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Spotify is a music streaming service. It is freeware, available at no cost, but for non-paying users, ads are inserted both inside the software and between songs. Unfortunately, the service is not yet available in Korea, but since being founded in Stockholm, Sweden in 2006, it has grown rapidly into a company employing nearly 3,000 people worldwide.
What has made Spotify even more famous than its music streaming service is the unique organizational structure, operating method, and culture that originated from the white paper "Scaling Agile @ Spotify." Let's step into Spotify's laboratory — the source of the agile organizational motif now adopted by ING and even some major Korean banks.
Squad
Spotify has no organizations with traditional names like teams or divisions. Having found new terms to replace the new operating method, their organization starts with a unit organization called the squad. A squad is a self-completing organization made up of 6–12 people — like a mini startup.
It is organized to hold every technology and tool needed for design, development, and testing — Product Owner, UX, iOS and Android development, keyboard/mouse, backend. It is, in a sense, a full-stack organization. Each squad has a long- or short-term mission and, at the same time, takes responsibility for a different part of the user experience, one piece at a time.
Because they own one mission and a specific part of the service over a long period, they grow into an expert group for that area. They can decide their own way of working, and are provided with independent office space, lounges, and other workspaces.
Tribe and Alliance
Squads in related areas — music players, mobile services, backend infrastructure — gather together to form a tribe. If a squad is a small startup, a tribe can be understood as a kind of startup incubator. The biggest responsibility of a tribe lead is to confirm and ensure that squad members have enough resources and autonomy to succeed. The tribe lead, responsible for providing the best habitat to a squad, does not have to be a single individual. Sometimes it is a group formed as needed — covering product, engineering, design, business, and so on.
Just as squads work with autonomy, tribes also have experimental autonomy in their operation. There are no two tribes that work in exactly the same way.
The ideal size of a tribe is around 40 people, and it is designed not to exceed 150. This is borrowed from Dunbar's number — the size at which social relationships and communication can be stably maintained.
It is also a way to prevent the constraints, rules, bureaucracy, politics, and waste from unnecessary layers that inevitably arise when an organization grows. When the size goes beyond a tribe and the speed slows while friction grows, an alliance is formed to support two or more tribes with closely connected missions.
Chapter
A chapter is a group of people working in similar skills and capability areas within the same tribe. Each chapter regularly gathers to discuss their specialty and concrete challenges. Through this, they share knowledge and help each other develop. There is a common misconception that Spotify has no managers.
But the chapter lead, as a kind of line manager for chapter members, takes on managerial responsibilities like employee development and salary setting.
What is different from a traditional manager is that the chapter lead is not limited to being a professional manager — they are responsible for performing work as a member of the squad they belong to. "Your manager does the same kind of work as you, and completely understands your day-to-day life" is a strong appeal.
Beyond the advantage of being a manager who understands the reality of the work environment, this also has the effect of reducing the silos and isolation that specialized employees often feel.
Guild
A guild is a kind of open community that anyone can join or leave. You can also join multiple guilds depending on your interests. The original purpose of guilds when introduced in 2012 was to fuse expertise across tribes, but they have since evolved further to become communities of interest among employees with shared interests.
There are work-related guilds like the Java guild, the C++ guild, or the Android guild, as well as hobby-related guilds for crafts, brewing, photography, and so on.
While chapters are organized and operated within tribes, guilds generally cut across the entire organization. Anyone wanting to share knowledge, tools, code, and practices in the same scope can gather.
Spotify's agile organization does not start simply from differences in name and structure. To literally move with agility, autonomy must be a precondition, and an organization with the capabilities suited to self-completing operation must be aimed at. Spotify's HR Business Partner Johan Sellgren explains:
"We give employees a lot of responsibility and trust. Failing here is not a problem. But we have to learn from that failure. Repeating the same mistake twice can be a sign that we are not growing enough."
Here we can read two characteristics of the organizational operation Spotify emphasizes: how to manage failure, and the desire for employee growth.
Experimentation, new attempts, and failure are part of Spotify's culture. Founder Daniel Ek has emphasized to employees that they should "fail faster than anyone else."
Failing fast means learning fast, and that means improving fast. He says we should not look for ways to avoid failure but for ways to experience failure and overcome it quickly. When problems arise, they post the failures as sticky notes on the "Fail Wall."
Through that opportunity, they hold a discussion not about who did wrong but about what was learned and what will change. In the engineering process as well, they have devices in place to manage failure and learn from it.
Generally, the probability of service failure rises significantly when the initial idea and composition are wrong. So at the idea stage, they quickly create service stories or prototypes and run customer reaction tests. Through this process, they rapidly and experimentally complete what they call the MVP (Minimum Viable Product) — the minimum product or service that can stand on its own.
They also prefer not to develop the entire service or product all at once but to break it into small parts, develop those quickly, and run and improve them. When several parts are successfully developed, they extend the efficiency and effectiveness of that approach (gradual rollout) and build the whole. This not only speeds up development but also makes it easy to quickly improve only the affected part when problems occur.
Saying something is 100% predictable is the same as saying it has 0% innovation. Spotify seems to focus not on building predictable plans and managing them but on discovering and delivering new value. As they often quote from the legendary racing driver Mario Andretti, "If everything is under your control, you're going too slow!"
Autonomy in How Work Is Done and Alignment of Employee Vision
Just as in the philosophy of how they develop and deliver their service, Spotify also tends not to prefer heavy, complex tools when managing their employees. Instead, they want substantive, honest conversation to be at the center of HR, and they believe that this is how employees can grow.
"There is no performance management — or anything like it — here. Instead, we encourage everyone to keep having 1:1 coaching sessions where each can tell the other the truth about performance."
As the HR Business Partner puts it, Spotify emphasizes that all employees maintain growth goals and that regular feedback is needed for this.
Most of the feedback continues to occur in everyday 1:1 sessions, but they encourage formal Development Talks twice a year.
The themes of these conversations are designed to be 70% about the employee's future, 20% about the current situation, and 10% about the past.
And based on the results, they draw up the company's talent snapshot at least once a year and conduct a salary review.
Even an HR practice focused on future growth has its challenges. Even at this very moment, Spotify takes in an average of three new hires a day. As the company expands worldwide, more employees are in different geographic locations and are part of different cultures.
You can imagine how hard it is, in such an environment, to deliver results, grow the business, and at the same time maintain a unique company culture.
Many companies face this challenge during fierce growth periods, but few overcome it wisely.
Most organizations grow at exponential speed and try to confront the chaos by adding bureaucracy and tearing down the unique strengths that originally made them successful. As a result, employees are not inspired by new things and become disconnected, unable to engage emotionally.
"Our way of working is unique, but certainly not perfect. We make mistakes, and we recognize that we don't have answers to every question.
And as we grow so fast, new challenges occur every day. Our biggest challenge is to leverage our unique culture — innovation, agility — and retain the talent that fits it. We're now leaving early childhood and growing into our teens."
As Spotify's Chief HR Officer Katarina Berg explains, they are well aware of the challenging environment and are focused on methods for sustainable success.
Spotify values culture more than skill. They believe skill can be developed, but cultural fit is not so easy.
To make sure of this, all recruiting processes start with a special, focused culture interview. Only internal recruiters are used, and they confirm that there is fit between the candidate's cultural values and the company.
The decision to make the culture interview the very first step of the recruiting process is in fact not very old.
It was very hard at first to drop highly skilled or highly specialized candidates at the very end for the reason of not fitting their culture.
But through experience, they came to know that culture is a more important aspect than expected, and so decided to move culture to the first interview gate.
For small startups, it is relatively easy to align all employees with the company's direction. Daily interactions with the founders, joint discussions about the company's direction, and the fact that everyone can clearly see their personal contribution to the entire operation all support the vision. But once an organization starts to grow, employee alignment with vision and mission often disappears. As a result, employees fail to grasp where they are headed or notice what is important.
It is like playing soccer without knowing where to put the ball. Spotify, with its rapid growth and new offices opening worldwide, has also found it harder for employees to feel a sense of company mission. So they began to convey the company's vision and purpose more actively than before. The privilege of allowing their teams — squads — to have enormous autonomy is explained as being premised on the high sense of purpose these employees hold.
Spotify's main vision and goals are regularly updated by leadership, centered on co-founder Daniel Ek.
Important changes are shared via the internal intranet, and all employees are asked to discuss, comment, or react. If needed, leaders do not hesitate to revise the original plan. Daniel Ek shares the latest developments with all employees through town hall meetings every three weeks. The topics range across finance, organizational changes, competitor updates, and more.
Large-scale participation like a town hall meeting has limited effect without the right technology. To confirm that everyone is participating as a member of the Spotify family, the meeting is broadcast simultaneously around the world. People can join the broadcast and deliver and share their questions, requests, opinions, or concerns.
For offices that cannot participate due to time zone differences, all town hall meetings are recorded.
The way technology is leveraged to have employees join the culture and reinforce it has been seen at many successful organizations before. Google founders Larry Page and Sergey Brin discuss the most important issues at weekly all-hands meetings with more than 60,000 employees. Employees can ask questions directly during that time.
Beyond the famous overseas companies, even in Korea, IT companies in particular are now regularly posting blog updates to communicate with employees and connecting to remote sites through video. Through opportunities for horizontal — and even bottom-up — communication like this, culture is reinforced in everyday life.
Stephen Bungay, in The Art of Action, introduced how organizational operation and cultural characteristics can change depending on the level of autonomy in how work is done and the alignment of employees with vision. If employees do not understand the vision and strategy and have no autonomy, the disadvantages of a traditional organization appear — managing every minor task and pouring out energy while remaining indifferent to culture. Companies that recognize the importance of cultural management try to change the organization by emphasizing vision and mission or by strengthening employee autonomy.
But if only one side is highlighted, you can become an organization that moves quickly but is authoritarian, or one that is armed with an entrepreneurial mindset but has to live with principle-less chaos. Spotify aims at an innovative, autonomous, collaborative organization through its distinctive organizational composition and operating method, and the cultural values that support them.
"What we are doing is a kind of snapshot of how we work right now. This long journey is not yet over, and is in progress." As they say, completion is far away, but the value is large just from showing many people a way to realize their dreams in new ways.
I cheer for the long journey ahead — one filled with challenges.