Thank you for your nice comment! Yes, I completely agree; what I love about autonomous teams is how “ugly” they seem at the onset, and yet their product is outright gorgeous. Organized chaos is how I see it.
Thanks again for the insight!
Great link to LEAD. I agree and am also incredibly fascinated by self-managed teams. Only time will tell! I would love to see this autonomous structure disprove the idea that more structure is needed in order for a business to scale. Thank you for your comment!
Thanks for your nice comments! Very, very good question about “the magic ‘30%’ revenue pool ratio.” To be honest, I am not sure. I did a fair amount of researching, and it seems to be convention (Apple also maintains a 70/30 rule; it pays out 70% of revenues and keeps 30% of revenues). Now, who ever decided this ‘rule’ is beyond me! If I ever find out I’ll be sure to let you know. Also, in case you’re interested, the Entertainment & Media Club’s NYC trek this February will include a visit to Spotify. Might be worth checking out.
Thanks again, Ivan!
You’re absolutely right. We’ll definitely have to see how the Spotify vs Apple contest shakes out. Just as interestingly, I wonder what Apple’s reaction is going to be to gain market share. Currently, Apple’s subscription is priced competitively with Spotify’s (also $9.99 per mo.), so apparently it thinks it can offer users some value that Spotify can’t — what that value is, is beyond me! But of course, I’m bias. Thanks for commenting!
First, bravo for writing about operations at a non-profit organization. Extra kudos for writing about the operational efficiencies at a successful charter school (so often is public attention drawn towards the operational INefficiences of our schools), and MAJOR kudos for doing all of the above really, really well!
I think all your points regarding the effects of standardized processes (e.g. reduced variability and a more process-centric model) are spot on. I wonder, though, what is the purpose of a sound operational model in the context of a school? If the purpose is to enhance a school’s business model, then what is the purpose of its business model? To enhance teacher performance or student performance? And if teacher performance and student performance go hand-in-hand, then does a business model that only satisfies one type of performance and not the other indicative of a poor operations model?
Currently, the convention is to view teacher performance as the input and student outcomes as the outputs. Unfortunately, I don’t think our society understands that producing high quality outputs (i.e. student outcomes) is really, really difficult, and therefore requires really, really high inputs. People become concerned when they hear teachers burning out or being laid off when they fail to meet a school’s high standards. It almost seems as if critics want to see our current system, with low-quality inputs, turn out high-quality products.
However, what if teachers were viewed as outputs instead of inputs? What if the purpose of a school was to make teachers more efficient and effective so that they don’t burn out?
I agree, Success Academy has a terrific operational model in that it focus’ on student outcomes, but considering its high teacher turnover rate, I think its operational model leaves much to be desired. Only until schools adopt an operational model that views teacher performance as outputs and not inputs will high-achieving schools truly ever have a sustainable business model.
Would love to hear your thoughts!
Great post! I think what’s interesting was that FedEx dropped the Kinkos name without selling off the entire business. Clearly, FedEx sees SOME value in keeping Kinkos’ operations around (e.g. stores, equipment, labor, etc.), yet it doesn’t see value in the Kinkos name? I always felt that if I need to get copies made I go to Kinkos, not FedEx.
In any case, what DOES FedEx see in keeping Kinkos? I agree with Adam, I am interested to see whether FedEx ultimately divests Kinkos. What’s also interesting is how FedEx has partnered with OfficeMax, using its stores as convenient drop-off locations. I wonder what would have happened if FedEx decided to create a strategic partnership with Kinkos, similar to its partnership with OfficeMax, rather than engage in a full-out merger. Also, do you think FedEx’s partnership with OfficeMax cannibalizes in-store shipping services from its FedEx-Kinkos locations?
Ultimately, I think senior management at FedEx doesn’t have a clear vision on its business model, which is why its hard to see how the FedEx-Kinkos operational model makes very much sense. You’re right in that the company should refocus on what it does well: shipping documents and packages.
Again, nice work!
Nice post! I’m a huge Zara fan. From a business standpoint, I can see why exclusivity is important and how quick turnarounds encourage repeat buyers to keep checking in. All the same, it can be incredibly frustrating to buy a sweater one year and then realize that I probably won’t be able to find it again — it’s gone, forever! I’m wondering if Zara’s just-in-time system could ever get to the point where people can reference prior designs and pay a premium to have the item recreated. I would certainly consider paying $$$ for that sweater.
Next, do you happen to know if Zara’s online operational model differs from its in-store operational model? I get the feeling that there are many items, which seem to be of better quality, that are sold exclusively in the store. I used to make all my purchases at the retail store when I lived in NYC, but since I’ve moved away I have had to make purchases online — the items, while good, are just not the same.
Finally, how does Zara’s operational model work internationally? It seems as if operations are broken down regionally. A blazer size 32 sold in the US is NOT the same as the same blazer of the same size sold in Argentina. I have also heard this criticism from other Zara enthusiasts. I think this could be a flaw in the company’s global operations model. Just a thought.
Thanks again for the great post!
Those are great questions. Compensation is variable, but is tied more to the popularity of a song than to the number of times it is streamed. The equation is slightly complex, but ultimately, I think it’s fair. Here it is:
Spotify monthly revenue * (artist’s Spotify streams / total Spotify streams) * 70% to master and publishing owners * artist’s royalty rate
The company tries to be very transparent with how it compensates artists. More information can be found here:
Hope this helps and thanks for posting!
That’s an interesting point. I think it emphasizes how important it is to find great talent at the company. People who are passionate about an organization and who want to see the company succeed will find most, if not all, problems that threaten the business’ success to be “sexy”. It also depends on how incentives are aligned to diagnosing and solving problems. If one’s paycheck were tied to the business’ overall success (e.g. equity), that would surely incentivize me to pursue just about any problematic area in the business.
Thanks again for commenting!
Good point! Like many creative companies, Spotify has a start-up culture that encourages experimentation. In fact, when I read about how Spotify tests products, I was reminded of the Facebook case.
Thank you for commenting. Yes, I too was reminded of the Valve case when I read about Spotify’s operational model. In fact, I was also reading that these matrix organizational structures are quite popular among engineering teams.