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.

Department	Type of Structure	Structure Details	Advantages	Drawbacks
Squads	Team-Based	– Spotify’s core organizational unit is the “squad.” Squads are small, cross-functional teams that work on specific features or projects. Each squad is autonomous and self-organizing, responsible for a particular aspect of the product.	– High autonomy and ownership for squad members. – Rapid development and deployment of features. – Encourages innovation and creativity.	– Potential for duplication of efforts or conflicts between squads. – Ensuring alignment with the overall company strategy can be challenging.
Tribes	Matrix	– Squads are grouped into “tribes” based on their area of focus or product domain. Each tribe has a mission aligned with the company’s strategic goals. Tribes provide support, resources, and alignment for squads within the tribe.	– Facilitates alignment of squads around common missions. – Allows for sharing of expertise and resources across squads. – Maintains a connection between squads and the overall company strategy.	– Increased complexity due to the matrix structure. – Potential for conflicts between tribes or resource allocation challenges.
Chapters and Guilds	Functional Network	– Within Spotify’s organizational structure, “chapters” group employees by their functional expertise or role (e.g., developers, designers). Chapters serve as communities of practice, providing opportunities for skill development and knowledge sharing.	– Encourages skill development and expertise within specific domains. – Facilitates peer learning and knowledge exchange. – Provides support and mentorship to squad members.	– Balancing time between squad responsibilities and chapter/guild activities can be challenging. – Maintaining alignment with squad missions while participating in chapters/guilds may require effort.
Guilds	Informal Networks	– “Guilds” are informal networks that span across squads and tribes, connecting employees with shared interests or passions. Guilds are voluntary and serve as forums for employees to collaborate, share ideas, and explore common interests.	– Fosters a sense of community and collaboration among employees with shared interests. – Promotes innovation and cross-pollination of ideas. – Provides a bottom-up approach to identifying opportunities for improvement.	– Guild participation may require additional time commitment outside of squad responsibilities. – Maintaining alignment with squad missions while participating in guilds may require effort. – Coordination challenges in large organizations with numerous guilds.

Spotify Business Model

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

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.

Tribes

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

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

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.

Comparison with Top Related Companies

Google: Google also emphasizes flexibility and innovation but follows a more traditional corporate structure that combines elements of a functional and product-based matrix. Google’s approach includes cross-functional teams and a focus on innovation, but it operates within a more defined hierarchical framework compared to Spotify’s fluid, team-based structure. This allows Google to maintain control over a broader range of products and services, though it may limit some of the autonomy found in Spotify’s model.
Apple: Apple is known for a more centralized, functional organizational structure where decision-making is highly centralized at the top levels. This structure supports Apple’s focus on integrated product development and brand consistency. In contrast, Spotify’s decentralized approach allows for greater flexibility and faster decision-making at the team level, potentially leading to higher innovation in rapidly changing markets.
Microsoft: Microsoft employs a matrix structure that is somewhat similar to Spotify’s but with a stronger emphasis on product divisions and less on the autonomy of small teams. Microsoft’s structure is designed to facilitate collaboration across different product groups and functional areas, which supports integration and efficiency. However, it does not promote the same level of cross-functional autonomy or the organic knowledge sharing that characterizes Spotify’s structure.

Similarities and Differences

Similarities: All these companies utilize some form of cross-functional or matrix structure to foster innovation and adapt to technological changes quickly. They recognize the value of integrating different functional expertise within product development cycles.
Differences: Spotify’s N-form structure is unique in its emphasis on autonomous squads and informal guilds that cross traditional boundaries to enhance knowledge sharing and innovation. In contrast, companies like Apple and Google maintain more control through a hierarchical structure that may prioritize brand consistency and product integration over individual team autonomy.

Implications

Innovation and Speed: Spotify’s structure enables rapid testing and development of new ideas, which is crucial in the fast-paced tech industry. This can lead to quicker product enhancements and adaptations to user feedback compared to the slower, more deliberate approaches at companies like Apple.
Scalability and Control: While Spotify’s approach fosters innovation and employee satisfaction, it might face challenges in maintaining consistency and aligning efforts as the company scales. In contrast, Google and Microsoft’s structures, while less flexible, may offer better scalability and control.
Employee Engagement and Retention: Spotify’s emphasis on autonomy and self-organization can lead to higher employee engagement and retention, as team members feel more empowered and connected to their work. This contrasts with more traditional structures where decisions are often made at higher levels, potentially leading to lower engagement among employees who are further from decision-making processes.

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.

Key Highlights:

N-Form Organizational Structure: Spotify’s organizational structure is based on the N-form model, which emphasizes knowledge sharing and integration across various business activities.
Autonomy and Creativity: Spotify’s structure encourages freedom and creativity among employees. Traditional hierarchies are absent, and employees have the flexibility to complete their work in their own ways.
Squads: The basic unit is a “squad,” an autonomous, cross-functional team comprising around 6-12 individuals. Each squad takes ownership of a specific product aspect, operates under a unique mission, and has access to support from agile coaches and product owners.
Tribes: Squads coordinating on the same feature area form a “tribe.” Tribes encourage collaboration, alignment, and idea implementation. Each tribe has a Tribe Lead to facilitate coordination across squads.
Chapters: Chapters are small groups of individuals within a tribe who share similar skills and expertise. They meet to discuss challenges related to their competency area and are led by a line manager responsible for traditional tasks and employee development.
Guilds: Guilds are formed by employees passionate about specific topics, creating a community of interest. Guilds can span different tribes and are coordinated by volunteers rather than formal leaders.
Accountability and Autonomy: Spotify’s structure enables autonomy while maintaining accountability. Squads own product features throughout their lifecycle and learn from both successes and failures. Feedback processes are separate from discussions on salary and performance.
Innovation and Repeatability: The combination of squads, chapters, and guilds fosters innovation and best practice adoption from the bottom up. Experimentation-friendly culture encourages trying new approaches, and the decoupled architecture limits the impact of failures.
Alignment and Autonomy: Spotify believes alignment and autonomy are interconnected. Greater alignment leads to more autonomy. Teams ensure alignment on goals before commencing work, and leadership reinforces this link to optimize solutions.
Cross-Pollination of Knowledge: Spotify’s organizational structure facilitates knowledge sharing through its unique combination of squads, tribes, chapters, and guilds. This approach enables employees to work autonomously, promotes innovation, and maintains alignment and accountability.