Form chapters and guilds to provide expertise and facilitate knowledge sharing.
4. Servant Leadership: Develop leaders who support squads and tribes rather than dictate top-down decisions.
5. Continuous Learning: Foster a culture of experimentation, learning, and adaptation.
Benefits and ImpactThe Spotify Model offers several benefits and impacts:
1. Scalability: It provides a flexible framework for scaling Agile practices in large organizations.
2. Alignment: The model balances autonomy with alignment to ensure that teams work toward common organizational goals.
3. Collaboration: Cross-functional collaboration and knowledge sharing are encouraged through chapters and guilds.
4. Innovation: Squads have the autonomy to innovate and adapt to changing customer needs.
5. Employee Engagement: Self-organizing teams often lead to higher job satisfaction and motivation.
6. Adaptability: The model allows organizations to adapt to changing market conditions and priorities effectively.
Challenges and RisksChallenges in implementing the Spotify Model may include the need for cultural shifts, potential difficulties in maintaining alignment as the organization grows, and the risk of creating silos within chapters or guilds. Risks can involve misunderstandings of the model’s principles and inadequate leadership support.

Understanding the Spotify model

While it has become popular in agile development circles, Kniberg stresses that the model is less of a framework and more a unique company philosophy.

In other words, the Spotify model simply represents Spotify’s view on scaling agile in a technical and cultural context.

Nevertheless, the model has received praise because it has enabled Spotify to successfully expand and scale agile.

It also serves as a more attractive form of embodying cultural change, creating motivated and empowered employees through increased autonomy.

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The seven constituents of the Spotify model

Spotify now has over 30 agile teams spread over four cities in three different time zones. To explain how the company achieved this, consider the following seven constituent parts:


Similar to Scrum teams, a squad is an autonomous and self-organized group of 6 to 12 people.

Each squad has a mission and is free to choose which agile methodology it will use – whether that be Kanban, XP, or a combination of both.

Each squad has an Agile Coach who improves processes and a Product Owner who clarifies the vision for the feature area.

Face-to-face communication is encouraged and squads have direct contact with stakeholders.


A tribe is a group of multiple squads working on a related feature.

Approximately 100 individuals are ideal, but some tribes may contain as many as 150 individuals.

Each tribe has a leader who is responsible for creating the conditions necessary for innovation and productivity.


These are groups formed by individuals of various squads that exist within tribes.

Like tribes, each chapter is led by a manager who supports individual members to achieve personal growth and overcome challenges.


A guild is an informal group of people from different tribes who share similar knowledge, tools, or practices.

Guilds are similar to chapters because they maintain transparency in problem-solving and help keep work in alignment.

Guilds are less formal in that anyone interested in joining can do so. But their ability to reach across an organization and exert influence is greater than the ability of chapters.


A trio simply refers to a tribe that has a design, product area, and tribe leader.


An alliance is formed by three trios.

Again, each alliance has a design, product, area, and tribe leader.

Chief architect

The individual who defines the architectural vision, guides design and deals with issues that arise from architecture dependency.

The chief architect reviews the development of new systems to ensure they avoid common mistakes.

Note that the chief architect gives feedback in the form of inputs, but the final decision ultimately lies with the squad building the system.

Benefits of the Spotify model

Two of the more obvious benefits of this model include:

Less focus on the process

The Spotify model seeks to empower employees to do the best work they can in whatever way they see fit.

With less of an emphasis on rigid ways of working, the organization becomes more flexible, adaptable, and productive.

More autonomy

When project teams are given more autonomy, trust and accountability also increase.

These values help create an environment where employees are free to share their failures as much as their successes.

When a team does fail to deliver, they have a safe space to learn from their mistakes and make the necessary improvements.

Spotify as a company progressed through many iterations of the Spotify model in much the same way, improving incrementally and becoming highly successful as a consequence.

Key takeaways

  • The Spotify model helps businesses scale agile with autonomy and purpose with a primary focus on culture and people.
  • The Spotify model is not a framework that can be emulated but more of a company philosophy of best practices. These best practices are underpinned by seven constituent parts: squads, tribes, chapters, guilds, trios, alliances, and chief architects.
  • The Spotify model empowers employees to deliver great results by providing an environment that is conducive to continuous improvement, flexibility, and autonomy.

Key Highlights of the Spotify Model:

  • Definition and Purpose:
    • The Spotify Model is an approach to scaling agile that emphasizes culture, communication, accountability, and quality.
    • It evolved from Spotify’s unique philosophy on scaling agile within a technical and cultural context.
  • Distinct Company Philosophy:
    • Henrik Kniberg and Anders Ivarsson introduced the Spotify Model in a white paper in 2012, showcasing how Spotify approaches agility.
    • It’s important to note that the model is more of a company philosophy than a rigid framework.
  • Components of the Spotify Model:
    • The model is composed of several components that enable agile scalability:
      • Squads: Autonomous teams of 6-12 members using various agile methodologies.
      • Tribes: Collections of squads working on related features.
      • Chapters: Groups of individuals from different squads within tribes.
      • Guilds: Informal groups sharing knowledge and practices.
      • Trios: Tribes with a design, product area, and leader.
      • Alliances: Formed by three trios.
      • Chief Architect: Guides architectural vision and design.
  • Benefits of the Spotify Model:
    • Focus on Empowerment: The model empowers employees to work in ways that suit them best, enhancing flexibility and productivity.
    • Autonomy and Accountability: Increased autonomy leads to higher trust and accountability, fostering an environment for learning and improvement.
    • Iterative Improvement: Like Spotify itself, the model evolves incrementally, allowing continuous improvements and adaptation.
  • Key Takeaways:
    • The Spotify Model offers a way to scale agile with a strong emphasis on culture and people.
    • It’s not a replicable framework but a philosophy based on best practices.
    • Components like squads, tribes, chapters, guilds, trios, alliances, and chief architects work together to create an agile and empowered environment for teams.
    • The model encourages flexibility, autonomy, and continuous improvement, contributing to its successful adoption by Spotify and other organizations.

What are the seven constituents in the Spotify model?

The seven constituents in the Spotify Model are:

What are the benefits of the Spotify model?

The benefits of the Spotify model are:

Read Also: How Does Spotify Make Money, Spotify Model, Who Owns Spotify, How Does Twitch Make Money, How Does SoundCloud Make Money, Who is Daniel Ek?, Who Is Martin Lorentzon?

Related Visual Stories

Spotify Business Model

Spotify is a two-sided marketplace, running a free ad-supported service and a paid membership. Founded in 2008 with the belief that music should be universally accessible, it generated €11.7 billion in 2022. Of these revenues, 87.4% or €10.25 billion came from premium memberships, while over 12.6% or €1.47 billion came from ad-supported members. By 2022, Spotify had 489 million users, of which 205 million premium members and 295 million ad-supported users.

Spotify Advertising Business Model

Spotify Audience Network is the underlying advertising infrastructure that supports its ad-supported user base. The Spotify Audience Network was born as the result of the acquisitions of Anchor and Megaphone. By 2022, Spotify had 273 million ad-supported users.

Economics of the Spotify Business Model

Spotify licensing deals affect its business model. The company runs on both a free service, which is ad-supported and a subscription premium service. They have different economics. The ad-supported business had a 10% gross margin in 2021, compared to 29% of the subscription-based business. That’s because the more the content gets streamed on the platform, the more that increases royalty costs for Spotify. That is also why the company invested in developing its content. Thus, in part transitioning from platform to brand.
The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.

Who Owns Spotify

The multi-billion music streaming company Spotify is primarily owned by its founders, Daniel Ek and Martin Lorentzon. As of 2022, Daniel Ek has 16.5% ownership of ordinary shares and 31.7% of the voting power. Martin Lorentzon has 10.9% of ordinary shares and 42.6% of the voting power. Another key shareholder is Baillie Gifford & Co, a Scottish-based money management firm, followed by Morgan Stanley, T. Rowe Price, and Tencent.

Spotify Revenue


Spotify Users

Spotify Free Users

Is Spotify Profitable?

Spotify is not profitable. The company’s net loss in 2022 was €430 million, compared to €34 million in losses in 2021, and €581 million net losses in 2020.

Spotify Cost Structure


Spotify ARPU


Connected Agile & Lean Frameworks


AIOps is the application of artificial intelligence to IT operations. It has become particularly useful for modern IT management in hybridized, distributed, and dynamic environments. AIOps has become a key operational component of modern digital-based organizations, built around software and algorithms.


AgileSHIFT is a framework that prepares individuals for transformational change by creating a culture of agility.

Agile Methodology

Agile started as a lightweight development method compared to heavyweight software development, which is the core paradigm of the previous decades of software development. By 2001 the Manifesto for Agile Software Development was born as a set of principles that defined the new paradigm for software development as a continuous iteration. This would also influence the way of doing business.

Agile Program Management

Agile Program Management is a means of managing, planning, and coordinating interrelated work in such a way that value delivery is emphasized for all key stakeholders. Agile Program Management (AgilePgM) is a disciplined yet flexible agile approach to managing transformational change within an organization.

Agile Project Management

Agile project management (APM) is a strategy that breaks large projects into smaller, more manageable tasks. In the APM methodology, each project is completed in small sections – often referred to as iterations. Each iteration is completed according to its project life cycle, beginning with the initial design and progressing to testing and then quality assurance.

Agile Modeling

Agile Modeling (AM) is a methodology for modeling and documenting software-based systems. Agile Modeling is critical to the rapid and continuous delivery of software. It is a collection of values, principles, and practices that guide effective, lightweight software modeling.

Agile Business Analysis

Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

Agile Leadership

Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles. 

Andon System

The andon system alerts managerial, maintenance, or other staff of a production process problem. The alert itself can be activated manually with a button or pull cord, but it can also be activated automatically by production equipment. Most Andon boards utilize three colored lights similar to a traffic signal: green (no errors), yellow or amber (problem identified, or quality check needed), and red (production stopped due to unidentified issue).

Bimodal Portfolio Management

Bimodal Portfolio Management (BimodalPfM) helps an organization manage both agile and traditional portfolios concurrently. Bimodal Portfolio Management – sometimes referred to as bimodal development – was coined by research and advisory company Gartner. The firm argued that many agile organizations still needed to run some aspects of their operations using traditional delivery models.

Business Innovation Matrix

Business innovation is about creating new opportunities for an organization to reinvent its core offerings, revenue streams, and enhance the value proposition for existing or new customers, thus renewing its whole business model. Business innovation springs by understanding the structure of the market, thus adapting or anticipating those changes.

Business Model Innovation

Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Constructive Disruption

A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.

Continuous Innovation

That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.

Design Sprint

A design sprint is a proven five-day process where critical business questions are answered through speedy design and prototyping, focusing on the end-user. A design sprint starts with a weekly challenge that should finish with a prototype, test at the end, and therefore a lesson learned to be iterated.

Design Thinking

Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.


DevOps refers to a series of practices performed to perform automated software development processes. It is a conjugation of the term “development” and “operations” to emphasize how functions integrate across IT teams. DevOps strategies promote seamless building, testing, and deployment of products. It aims to bridge a gap between development and operations teams to streamline the development altogether.

Dual Track Agile

Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.

eXtreme Programming

eXtreme Programming was developed in the late 1990s by Ken Beck, Ron Jeffries, and Ward Cunningham. During this time, the trio was working on the Chrysler Comprehensive Compensation System (C3) to help manage the company payroll system. eXtreme Programming (XP) is a software development methodology. It is designed to improve software quality and the ability of software to adapt to changing customer needs.

Feature-Driven Development

Feature-Driven Development is a pragmatic software process that is client and architecture-centric. Feature-Driven Development (FDD) is an agile software development model that organizes workflow according to which features need to be developed next.

Gemba Walk

A Gemba Walk is a fundamental component of lean management. It describes the personal observation of work to learn more about it. Gemba is a Japanese word that loosely translates as “the real place”, or in business, “the place where value is created”. The Gemba Walk as a concept was created by Taiichi Ohno, the father of the Toyota Production System of lean manufacturing. Ohno wanted to encourage management executives to leave their offices and see where the real work happened. This, he hoped, would build relationships between employees with vastly different skillsets and build trust.

GIST Planning

GIST Planning is a relatively easy and lightweight agile approach to product planning that favors autonomous working. GIST Planning is a lean and agile methodology that was created by former Google product manager Itamar Gilad. GIST Planning seeks to address this situation by creating lightweight plans that are responsive and adaptable to change. GIST Planning also improves team velocity, autonomy, and alignment by reducing the pervasive influence of management. It consists of four blocks: goals, ideas, step-projects, and tasks.

ICE Scoring

The ICE Scoring Model is an agile methodology that prioritizes features using data according to three components: impact, confidence, and ease of implementation. The ICE Scoring Model was initially created by author and growth expert Sean Ellis to help companies expand. Today, the model is broadly used to prioritize projects, features, initiatives, and rollouts. It is ideally suited for early-stage product development where there is a continuous flow of ideas and momentum must be maintained.

Innovation Funnel

An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Innovation Matrix

According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).

Innovation Theory

The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Lean vs. Agile

The Agile methodology has been primarily thought of for software development (and other business disciplines have also adopted it). Lean thinking is a process improvement technique where teams prioritize the value streams to improve it continuously. Both methodologies look at the customer as the key driver to improvement and waste reduction. Both methodologies look at improvement as something continuous.

Lean Startup

A startup company is a high-tech business that tries to build a scalable business model in tech-driven industries. A startup company usually follows a lean methodology, where continuous innovation, driven by built-in viral loops is the rule. Thus, driving growth and building network effects as a consequence of this strategy.

Minimum Viable Product

As pointed out by Eric Ries, a minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort through a cycle of build, measure, learn; that is the foundation of the lean startup methodology.

Leaner MVP

A leaner MVP is the evolution of the MPV approach. Where the market risk is validated before anything else


Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.


Jidoka was first used in 1896 by Sakichi Toyoda, who invented a textile loom that would stop automatically when it encountered a defective thread. Jidoka is a Japanese term used in lean manufacturing. The term describes a scenario where machines cease operating without human intervention when a problem or defect is discovered.

PDCA Cycle

The PDCA (Plan-Do-Check-Act) cycle was first proposed by American physicist and engineer Walter A. Shewhart in the 1920s. The PDCA cycle is a continuous process and product improvement method and an essential component of the lean manufacturing philosophy.

Rational Unified Process

Rational unified process (RUP) is an agile software development methodology that breaks the project life cycle down into four distinct phases.

Rapid Application Development

RAD was first introduced by author and consultant James Martin in 1991. Martin recognized and then took advantage of the endless malleability of software in designing development models. Rapid Application Development (RAD) is a methodology focusing on delivering rapidly through continuous feedback and frequent iterations.

Retrospective Analysis

Retrospective analyses are held after a project to determine what worked well and what did not. They are also conducted at the end of an iteration in Agile project management. Agile practitioners call these meetings retrospectives or retros. They are an effective way to check the pulse of a project team, reflect on the work performed to date, and reach a consensus on how to tackle the next sprint cycle. These are the five stages of a retrospective analysis for effective Agile project management: set the stage, gather the data, generate insights, decide on the next steps, and close the retrospective.

Scaled Agile

Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.


The SMED (single minute exchange of die) method is a lean production framework to reduce waste and increase production efficiency. The SMED method is a framework for reducing the time associated with completing an equipment changeover.

Spotify Model

The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.

Test-Driven Development

As the name suggests, TDD is a test-driven technique for delivering high-quality software rapidly and sustainably. It is an iterative approach based on the idea that a failing test should be written before any code for a feature or function is written. Test-Driven Development (TDD) is an approach to software development that relies on very short development cycles.


Timeboxing is a simple yet powerful time-management technique for improving productivity. Timeboxing describes the process of proactively scheduling a block of time to spend on a task in the future. It was first described by author James Martin in a book about agile software development.


Scrum is a methodology co-created by Ken Schwaber and Jeff Sutherland for effective team collaboration on complex products. Scrum was primarily thought for software development projects to deliver new software capability every 2-4 weeks. It is a sub-group of agile also used in project management to improve startups’ productivity.


Scrumban is a project management framework that is a hybrid of two popular agile methodologies: Scrum and Kanban. Scrumban is a popular approach to helping businesses focus on the right strategic tasks while simultaneously strengthening their processes.

Scrum Anti-Patterns

Scrum anti-patterns describe any attractive, easy-to-implement solution that ultimately makes a problem worse. Therefore, these are the practice not to follow to prevent issues from emerging. Some classic examples of scrum anti-patterns comprise absent product owners, pre-assigned tickets (making individuals work in isolation), and discounting retrospectives (where review meetings are not useful to really make improvements).

Scrum At Scale

Scrum at Scale (Scrum@Scale) is a framework that Scrum teams use to address complex problems and deliver high-value products. Scrum at Scale was created through a joint venture between the Scrum Alliance and Scrum Inc. The joint venture was overseen by Jeff Sutherland, a co-creator of Scrum and one of the principal authors of the Agile Manifesto.

Six Sigma

Six Sigma is a data-driven approach and methodology for eliminating errors or defects in a product, service, or process. Six Sigma was developed by Motorola as a management approach based on quality fundamentals in the early 1980s. A decade later, it was popularized by General Electric who estimated that the methodology saved them $12 billion in the first five years of operation.

Stretch Objectives

Stretch objectives describe any task an agile team plans to complete without expressly committing to do so. Teams incorporate stretch objectives during a Sprint or Program Increment (PI) as part of Scaled Agile. They are used when the agile team is unsure of its capacity to attain an objective. Therefore, stretch objectives are instead outcomes that, while extremely desirable, are not the difference between the success or failure of each sprint.

Toyota Production System

The Toyota Production System (TPS) is an early form of lean manufacturing created by auto-manufacturer Toyota. Created by the Toyota Motor Corporation in the 1940s and 50s, the Toyota Production System seeks to manufacture vehicles ordered by customers most quickly and efficiently possible.

Total Quality Management

The Total Quality Management (TQM) framework is a technique based on the premise that employees continuously work on their ability to provide value to customers. Importantly, the word “total” means that all employees are involved in the process – regardless of whether they work in development, production, or fulfillment.


The waterfall model was first described by Herbert D. Benington in 1956 during a presentation about the software used in radar imaging during the Cold War. Since there were no knowledge-based, creative software development strategies at the time, the waterfall method became standard practice. The waterfall model is a linear and sequential project management framework. 

Read Also: Continuous InnovationAgile MethodologyLean StartupBusiness Model InnovationProject Management.

Read Next: Agile Methodology, Lean Methodology, Agile Project Management, Scrum, Kanban, Six Sigma.

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