Spotify Organizational Structure

Spotify has an N-form organizational structure with an emphasis on knowledge sharing and integration across business activities. Spotify’s N-form organizational structure emphasizes knowledge sharing and integration.

Understanding Spotify’s organizational structure

There is a notable absence of traditional hierarchies, with employees offered the freedom and creativity to complete their work in any way they see fit.

Spotify has an N-form organizational structure with an emphasis on knowledge sharing and integration across business activities.

The N-form structure was first described in Anders Ivarsson and Henrik Kniberg’s 2012 whitepaper Scaling Agile @ Spotify.

The whitepaper, which introduced a new approach to agility, soon became popular because it was radically simple and focused on organizing around work instead of specific practices. 

Spotify’s model, as we touched on earlier, champions team autonomy with each team able to choose a framework such as Scrum, Scrumban, or Kanban.

Spotify calls these teams squads, with squads subsequently organized into tribes, chapters, and guilds to encourage the cross-pollination of knowledge.

In the next section, we’ll demystify these terms and how they relate to Spotify’s structure.

The core elements of Spotify’s organizational structure


Squads are autonomous, self-organized, cross-functional teams that enable Spotify to maintain an agile mindset as it scales. 

Squads contain around 6-12 individuals and are the most basic unit of a development team.

Each squad takes ownership of a discrete aspect of the product, works according to a unique mission, and has access to an agile coach and product owner for support and guidance.


When several squads coordinate with each other on the same feature area, they form a matrix otherwise known as a tribe.

If squads are the start-ups of Spotify’s structure, then tribes are the incubators responsible for making ideas a reality. Each tribe has a Tribe Lead who coordinates across squads and encourages collaboration.

Tribes facilitate alignment between squads and normally comprise around 40-150 individuals.

Ideally, however, Ivarsson and Kniberg believed a team of around 100 was most optimal because it respected a theory known as Dunbar’s number.

Essentially, the theory posits that there is a cognitive limit to the number of people with which one can maintain a stable social relationship.

When teams become too large, Ivarsson and Kniberg noted several consequences such as bureaucracy, politics, restrictive rules, and extra layers of management.


Chapters are small families of people who work within the same tribe, the same general competency area, and who also share similar skills.

These families frequently meet to discuss specific challenges in the context of their area of expertise.

Each chapter is led by a line manager who carries out more traditional tasks such as defining salaries and fostering employee development.

The chapter lead is also part of a squad like everyone else, which enables them to stay in the loop and up to date.


Guilds are formed by team members who are passionate about a certain topic. Think of a guild as a community of interest where anyone can join and participation is not mandatory.

Unlike chapters that belong to a particular tribe and have a formal leader, guilds can span different tribes and the formal leader is replaced by a coordinator who volunteers for their role.

How do these groups contribute to organizational structure?

While unusual, the combination of squads, tribes, chapters, and guilds is the foundation of Spotify’s effective organizational structure. This is reflected in three main ways.

1 – Autonomy is achieved without sacrificing accountability

Each squad owns its product feature for the entire lifecycle and is fully aware of (and expected to understand) the successes and failures of that feature. Squats conduct post-mortem analyses to learn from failures and perform retrospectives every few weeks.

To ensure feedback processes are effective at the individual and squad levels, the performance management system separates coaching and feedback from discussions around salary and individual performance.

2 – Innovation is encouraged, but not at the expense of repeatability benefits

Spotify’s chapters have less formal authority and are organized around discrete competencies. 

Unlike the traditional model where standards and processes are enforced from the top down, the company allows best practices to be discovered and adopted from the bottom up.

Note that a practice only become adopted if a sufficient number of squads are utilizing it.

Spotify’s experimentation-friendly culture also ensures that innovation remains front and center.

If employees do not know how to do something, they are encouraged to run A/B tests or try possible alternatives to determine the best course of action. 

In any case, the company’s decoupled architecture ensures that the damage from any failure is limited to small parts of the user experience.

3 – Alignment is fostered but without excessive control

Spotify believes that alignment and autonomy are closely linked. In other words, the greater the alignment, the more autonomy employees are granted.

Teams take the time to ensure they are aligned on goals and objectives before work commences.

Spotify’s leadership model reinforces the link between alignment and autonomy, with leaders ensuring they understand the problem and how to best communicate it so that squads can find the most optimal solution.

Key takeaways:

  • Spotify has an N-form organizational structure with an emphasis on knowledge sharing and integration across business activities.
  • Spotify’s model champions team economy. Each team is able to select its framework – whether that be Scrum, Scrumban, or Kanban, etc.
  • Spotify organizes employees into squads, tribes, chapters, and guilds to facilitate the cross-pollination of knowledge. The combination of these teams underlies Spotify’s operating model, ensuring that employees can work autonomously and remain accountable. The structure also promotions innovation without losing the benefits of repeatability and supports what the strong link between alignment and autonomy.

Read Next: Organizational Structure

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


Read Next: Spotify Business Model, Spotify Advertising Business, Spotify Model.

Types of Organizational Structures

Organizational Structures

Siloed Organizational Structures


In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.



Open Organizational Structures




In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.

Connected Business Frameworks

Portfolio Management

Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.

Kotter’s 8-Step Change Model

Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.

Nadler-Tushman Congruence Model

The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.

McKinsey’s Seven Degrees of Freedom

McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

Mintzberg’s 5Ps

Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.

COSO Framework

The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.

TOWS Matrix

The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

Lewin’s Change Management

Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.

Organizational Structure Case Studies

Airbnb Organizational Structure

Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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