Opening Pandora's Box - Reflection

        I would still recommend an aggressive approach with Pandora’s technology. The conservative approach of pulling back, reducing headcount and having minimal investments are not a promising future. In my opinion, the pedal to the medal approach and the 3 emerging technologies provides motivation, determination and profitability for Pandora. Pandora must continue to be creative and unique with offering different ways to listen to music. I wouldn’t change the following bullet points below.  

• Continue to offer a free music service with an optional monthly subscription
• Continue to use the word of mouth marketing strategy (no significant marketing expenses)
• Continue to challenge the Copyright Royalty Board (Trying to Triple the licensing fees)
• Aggressive Path (3 New Emerging Technology products)

There must be an investment with the three emerging technologies.  As I mentioned, the three emerging technologies are a Pandora headset, a Pandora watch and the ability to watch free music videos. All three new products offer a new unique way to listen to music. A Pandora headset would be a great way to listen to music as other competitors wouldn’t match the product. The iNanos are heavy and don’t have a good track record with their ear phones. The Pandora headset provides convenience and easy listening with no technical interruptions. There is an opportunity to make $10 million in net profit within one year.

The Pandora watch is a creative way to partner up with Swatch. Pandora would add notoriety to their portfolio and the Pandora Swatch watch would add you as a household name. The ability to listen to music on a watch is unheard of and a great way to be creative. The Pandora watch would increase profitability with a $60 million net profit within one year.     

Pandora has an opportunity to provide free music videos to listeners and viewers. The ability to watch free videos is a similar approach with Pandora’s current model of listening to free music on the Internet. There is a major investment and a great way to significantly increase your net profits. I calculated approximately $292 net profit within one year! Your listeners have an opportunity to listen to free music and watch free videos!  

Pandora’s goal is for listeners and musicians to come together as one. I have identified new and creative ways to bring them together. The three emerging technologies gives you an opportunity to make $332 million net profit within the first year projections ($10 million in the headset, $30 million in the watch and $292 million in watching music videos on Pandora). I would take an aggressive approach and not look back. 

 I have a simple formula that helps identify the big picture.  Emerging Technology + Emerging Market = Significant Profits. I am looking forward to Pandora’s next action step.  

Microsoft Project

Joe,

I would recommend Microsoft Project for our accounts payable automation project coming this summer. Lotus Notes is outdated and is not providing as a good timeline resource.  It’s exhausting going back forth between Microsoft Excel, PowerPoint, Word and Lotus Notes. Microsoft Project is a one-stop shop for projects and it consolidates the different Microsoft programs into one main program.

          We weren’t efficient with time and we were over the budget by $150,000 during the credit card project. We spent an additional $100,000 in consultants and another $50,000 in overtime with staff training.  We were not accurate with time and relied too much on the Lotus Notes calendar. I don’t want another timing debacle similar to the credit card project. The CFO came into my office last week and encouraged me to improve our time management in projects.   In my opinion, Microsoft Project will give us the opportunity to make sure we don’t go over $150,000 in our budget and that we stay focused each day on our daily tasks.  Microsoft Project provides us with a significant impact in visibility and accurateness for achieving deadlines in a timely manner. I want to ensure we save time and money for the a/p automation project.

         Microsoft Project is a one-stop tool that is neat, organized and efficient for future projects. The built in features gives you the various different charts to see your reports. The Ganntt chart is where you input your timeline data and it gives you the visibility of the task.   You can insert a column and begin your timeline. It gives you an endless amount of features using the drop down field columns. For example, there is a % complete column that shows how far complete you are with a project. The % complete drop down option is great way to monitor your project. You have the ability to take notes and there is a sticky notepad symbol that you can add additional comments. The cost drop drown feature is another great way to ensure you are on target with the budget. The budget shows a comparison to actuals in a Microsoft Excel format. You can create charts and diagrams with the spreadsheet analysis making it convenient using one program instead of Excel and PowerPoint. This analysis will be great for the upcoming a/p automation project as we can monitor each week and see how committed the a/p consultants are achieving the deadlines. The goal is update the actual data daily and not go over the budget. This will be a key area where we could make a significant improvement. I’m ready and eager to get my team and the solution up and going within three months. Please open the attached Microsoft AP Automation file as there are 5 easy steps to view the project summary into 1 sheet.

1. Click Projects
2. Select Reports
3. Select Overview
4. Select Project Summary
5. Print

Please see the $150,000 cost savings below.
Total Yearly Cost Savings – A/P Automation Project

•          $100,000 in a/p consultants –Microsoft Project provides new visibility to projects.                                
•           $50,000 in training – The structured timeline will require no overtime.    

       We can use Microsoft Project for other tasks such as electronic time sheets for the entire company. We don’t have a timesheet policy and HR is looking for a timesheet software solution. HR should stop looking for an HR software and we can utilize Microsoft Project as the replacement. We have a significant expense in overtime and Microsoft Project would solve our problems. This will modify our paper archaic timesheets and will serve as an electronic timesheet. I can partner up with the HR director and show the benefits of Microsoft Project. Microsoft Project is more than a project timeline and we need to be creative with this application. We could deploy Microsoft Project onto employees’ laptops and the application would be installed within 45 minutes. There would be a training demo on Microsoft Project for the new time sheet procedures.   We could save $250,000 in HR software and maintenance!! I will have visibility in overtime for fulltime employees. Also, I can keep track of the part time employees compared to receiving a monthly invoice from Robert Half. I created my employees in the Timesheet file and I have access to view my employee summary. Please open the attached Timesheet file as there are 5 easy steps to view the weekly payroll expenses. 

1. Click Projects
2. Select Reports
3. Select Overview
4. Select Project Summary
5. Print

Please see the $450,000 cost savings below.

Total Yearly Cost Savings – Microsoft Project Company Timesheet

• $250,000 – Software/Maintenance. Why do we need new complex electronic timesheet software from a HR vendor? The HR Software is going to 6-8 months to implement. Also, do we need to pay another $50,000 a year in yearly maintenance to the HR vendor?
•  $200,000 –Company overtime. Microsoft Project’s electronic timesheet will serve   as                a better visibility tool compared to monthly P/L’s ($300k o/t savings - $100k Microsoft Project Users = $200k).   

I am ready to discuss Microsoft Project since we have Microsoft already installed on our laptops. The IT department can install Microsoft Project to our laptops quickly so we can get started with organizing the project timeline. I want to ensure Microsoft Project will give our team the ability to meet tasks timely and accurately so we don’t go over budget compared to the credit card project.  Microsoft Project’s one-stop feature will make all of our jobs easier and efficient. I am ready to show the HR Director    that Microsoft Project is an electronic timesheet feature for the entire company. I want to show the CFO that I am ready for the/p automation project and I will be cost effective, utilizing Microsoft Project as a timeline resource. A $600,000 cost savings reduction within a year is a great story to build on to my resume.  

Opening Pandora's Box

Key Problem

Pandora is starting to see major success in December 2007. The users are growing to 8 million and online hours were growing at a staggering 50% year on year. Pandora is projected to see a positive cash flow in 2 years. There is a potential challenge that Pandora had to face with the Copyright Royalty Board in Washington, DC.  You are  facing serious threats in licensing fees and trying to find a balance of risk and reward. Tim Westergren, your chief strategist and founder of Pandora has to make an important decision besides the potential increasing licensing fees on what strategic path to choose:   A conservative path or an aggressive path. The conservative path would pull back on the growth levels, reduce headcount and have minimal investment in the Pandora product. The aggressive approach is a pedal to medal approach, which would add headcount, significant investment and financing and take advantage of the first mover advantage. The key problem is what strategic path will be the most efficient for Pandora’s future growth.

There are 4 major distribution channels: traditional radio, satellite radio, CDs and digital music. Pandora will have a technological advantage over these alternatives.

Traditional Radio

            Traditional radio is a free music broadcast for FM listeners. The radio stations earn advertising revenues based off of advertisements. In recent years (2000-2005), traditional radio has been on decline for several reasons: Listeners being annoyed with too many advertisement's and with technology. Listeners found new ways to listen to music using portable music devices like MP3 players.    

Satellite Radio

            Satellite Radio is a subscription based way to listen to commercial free music, sports and news. The subscription is approximately $12.95 per month and is dominated by two companies XM and Sirius. The two companies had a $6 billion accumulated losses by the early part of 2007.      

CDs

            Compact Disc (CDs) consist of a pre-recorded 10-14 songs or single songs CDs.  The CD comes with a CD booklet with pictures and song lyrics. CDs are not free like traditional radio. In 2005, the average price of a CD was $14.92. CDs like traditional radio are seeing a decline due to today’s technology. Digital music is a new way of listening to music in a convenient and user-friendly way.        

Digital Music

            2005 is the year when the US digital music sales doubled reaching over $770  million. Digital music growth is the reason the CD business declined. Digital music is based on either a la carte single songs or monthly subscriptions. iTunes has a la carte for $.99/song and Rhapsody $9.99/monthly subscription. The digital music business is growing significantly however; Pandora has a different philosophy. I am in favor of your free of charge philosophy of listening to music and an optional monthly subscription.     

Pandora – Recommendation

The other four distribution channels (radio, satellite radio, CDs, iTunes/Rhapsody) all have cons and they don’t have the unique opportunities that Pandora offers. In exhibit 7, there were 4 attributes that Pandora was favorable (the colored circles). The pros were:  Variety, low price, ability to find new songs and interruption-free listening. There was one major con (no color in circle) that was to play specific songs on demand. In my opinion, I wouldn’t change to a la carte for specific songs on demand for listeners. I don’t think it hurts the value of the Pandora product as listeners like the convenience of music listening.  Pandora is the preferred digital way to listen to music compared to the other distribution channels.  Pandora offers a free, efficient and user-friendly way to listen to music on the Internet. Other digital music services do offer similar ways to listen to music but to pay for songs is not favorable and is a major difference (iTunes $.99/song and Rhapsody $9.99/month).  

 I wouldn’t change the marketing strategy as well as the word of mouth strategy has been working well over the years. As it was mentioned to me, Pandora’s goal is to create new ways for musicians and listeners to find each other. The aggressive path is creating three new technological products that will accomplish Pandora’s goal. I would recommend the following four bullets below that will not only increase profits but make Pandora a household name.   

• Continue to offer a free music service with an optional monthly subscription
• Continue to use the word of mouth marketing strategy (no significant marketing expenses)
• Continue to challenge the Copyright Royalty Board (Trying to Triple the licensing fees)
• Aggressive Path (3 New Emerging Technology products)

Pandora’s Emerging Technologies

I would recommend three new products for new and existing customers that would significantly impact today’s music word: a Pandora headset, a Pandora Watch and creating the ability to watch music videos on Pandora. I see walkers and joggers struggling with iNanos and their headphones. The iNanos are neat and can store up to 1,000 songs but the issue is iNanos are not convenient and causes technical issues. iNanos are heavy and are a liability as they could break if you drop them.  Also, customers need to buy additional headphones since the iNanos headphones are not reliable and are a weakness in their product.  The Pandora headset would be an exciting concept where users can listen to Pandora on a mobile wireless headset. The Pandora headset requires no wires and essentially goes around your ears similar to a wireless mobile phone headset. There are existing products that have traditional radio headsets so the research and development wouldn’t require an extensive amount of time.  Pandora wouldn’t require a significant amount of time for production as the main components are already enabled with through computers, tablets and phones. You can charge $50 for a headset compared to the iNanos $60.  You are reducing a price on the new technology competing head to head with Apple. Overall, the Pandora wireless headset has an advantage over Apple’s product: The Pandora’s headset is less expensive, comes with no software, music downloading and doesn’t require purchasing additional headphones.  

First Yearly Projections:

$50/Pandora Headset * 1,000,000 new customers = $50 million (revenues)

$40/Headset costs to make * 1,000,000 headsets =   $40 million (expenses)

                                                    Total:     $10 million (profits) 

The Pandora watch is another excellent idea to add to Pandora’s new collection of IT products. The Pandora watch is a unique, fun and exciting way to listen to music. The Pandora watch is light, modern, hip and easy to listen to music in a new efficient way. Pandora would partner up with an established watch company such as Swatch. Throughout the years, Swatch has targeted a younger population similar to Pandora. This would be a good fit for both companies to expand growth and revenues. Swatch has the expertise with their watch functionality and Pandora adds a new unique way to listen to music on a watch.  You would be able to even set the time to listen to your favorite stations during a particular part of the day. For example, you can program the Lionel Ritchie station in the morning and Best Hits in the afternoon. The Swatch Pandora watch would sell for $60 for the watch, watch charger and music. The watch would need a charger similar to mobile phones. We guesstimated a $30 million increase with the Pandora watch.

First Yearly Projections:

$60/Pandora Watch * 3,000,000 new customers           = $180 million (revenues)

$30/Watch costs to make * 3,000,000 new customers   =  $90 million (expenses)

$20/Swatch royalties’ fees  * 3,000,000 new customers =  $60 million (expenses)

                                                     Total: $30 million (profits)    

 

Pandora’s customers like the free convenience of listening to music but watching free music videos is an even a better concept. It’s the same concept as listening to music but you would be seeing the music videos for free. It would have minimal commercials like the current process with listening to music. The most profitable aspect of this alternative concept is earning the advertising revenue in both segments of the business. Your company would earn both advertising revenue in listening and watching music!

First Yearly Projections:

$50,000/Commercial * 9,125 Total (25 commercials/day *365 days) =    $456 million (revenues)

$36/Yearly Paying Subscriptions ($3/month)* 1,000,000 new customers = $36 million (revenues)

$20,000/Licensing Fee for Music Video  * 10,000 Music Videos    =       $200 million (expenses)

                                                                                                                                                                                            Total:         $292 million (profits)    

Conclusion

            A free product is unheard of in today’s market. You have done an outstanding job with your Pandora product revolutionizing the free music world while earning advertising revenues and subscriptions fees. You have done an excellent job with the word of mouth marketing strategy and I would continue to use the word of mouth as a free marketing strategy.  There is a significant amount of technology that I could add to your platform with three new ideas: a Pandora Headset, a Pandora Watch, and watching free music videos on Pandora. I recommend all three new products that would increase your revenues and the future is an aggressive path. In my opinion, Pandora should use a pedal to the medal approach as this will generate significant funds. You have the potential to make $332 million within the first year projections ($10 million in the headset, $30 million in the watch and $292 million in watching music videos on Pandora)!  

            I am available to discuss these great emerging technologies this week if you would like to discuss more in detail.                                 

Bombardier Reflection

            The consultants reviewed the second implementation on a green, yellow and red post implementation rating. The Dynamic Consultants feel that a green rating was accomplishing the goal effectively, yellow rating needed some fine tuning and red needs a significant improvement. There were four areas broken down in executive management, project management, knowledge transfer and adoption.    

I agree with the consultants as Bombardier needs improvement in project management and significant improvement in knowledge transfer. I would still recommend developing Key Performance Indicators (KPIs). This was mentioned as a red rating and an area of concern in project management. Employees need to be aware of inventory reduction and costs. Bombardier’s management must show monthly KPIs to their staff, otherwise, the employees don’t see the value of the ERP implementation. For example, the Mirabel plant had a significant reduction in $1.2 billion in inventories within the first year of Go-Live. The KPI inventory reduction should be communicated throughout the plant on a monthly basis to the staff. This is a major accomplishment for the plant and there must be awareness of this outstanding achievement. The ERP KPIs will only boost morale within the department. These positive results will allow employees and management continue to build rapport.       

I would still recommend making significant improvements in knowledge transfer with proper training and eliminating the legacy systems. The consultant training was not effective and power users struggled in the second implementation. I agree with the Dynamic Consultants that additional full-time headcount would be needed since the outside consultants were not adding value. Two full-time SAP specialists on each site is a great recommendation compared to the inadequate consultants.  I would still suggest utilizing the Mirabel plant as a resource. The Mirabel employees can cross train the next plant with their knowledge transfer. Also, I would recommend eliminating the legacy systems for each site. Employees should be deactivated from the legacy systems after each site goes live to ERP SAP.  The Dynamic Consultants did an excellent job with providing the best practices. This will make the ERP SAP third implementation a successful project.   

Dr P. – I attached 2 of my KPIs from my ERP system that I prepare to my staff.

                        1^st KPI –How long does it take for my team to log invoices.

                        2^nd KPI – How many a/p checks are being issued. The goal is to convert to ACH payments.