Markets and Revenue Models
Isolde and Emanuel lead two units that serve distinct yet increasingly overlapping markets. Isolde’s Siiquent focuses on diagnostic labs and hospitals, generating profit through a “razor-blade” model (selling machines at cost and making money on biological and chemical consumables). As she puts it, “we both sell two things: machines and stuff that the machines use. My unit makes its money on the stuff.” On the other hand, Emanuel’s Teomik targets academic and research institutions, such as the Max Planck Institutes, and makes money primarily on machines, with consumables playing a secondary role. He sees value in pricing flexibility, adapting to “customer demands, internal accounting guidelines, and competitive threats.” These models align with their respective markets, since Siiquent’s customers are price-sensitive institutions bound by reimbursement structures – hence, cost-efficient and service-backed consumables are very important in this case. Teomik’s clientele (research labs) prioritize cutting-edge equipment and appreciate the “expert support” that accompanies it.
The Pros and Perils of One Model versus Many
A unified model offers clarity and coordination, reducing both customer confusion and internal conflict. As Peter notes, “sales forces sometimes even called on the same customers, leaving potential buyers confused.” Standardized incentives, pricing strategies, and key performance indicators can streamline integration after a merger while strengthening focus by providing a lens for assessing profitability and scale (however, this uniformity comes at a cost). Both unit heads argue that rigidity undermines innovation and responsiveness—Isolde insists that their “ever-changing mix of models” is essential for adapting to a dynamic market. A single approach can also create mismatches between products and customer needs; as Isolde remarks, the “stuff vs. machines” debate is a “false dichotomy” because real-world demand cuts across both. Furthermore, employees may resist unfamiliar models, as sales teams already struggle to sell services when customers “don’t seem to grasp the value… before they’ve experienced them.” A rigid structure risks stifling the adaptability that has kept both divisions thriving post-patent.
Facilitating a Fair Merger Discussion
If assigned as a PM to mediate the merger between the two departments, I would structure the process around collaborative discovery, scenario exploration, and co-design. The first step would be a discovery phase, where both sides articulate their core strengths, customer segments, and revenue logics—much like the offsite meetings where Isolde and Emanuel “came to a better understanding of each other’s businesses.” Next, I would facilitate scenario planning by simulating customer journeys under multiple strategic models (machines-first, stuff-first, and hybrid) to visualize trade-offs, such as moral hazard in pay-per-test models versus rigidity in machine-heavy ones. Finally, I would guide the group toward designing a modular framework that integrates shared services and optimized pricing strategies, while establishing “guardrails” to determine when pivots are necessary. Throughout the process, I would ensure balanced participation and an emphasis on prototyping solutions before actually institutionalizing them, with the vision to not be to impose a singular answer, but to co-create a flexible model that heeds both divisions’ expertise and market realities.
