Door: Roel Wagter
In mijn rol als copromotor en gastdocent aan de Radboud Universiteit Nijmegen begeleid ik via de Faculteit der Natuurwetenschappen, Wiskunde en Informatica jaarlijks een aantal studenten. Na mijn college over ‘sturen op samenhang’ ontvangen de betreffende studenten de opdracht om naar keuze een jaarverslag van een onderneming te downloaden en de samenhang op zingevingsniveau van deze onderneming te onderzoeken en te waarderen. Voor alle duidelijkheid, het betreft hier tussentijdse studieresultaten in de vorm van een op te leveren paper. De komende tijd zal ik, overigens met toestemming van de betreffende studenten en de universiteit een aantal van deze papers publiceren. Dit doe ik in de hoop opdat velen deze exercitie zullen navolgen. Immers een goed niveau van samenhang is randvoorwaardelijk voor een hoog reactievermogen, hoge aanpasbaarheid en het bereiken van de beoogde performance. En het sturen op samenhang begint met het sturen op samenhang op zingevingsniveau. Te weten de samenhang tussen de missie, visie, kernwaarden, doelen en strategie. Voor een ieder die meer wil weten over ‘sturen op samenhang’ zie ons laatstelijk gepubliceerde boek.
De onderzoeksopdracht zoals omschreven in de inleiding heeft bij student Jasper Klomp er toe geleid de samenhang op zingevingsniveau van Spotify Technology S.A. te onderzoeken. In deze blog geef ik onderstaand alleen het abstract en de intro van zijn paper weer en verwijs graag naar de versie van het volledige paper.
Abstract en intro
The adoption of the internet provided new possibilities for different industries including digital distribution. This led to the fast-growing market of streaming services (Vonderau, 2019; Fagerjord, & Kueng, 2019) which created many opportunities for business expansions increasing the complexity of these enterprises’ organizational structure. In such a complex structure it becomes even more important to ensure that different business units operate consistently, complying to the purpose of the enterprise. This paper aims to make the coherence of an enterprise in the streaming services industry, Spotify Technology S.A., explicit utilizing the Enterprise Coherence Framework (ECF) (Wagter, 2013). Here, the focus of the ECF is on the level of purpose which concerns the viability of an organization through its mission, vision, core values, goals and strategy. Besides, this paper quantifies coherence through the GEA C-index (Bekel, & Wagter, 2020). This paper leads to a further understanding of enterprise coherence governance in practice through an analysis of the coherence within Spotify Technology S.A. and discusses future actions this enterprise can take to improve its coherence.
“The main reason people want to pay for Spotify is really portability. People are saying, ‘I want to have my music with me’.” (Daniel Ek in Griggs, 2011)
Spotify Technology S.A. is a Swedish technological company founded in 2006 that provides a digital platform allowing its users to stream music via the internet. Since its foundation it has grown enormously hitting 188 million paid subscribers in the second quarter of 2022 (Investor Spotify, 2022). Whereas physical music (e.g. CDs) and digital downloads where the main drivers of music consumption in the 2000s and early 2010s, streaming services started to take over once technology became more advanced increasing the usability of digital streaming platforms. The technological development of smartphones (Smartphones rapidly gained more processing power, became smaller and more user-friendly) played a big role in this, where the portability argument of the founder Daniel Ek really became significant. Nowadays you can simply put a smartphone in your pocket and stream music from anywhere.
Spotify Technology S.A. offers two business models to its users; a free membership with targeted advertisements or an ad-free membership with a subscription fee. The enterprise earns money on the subscription fees and advertising revenue. Spotify Technology S.A. is unique in the free membership model further stimulating its fast growth. To manage this growth Spotify Technology S.A. employs two strategies, market development and market penetration. The increasing demand for streaming services opened doors for expansions of the digital platform to more than 180 countries (Investor Spotify, 2022). Moreover, the enterprise uses market penetration to reach more customers in already operating markets. For instance in 2018 Spotify Technology S.A. introduced podcasts to its platform allowing creators to upload digital audio files to the platform (Holt, 2018).
Recently, it also introduced audiobooks (US only) trying to penetrate into another market (Perez, 2022). These strategies lead to business expansions increasing organizational complexity. The market of Spotify Technology S.A. is dynamic and continuously adapting to new technologies (Vonderau, 2019). If it wants to be competitive operations have to be adjusted to new market developments. Expanding services to other countries and penetrating markets is difficult (e.g. “Difficulties in obtaining licenses to stream content from rights organizations and individual copyright owners in countries around the world on favourable terms” (Spotify Technology S.A., 2022, p. 8)) and requires organizational change. For this change to go efficiently, enterprises ought to be communicative and transparent about its organizational purpose ensuring that new teams comply to this purpose. This shows the importance of the way enterprise coherence is organized to maintain an efficient organization.
Wagter (2013) discusses the ECF to examine enterprise coherence and to make it explicit. This framework focusses on two levels, the level of purpose and the level of design. The focus of this paper is on the level of purpose which is about the main strategy of the enterprise. What is its mission? What vision does it have for the future? What are its core values? What are its goals? And what strategies does it employ to achieve these goals? The mission of Spotify Technology S.A. is: “To unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators” (Spotify Technology S.A., 2021, p. 35). The vision statements of Spotify Technology S.A. is: “We envision a cultural platform where professional creators can break free of their medium’s constraints and where everyone can enjoy an immersive artistic experience that enables us to empathize with each other and to feel part of a greater whole.” (Spotify Technology S.A., 2018). Several questions can be asked about such statements. Is the enterprise transparent about its mission and vision to their stakeholders? Are these statements consistent with each other? Do they make the purpose and the future direction of the enterprise explicit? These are relevant questions to assess enterprise coherence, and in the case of Spotify Technology S.A., to judge if a new team will work efficiently and comply to the purpose of the enterprise.
The goal of this paper is to make this assessment and to examine the coherence at Spotify Technology S.A. on the level of purpose. Besides, I quantify enterprise coherence through the GEA C-index developed by Bekel and Wagter (2020). These two approaches lead to two research questions. First, how does Spotify Technology S.A. communicate its organizational purpose to their stakeholders? This gives insight into the accountability of the enterprise and whether the cohesive elements of the organizational purpose are consistent. Second, what is the quality of coherence on the level of purpose at Spotify Technology S.A.? Here the aim is to get an overall score for enterprise coherence which gives an indication on how Spotify Technology S.A. can improve its coherence in the future.