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Autonomy may be the single most important element for creating engagement in a company. How can anyone feel engaged, let alone inspired, if she feels that some supervisor is always looking over her shoulder? But autonomy is a double-edged sword. On the one hand, it spurs creativity and involvement. On the other, unchecked autonomy can lead to ambiguity and inefficiencies, even organizational chaos. To find the right balance, you have to wrestle with three challenges:
Balancing autonomy and accountability. An essential counterweight to autonomy is strict accountability for results, and for the actions and behaviors that deliver those results. A company has to establish a strategy and a purpose that provide context for employees’ actions. It has to put the strategy into practice with measurable objectives, consistent measurement of progress toward those goals, feedback systems to monitor activities along the way, and appropriate consequences for reaching or failing to reach the goals. At their best, companies realize that not everything is easily measurable, or should be measured, and that constant temperature taking and micromanagement are inefficient and demoralizing. They establish transparent boundary conditions and clear expectations. Employees and teams know they will be held accountable, and they know where the guardrails are. They understand the objectives, and they have a great deal of freedom in determining how to reach them within those guardrails. Clarity of purpose and what we call high-resolution strategies, which give people a clear view of where they’re headed, provide the compass that can guide the choices that teams and individuals make when working autonomously.
Balancing freedom to innovate versus following proven routines. The art and science here is determining how to get both outcomes — consistency and innovation — in the right proportion and in the appropriate parts of your organization. In many areas, freedom to innovate is the critical need. Think of new product development, or the parts of the company’s value chain and business model that are undergoing significant reinvention because of digital transformations. In these activities, speed of innovation is critical, and the rallying cry should be autonomy, small teams, and organizational agility. Other areas, however, may benefit from standardized approaches. These are areas where consistent outcomes are essential and where speed of execution comes from deploying common methods, best practices, and enforced routines. The focus here should be on repeatability and efficiency. Each requires speed in different areas, innovation versus execution, and achieves these results in different ways. The challenge in striking the right balance is to know which method should predominate and how to design appropriate ways of working for each area. The wrong approach leads to confusion over goals and to ineffectiveness.
Balancing alignment with control. This task is closely related to the other two. In traditional hierarchical organizations, managers direct the work of subordinates and thereby ensure alignment with broader organizational goals. Spans of control are limited to a reasonable number — typically eight people or fewer — so that managers can effectively oversee their subordinates’ efforts. This organizational model can work well in relatively stable business environments, where the pace of change is modest and where annual planning cycles suffice for managing strategic changes and course corrections. In dynamic business environments, where innovation cycles happen in days or weeks rather than months and years, and where much of the work is cross-functional in nature and is undertaken by small, agile teams, this type of organizational model can be slow to respond and innovate. Companies that take the approach of empowering autonomous teams must find ways to ensure that coordination and connectivity happen among those teams without relying on controlling managers. Again, it’s a matter of managerial art as well as science to achieve alignment without excessive control.
Our favorite example illustrating how to approach these three challenges is the Swedish company Spotify. Spotify is a 10-year-old music, video, and podcast streaming company with 30 million paying subscribers and about $3 billion in revenue. Its more than 2,000 employees are organized into agile teams, called squads, which are self-organizing, cross-functional, and colocated. Spotify has largely succeeded in maintaining an agile mindset and principles without sacrificing accountability. It enables innovation while keeping the benefits of repeatability, and it creates alignment without excessive control. Its lessons apply to many companies, not just digitally enabled service providers. Here’s how.
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Spotify’s core organizational unit is an autonomous squad of no more than eight people. Each squad is accountable for a discrete aspect of the product, which it owns cradle to grave. Squads have the authority to decide what to build, how to build it, and with whom to work to make the product interoperable. They are organized into a light matrix called a tribe. Tribes comprise several squads linked together through a chapter, which is a horizontal grouping that helps to support specific competencies such as quality assistance, agile coaching, and web development. The chapter’s primary role is to facilitate learning and competency development throughout the squads.
Leadership within the squad is self-determined, while the chapter leader is a formal manager who focuses on coaching and mentoring. Spotify believes in the player-coach model: Chapter leaders are also squad members. Squad members can switch squads and retain the same formal leader within their chapter. Spotify introduced a third organizational element, known as a guild. Spotify mac download. Guilds are lightweight communities of interest whose primary purpose is to share knowledge in areas that cut across chapters and squads, such as leadership, continuous delivery, and web delivery.
Audio recorder spotify free. This unusual combination of squads, tribes, chapters, and guilds is the organizational infrastructure that underlies Spotify’s operating model. At first reading, it might sound like just another way to define a conventional organizational matrix in Millennial- and digital-friendly terms. But a closer examination reveals just how different the model really is and why it seems to work so well.
The squad structure achieves autonomy without sacrificing accountability. Every squad owns its features throughout the product’s life cycle, and the squads have full visibility into their features’ successes and failures. There is no single appointed leader of a squad; any such leadership role is emergent and informal. Results are visible both through internal reviews and through customer feedback, and squads are expected to fully understand successes and failures. Squads go through postmortem analyses of failures to ensure learning, and some squad rooms have “fail walls.” Every few weeks, squads conduct retrospectives to evaluate what is going well and what needs to improve.
https://newrf990.weebly.com/no-audio-in-download-spotify.html. To ensure that the feedback process is effective for individuals as well as for the squads, Spotify redesigned its performance management system to separate salary discussion and performance evaluations from coaching and feedback. Before, peer feedback was incorporated into salary reviews; in Spotify’s words, that “incentivized people to gather as many favorable reviews as possible rather than getting feedback around their biggest areas of potential improvement.” Now, colleagues use an internal tool to invite anyone — including managers, peers, and direct reports — to provide feedback on results and on what an individual can do to improve. Employees may solicit feedback as often as they choose. Spotify employee Jonas Aman told us, “The result is a process that everyone needs to own and drive themselves — it is about development and personal growth.”
Adapted from
Time, Talent, Energy: Overcome Organizational Drag and Unleash Your Team’s Productive Power
Strategic PlanningBOOK- Michael Mankins
- Eric Garton
Spotify encourages innovation without losing the benefits of repeatability. Since squads are the primary centers of innovation, Spotify introduced its chapters as the matrix to connect competencies across squads. Chapters in some ways are like a function-led center of expertise in a traditional model, which links center-led functions with business units. In Spotify’s case, chapters have less formal authority, and they are organized around discrete competencies as opposed to broad functions. Guilds were added to facilitate experience sharing for horizontal topics of interest that are at a higher level than a specific competency. In the traditional model, central functions define and enforce standards and routinized processes from the top down. At Spotify, best-practice methods are discovered over time and determined by popular adoption from the bottom up. A practice or tool becomes a standard only when enough squads have adopted it to make it a de facto standard.
Culture plays a big role in keeping the innovation engine firing on all cylinders. Spotify has an experiment-friendly culture with an emphasis on test-and-learn approaches and contained experiments. If people don’t know the best way to do something, they are likely to try alternative approaches and run several A/B tests to determine which is preferable. In place of opinion, ego, and authority, Spotify works hard to substitute data, experimentation, and open dialogue about root causes. It lowers the cost of failure through a decoupled architecture, so that a failure has a “limited blast radius” and affects only part of the user experience.
Spotify fosters alignment without excessive control. The central organizational feature that shapes Spotify’s model is the concept of “loosely coupled, tightly aligned squads.” The key belief here is that “alignment enables autonomy — the greater the alignment, the more autonomy you can grant.” That’s why the company spends so much time aligning on objectives and goals before launching into work. The leadership model at Spotify reinforces this alignment. A leader’s job is to figure out the right problem and communicate it, so that squads can collaborate to find the best solution. Coordination comes through context and through a deep understanding of the company’s priorities, product strategies, and overall mission. The release process decouples each element for feature squads, infrastructure squads, and client application squads. The ability to release features and then toggle them on or off enables full releases even before all features are fully operational. Here, too, the culture acts as a support. The watchword at Spotify is “be autonomous, but don’t suboptimize — be a good citizen in the Spotify ecosystem.” A common analogy at the company is a jazz band: Each squad plays its instrument, but each also listens to the others and focuses on the overall piece to make great music.
Clearly, not all of Spotify’s choices will be appropriate for every company; that’s not the point. Rather, the point is that a company must make explicit choices in its operating model, ways of working, and culture that address the three core tensions between individual autonomy and organizational goals. Systematically aligning all elements of your operating model and working environment to create autonomy without sacrificing accountability, to get innovation where it matters most without sacrificing the benefits of scalability and repeatability, and to get alignment without excessive control are all at the heart of building an engaging and inspiring working environment.
Adapted from the Harvard Business Review Press bookTime, Talent, Energy: Overcome Organizational Drag and Release Your Team’s Productive Power.
Spotify Technology S.A. grows as a major music streaming service provider. The company’s multinational operations continue to expand, despite competitive challenges involving other firms that offer digital content distribution services, such as Pandora, Google Play Music, and Amazon Music. This expansion trend is related to the internal and external strategic factors discussed in this SWOT analysis of Spotify. The SWOT framework specifies the strengths and weaknesses (internal analysis), and opportunities and threats (external analysis) pertinent to the company’s operations, with consideration for the strategic challenges characterizing the music streaming industry. These external and internal strategic factors require Spotify to innovative to overcome competitive rivalry and possible business stagnation, as competitors hinder the company’s international growth. Relative to competing large technology firms like Apple, Google, and Amazon, a consideration of the SWOT factors can improve the company’s strategic decisions in reaching its goals and keeping a leading market position.
Spotify experiences a variety of strategic influences, although the strengths, weaknesses, opportunities, and threats included in this SWOT analysis are some of the most readily observable regarding the on-demand media streaming business.
Spotify’s Strengths and Weaknesses (Internal Analysis)
Strengths (Competencies): |
1. Strong brand based on service popularity |
2. Wide reach and easy accessibility of media streaming services based on technological benefits |
3. Demand-side economies of scale for music streaming and related services |
Weaknesses: |
1. Payment agreements with rights holders |
2. Dependence on Internet connectivity and its issues in various markets around the world |
3. Dependence on other technology companies, including some competitors |
4. Imitable business model involving computing systems and online service provision |
- This SWOT analysis table is best viewed using HTML5-compatible browsers.
In this SWOT analysis of Spotify, the business strengths are based on the extent and nature of its online services. These strengths are among the core competencies of the enterprise, as discussed in the VRIO Analysis of Spotify Technology S.A. In a similar way, the weaknesses are based on the technological dependence of the business on other firms that operate in the same industry or related industries. Thus, Spotify enjoys the benefits of the efficiencies and scalable nature of digital technology-based services. However, at the same time, the company suffers from the innate technological issues and strategic challenges of its music streaming business model and its related characteristics. Despite these weaknesses and threats in the industry, the business manages to use its strengths to grow and become a leading player in the on-demand media streaming services industry. Can you download spotify playlists to fitbit versa 2. The table above presents Spotify’s internal strategic factors (strengths and weaknesses) that form part of the SWOT analysis elements.
Strengths. Spotify’s strong brand is based on the popularity ofits music streaming services. Even though the company started its internationalexpansion in 2009, the business has steadily expanded to offer its digitalmedia services to a continually increasing user base. This growth iscodependent with the Spotifybrand, which is a major strength in this SWOT analysis. The brand strength contributes tocompetitiveness that reduces the ability of smaller music streaming firms to convinceconsumers to transfer from the company. Thus, this internal strategic factorshapes Spotify’s developmentin terms of how it organizes its business around the brand and its utilizationin various music streaming markets worldwide.
Wide reach and easy accessibility of media streaming services is a value proposition and another strength relevant in this SWOT analysis of Spotify Technology S.A. This internal factor involves the ability of the company to provide its streaming services to consumers around the world. This ability is due to the online nature of Spotify’s business operations. The strength is also based on the global proliferation of the Internet and online devices. As a result of this internal strategic factor, customers can easily access their preferred music via Spotify’s web site or mobile apps. In the circumstances involved in this SWOT analysis, such strength helps retain customers, who would likely leave the company if its on-demand music streaming services were not as easily or widely accessible. This strength of the platform business supports the achievement of the corporate mission and vision statements of Spotify Technology S.A.
Anotherstrength of Spotify isthe demand-side economies of scale of its business. Such economies of scale buildon the other strengths shown in this SWOT analysis. For example, the strong brand and wide accessibilityof the online service leads to a major share of the market and thecorrespondingly large user base. This business condition strengthens Spotify through the businesssize needed to reach effectiveness and efficiencies through economies of scale.This SWOT analysisstresses the benefits of such an internal factor, including the reduction offixed costs per account or per customer, and optimization of profit margins.Through this business strength, Spotify has reached profitability despite payments to rightsholders, such as artists or production companies, and other costs.
Weaknesses. This SWOT analysis shows that Spotify’s weaknesses are representative of itsbusiness model and the nature of resources used to support its music streamingoperations. For instance, payment agreements with rights holders are a major weaknessthat affects and potentially limits the success rate of the company. In orderto provide on-demand music to its target market, Spotify needs to pay the creators or producers ofsuch digital content. For example, the company pays production companies like UniversalMusic Group for royalties and related rights. In this SWOT analysis, such an internal factor is a weaknessthat limits Spotify’sprofitability by taking a major chunk of the company’s subscription revenues.
Anotherweakness to consider in this SWOTanalysis of Spotify isthe dependence on Internet connectivity. This internal strategic factor isbased on the online nature of the business. The actual benefit of the musicstreaming service and its value chain depends on the speed of the customer’sconnectivity to access such service. For example, in developing countries, slowInternet connectivity and relatively high costs reduces the attractiveness of Spotify’s service. In this SWOT framework’s background,such an internal factor is difficult to overcome. Nonetheless, the trend ofimproving connectivity worldwide reduces the negative effects of this weakness.
Spotify’s dependence on other technology companies is a related weaknesslisted in the SWOT analysistable above. Such dependence is an internal strategic factor that involves notjust third-party providers but, more notably, some of the company’s competitorsin the music streaming industry. For example, Spotify depends on Apple’s App Store, which is a primarygateway for accessing and installing mobile apps. Similarly, the company relieson Google Play for mobile apps in Android devices. Considering that both Googleand Apple have their respective music streaming services, this weakness puts Spotify’s business under the bargainingpower of these two major competitors. Based on this internal factor, this SWOT analysis points out strategicchallenges, such as the company’s payment of 30% commission or fees to Apple onrevenues generated via the SpotifyiOS app.
The imitable characteristics of Spotify’s business model are another internal factor that weakens the company. This weakness is based on the fact that other firms can develop similar online media streaming services that directly compete against the company. The existence of many music streaming service firms is an indicator of this strategic weakness. This SWOT analysis shows the importance of developing Spotify’s uniqueness as a brand and service, to reduce the impact of such an internal strategic factor. Still, the vast song collection and brand popularity help in protecting the company’s music streaming business from the effects of imitation.
Spotify’s Opportunities and Threats (External Analysis)
Opportunities: |
1. Potential growth and expansion in new music streaming markets |
2. Diversification of online services to include new or different products for the same or new target market and market segments |
3. Growth through new partnerships with mobile device manufacturers and other firms |
Threats: |
1. Competition with major technology companies |
2. Legal disputes and challenges |
3. Criticisms from artists and other stakeholders |
- This SWOT analysis table is best viewed using HTML5-compatible browsers.
Spotify’s opportunities and the threats against its business are theexternal strategic factors in this aspect of the SWOT analysis. As an external analysis of the musicstreaming company, this aspect considers the influence of various market andindustry factors that are not under the direct control of the company’sdecision-makers and administration. Opportunities can shape Spotify’s strategictrajectory, although the threats may hinder the business from exploiting these opportunities.Continuous growth and its achievement of profitable performance reflect thecompany’s effectual efforts in bringing its financial goals into fruition. Theabove table lists this aspect of the SWOT analysis of Spotify.
Opportunities. The opportunity to grow and expand innew markets is an external factor based on Spotify’s current limited operations. For example,the company’s focus remains on music streaming markets like the United Statesand the European Union, and has limited or no presence in many developingcountries. In light of this market position and operational expansion, Spotify can establish operationsin additional markets, and intensify its market penetration efforts in itscurrent markets. As shown in the SWOT analysis table, this external strategic factor brings the opportunityto grow and improve profitability, especially as economies of scale areincreased in the company’s music streaming operations.
TheSWOT analysis table forSpotify includes the opportunityto diversify online services through new or different products. This externalstrategic factor is based on the company’s limitation of focusing on musicstreaming operations. Considering the capability to establish, maintain, andmanage IT systems for these operations, Spotify has the opportunity to develop new products,which may involve offering other types of digital content, or some otherservices that take advantage of the worldwide user base of the business. Basedon this SWOT analysisof Spotify, such anexternal factor leads to the opportunity to create new revenue streams orincrease current revenue sources, as the company grows and expands in the midstof cutthroat competition with multinational technology firms.
Spotify has the opportunity to grow via new partnerships with other enterprises. These partnerships can increase the company’s market reach and impose strategic challenges against firms like Apple and Google in the music streaming industry. In this SWOT analysis of Spotify, this external factor has the potential to facilitate business growth. However, the opportunity requires careful negotiations to ensure mutually beneficial agreements. The company has already embarked on such a partnership to make its product the primary music streaming service included in Samsung’s consumer electronics. This opportunistic strategic move helps create competitive advantage against Apple Music in Samsung devices. Spotify can take this external strategic factor further to create new partnerships with other consumer electronics manufacturers.
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Threats. The threats to the business are based on stakeholders’ and competitors’ actions, which are assessed through the Porter’s Five Forces analysis of Spotify Technology S.A. In this SWOT analysis case, competition with major technology firms is among the top issues that threaten the music streaming company. This external factor involves the competitive forces coming from such services as Google Play Music and Apple Music. This factor in the SWOT analysis underscores how a competitive environment hinders Spotify’s growth, considering the market positions of such competitors. This external strategic factor threatens the company in practically every market, as major competitors already have a global presence and the potential to penetrate more markets with their respective music streaming products.
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Legal disputes and challenges are a threat against Spotify Technology S.A. in terms of costs and legal restrictions. This external factor is a common threat among major technology firms. In this SWOT analysis of Spotify, such external strategic factors are based on ongoing legal disputes with competitors like Apple Inc., involving fees amounting to 30% of revenues generated through apps via the App Store. Along with the other issues identified through the PESTLE analysis of Spotify Technology S.A, such disputes are external factors that require funds and threaten the public relations standing and brand image of Spotify.
The SWOT analysis table also includes criticisms as a threat to Spotify’s business. Criticisms are external factors that damage the company’s brand and its relationships with stakeholders. For example, criticisms about revenue sharing could discourage artists and music producers from allowing their content on Spotify. This condition threatens the digital content streaming business by potentially limiting content that target consumers are looking for. Ultimately, this SWOT analysis should direct Spotify’s administrative attention to how such an external strategic factor could reduce the company’s profitability and share of the streaming music market.
Key Points from the SWOT Analysis of Spotify Technology S.A.
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The strengths and weaknesses in the internal analysis element of this SWOT analysis illustrate Spotify’s strategic positioning as a leading music streaming business that grows based on popularity, among other contributing factors. However, the company needs to continually improve its business strengths and its product features to address such weaknesses as the imitability of its business model. Such improvement may require modifying Spotify’s corporate structure. On the other hand, the external analysis element of this SWOT analysis identifies opportunities and threats that define the future organizational development of the company. For example, the company has the opportunity and potential to become an even bigger digital content distributor by entering new markets or penetrating more of its current markets. Despite such potential, Spotify faces the threat of tough competition. These strengths, weaknesses, opportunities, and threats included in this SWOT analysis suggest that Spotify should develop core competencies to strategically exploit emerging opportunities and protect its business against the threats of competition, imitation, and criticism.
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References
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- About Spotify Technology S.A.
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