Which markets do Isolde and Emanuel target respectively? How do their respective business/revenue models align with their markets?
Isolde targets hospitals and labs focused on gene-based diagnosis. Her market includes a lot of strict regulations due to her product, and a lot of her customers, being hospitals, are interested in the ability to generate revenue by buying cheaper test instruments. Her revenue model works by selling products like razors at cost, and making money from consumables such as blades, reagents, test-kits, etc. This model fits Isolde’s market because hospitals are familiar with having predictable costs and paying per test. This also helps build loyalty and establish recurring customers.
On the other hand, Emanuel targets research institutions and universities focused on genetic and biological studies. His market includes scientists and labs which works with their product because these customers value performance and innovation more than cost. This is also because they are often supported by large research grants or endowments. His revenue model works by selling high-end research instruments at a premium price, while making little to no profit on consumables like recurring tests, blades, or reagents. This model fits Emanuel’s market because research labs value reliability, cutting-edge technology, and expert support over price. This approach allows him to maintain high margins and strong relationships with prestigious scientific institutions.
What are the pros and perils of “imposing the structure of a single revenue model” vs. “letting [the company] continue on its flexible way”?
Imposing the structure of a single revenue model would be beneficial because it would align incentives and make it easier to communicate their value to customers. Having a single value proposition allows for clarity, consistency, and would greatly simplify the inner workings of operations, pricing, and general company strategy. It would also help for forecasting the company’s growth because the customers would be aligned and general strategy would be aligned. This also helps with sales. However, this would require making a lot of team cuts and picking and choosing between companies. This is not ideal as one business model will have to be left behind along with those who enforce it.
Letting the company continue on its flexible way would be beneficial because it would allow each division to adapt to the specific needs of its market, which would then be able to reach a larger TAM. This flexibility encourages innovation because they can adapt their strategy to expand without being constrained by a single framework. Having multiple revenue models can also diversify income streams and make the company more profitable and stronger against competition. However, it would require careful coordination to ensure that it doesn’t lead to internal confusion or inefficiency. This could also be spreading too thin, doing many things but not doing any of them well.
Pretend that the CEO has decided the department heads must merge their divisions together. As a star PM assigned to mediate this interaction between department heads, how would you scaffold the discussion to ensure a fair merging process?
As the PM leading the merger, I’d start by getting both department heads aligned on shared goals and what success actually looks like for the new division. From there, I’d walk them through a structured conversation comparing their markets, customers, and revenue models so we can identify overlaps, test what really works, and build a unified strategy that feels fair and balanced to both sides. As long as incentives are aligned, we will be successful!
