Facing the Music: Diego’s Strategic Decision

In February 2007, Diego Papalia, founder and owner of Ottawa Pianos, was getting ready to meet with his daughter, Carmen, to discuss the strategic future of the company. Five years prior, the father–daughter duo had started separate projects within the business. Diego had launched the digital music centre and Carmen had started a piano school, with a plan to reassess which might be the more lucrative endeavour in five years’ time. The DMC sold guitars, amplifiers, drum kits, and various other electronic musical equipment; however, there was a high turnover requirement as music technology was constantly evolving. Carmen’s piano school had grown to over a dozen instructors and 300 students. The downside was that it took up a lot of space— in this case, the entire basement that could otherwise be used for stock storage—and yielded low profit margins. Diego and Carmen had to decide which of the two projects to retain.