The future role of treasury has come under the Nordea spotlight following the publication of our in-depth Treasury 2017 survey and report. The treasury's role in an organisation obviously differs widely depending on industry, growth rate and targets and the company's overall strategic agenda. However, what tends to be a common clear trend is treasury's growing role as a strategic interlocutor, as a knowledge center and as an area with very high demands on customisation and agility.
To explore this theme, Jesper Ramsö, Nordea’s Head of CM Sales & Solutions, spoke with Johan Bergqvist, Group Treasurer at Spotify, one of the Nordics most progressive and future-focused companies and one experiencing a high growth rate in the rapidly changing industry of media. In Spotify’s situation, for instance, what requirements are imposed on the Treasury in terms of innovation and organisation? We set about finding out.
Jesper: What does innovation mean at Spotify and how does it affect the way you build treasury?
Johan: Innovation is very important for us. The industry we are in is changing fast and requires us to innovate and keep moving.
I started here two years ago and was struck by the spirit of innovation, both in terms of the culture within the company and in how the company is structured. Take for instance our technology department – there are 700 people in 90 different teams and each team has its own responsibility, e.g. Search or Playlist curation, and they have their own ecosystem consisting of product people, graphic designers, testers and developers. It was extremely exciting to see how they work; like small self-dependent start-ups within the larger organisation. Product enhancements are shipped by different teams every second week independently of each other. It is an exciting environment to work in.
Over the last two years, Spotify has doubled the number of employees and doubled its turnover, while we have expanded from less than 20 to 58 countries. For a company to stay on top of such fast expansion, it requires a lot from all support functions and areas of the organization – including, of course, treasury. It meant I had to think a lot about how to structure the treasury department to be able to achieve scalability.
Jesper: What is your mission as group treasurer and what measures do you use to achieve it?
Johan: During the two years I’ve been at Spotify the job description has changed and as a result so has how I set about developing the treasury from the ground up (there was no treasury per se when I started). We have all the obvious elements that exist within treasury but also manage investor relations, insurance, corporate finance and the management of our share register. It is quite a broad role and certainly a fun responsibility.
Currently, during a test period, we have tried to embrace some of the working methods our tech department use. Within the team we try to be autonomous and agile by not having specific responsibilities assigned within the group, rather being task oriented and project based without strict job descriptions. We are all collectively responsible to deliver on the activities assigned to treasury and we encourage each other to continuously challenge, simplify, and innovate the way we work – and, most importantly, to have fun while doing it. We have a weekly team prioritisation meeting when each member has an equal say in what we should focus on. I strongly believe that with the right people, the right conditions, and the right environment great things will be achieved. Removing the fear of failing is the biggest enabler for innovation, therefore we try to promote a fail-friendly environment.
Jesper: But what happens then to the required formal aspects, such as governance and administration?
Johan: First of all I just want to be clear that the way we work and structure ourselves is an iterative process and I have no answers on the perfect organisation, only a hypothesis which I am now testing. So of course we cover the basics, but we also try to challenge the norm and when possible try to find ways to remove manual processes in favor of simplicity and to automate these to achieve maximum scalability. This extends throughout the company from the treasury department to the chairperson and CEO. It does make it a bit challenging for a person that prefer a structured environment.
Jesper: We touched on agility but do you also consider Spotify to be that rare thing – a silo-free company?
Johan: Well, in comparison to other companies, I would say we are relatively silo-free. We empower the individual and information sharing is part of the cultural back-bone, successes as well as failures. Also the way we are structured creates a collaboration friendly environment. If you visit Spotify Agile you will see a video presentation on how we are trying to work.
Jesper: Do you have a best practise policy for establishing Spotify in new markets and regions?
Johan: We have some guidelines in place for entering new markets. Ambition is to minimise complexity. We try to be as lean as possible in our organisational structure. It gives us some advantages but there is always a balance to be reached; for instance, when official authorities say you need to be registered locally. Brazil is a typical example of this. But in general, we try to resist building unnecessary complexity in the organisation.
Jesper: Spotify partners globally with banks, auditing firms and so forth – what requirements do you have for your partners?
Johan: Generally, large, mature companies – take banks as an example – have built in so much technical debt in their organisations that change becomes something very challenging for them. As change is the foundation for innovation, banks struggle to keep up with smaller more niched players.
We also expect them, once they have identified our needs, to become better at developing and shipping new products and solutions with high relevance for us as a customer.
I think in general, banks have existed in an oligopolistic environment which has meant they have not had to change all that much and they have generally moved forward at the same pace. But as technology makes increasing inroads into banking values and culture it will be more similar to how we in the tech space work. In this environment, either a company takes part in the change or will be overtaken by its competitors. Some companies will of course act in good time and grow as a result, while some will slowly fade away. It is important for companies to have a strategy that can deliver product improvements in an agile way. I believe those who can run fastest in terms of developing their banking software will be able to achieve greater market share going forward. This is not exclusive for banks, rather it is applicable for most big organisations, as they grow complexity will follow. As an organization you can fight it but not entirely eliminate it, in my mind the organisations that have identified this and successfully work to mitigate complexity will be the long term winners.
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