Isolde, the head of Siiquent, focuses on hospitals and big diagnostic labs conducting gene-based diagnoses. Siiquent’s revenue model is the razor-blade model, meaning that they sell machines basically at cost and make profit off of “stuff,” or things like chemical and biological consumables. Since they focused on a budget-conscious market (hospitals and healthcare-adjacent institutions) that needs to comply with strict regulations, they also further adjusted by providing maintenance support and moving toward a pay-per-test model for their consumables, which further aligned their revenue model with their market.
Emanuel, the head of Teomik, focuses on big research labs and universities that run gene-based studies. Teomik’s revenue model is the opposite of Siiquent’s, making profit off of machines rather than consumables. This is because Teomik faced most of its competition in consumables but enjoyed high margins on patent-protected machines that big labs and universities wanted (who also cared less about price because they had funding). In addition, Teomik focuses on flexibility, and offers expert support rather than maintenance support, which further aligned their revenue model closer to their market.
I think some pros of imposing a single revenue model are that it would simplify company strategies; instead of making 2 separate decisions, the company can just focus on making one decision for both sectors. It would also simplify communications to shareholders and align marketing. Some perils of this structure are that it reduces the flexibility that both Siiquent and Teomik operate on; if one sector of customers wants a change that a different sector of customers doesn’t want, it could cause conflict. There’s also the risk of alienating customers and losing the close relationships each have built within their respective sectors.
However, letting the company continue as is also has its pros and cons. Continuing as is enables both companies to better respond to its customers and preserves their unique competitive advantages, but also risks internal confusion on aligning the company goal-wise and strategy-wise, making scalability more complicated, and makes it difficult to create long-term goals since both models are more relationship-based and reactive rather than proactive.
If I were a PM for this situation, I’d begin by outlining shared goals between the two divisions and acknowledging the benefits and wins of each division’s revenue models and leadership. I’d map out the entire revenue space that both divisions cover to identify overlaps, divergences, customers, and begin brainstorming different models for uniting the divisions, like piloting bundled programs for machines and consumables that vary based on the customer need (a program for healthcare-focused institutions that discounts consumables if they buy machines too and a program for universities/big labs that discounts machines if they buy consumables too). I’d also start to identify what a shared evaluation criteria would be for this merger: what does success look like for both divisions, and in what ways do they differ? Finally, I’d focus on integration pathways and ask each division head to identify pain points, current successes, and paths to integration that benefit both divisions.
