Blog 2: Internal Organizational Analysis and Developing Strategic Options

The advantage of creating organizational coherence from the very beginning in a company is huge. Particularly in markets that are oversaturated, for example the music streaming market, companies need to be able to create an identity that separates them from the competition before dispersing efforts into other capabilities. One great example of this idea is Spotify in its position as a music streaming platform. Though Apple Music, TIDAL, Amazon Music, and other small local streaming services have a large amount of content to stream, Spotify has solidified itself as the industry leader in music discovery suggestions, per their advanced algorithms and user metrics. In this way, they have been able to provide a specialization that they integrate throughout the rest of their business.

The coherence with Spotify is thus demonstrated by how they build outwards from this core capability. The company describes itself as an audio technology company, making moves in the programming and technology space in order to sharpen those skills, then expanding out to new waves of content when they are prepared. For example, after several years of operation, Spotify is now branching out into the podcast space much more aggressively than ever, as its primary focus was creating a tailored music experience for all listeners. The company made sure that the API it has in place was up to par in terms of efficiency and usability before attempting to enter any new content spaces, and for this reason they remain an industry leader and a global influence on the streaming industry.

This strategy closely aligns with the suggestions made by Paul Leinwand and Cesare Mainardi in "The Coherence Premium" mainly due to the focus on capabilities rather than haste in expansion, as previously mentioned. There was certainly a "premium" to this approach from Spotify as well, having to shell out a significant amount of money to gain streaming licenses on new content before releasing its library in the first place. Additionally, Spotify only has a limited amount of exclusive content, so the majority of its revenue is dependent on outside licenses. However, to overcome these costs and become a stable company, Spotify focused its efforts on an innovative algorithm that has netted more subscribers than any other music streaming platform globally and has altered the field of music distribution significantly.