As described in the case study, Isolde and Emanuel took different paths to success and implemented two different strategies based on their respective markets. Isolde’s company, Siiquent, originally struggled to mark up their test instruments to hospitals and labs due as they were prohibitively expensive, so they focused on earning sustainable profit from compounds, test kits, and other consumables. Emanuel’s company, Teomik, had been providing compounds to customers but had to compete on price with other providers. When they acquired patents for some gene-based scientific technologies and started making instruments, they discovered big institutions weren’t turned away by very expensive instrument prices, so they leveraged this and earned massive margins on selling instruments. Isolde boils down the distinction between Siiquent and Teomik quite elegantly—in a razor and blade model, Siiquent makes money on the blades but not the razors, while Teomik makes money on the razors but not the blades. Both pride themselves on having outstanding customer service and support
Eventually, patents for both companies expired and merging the two entities started to make sense, since even though they had found their own niches, they stepped on each others’ toes and each had separate overhead costs. Peter, the chief of Scherr, framed the merger as if only one of the two companies’ revenue models would continue on, and having a single revenue model would add structure and cohesion to the unified business. It would likely be the first step to breaking down the siloed barriers between the companies, who had been under the same umbrella for quite some time. However, he was surprised to hear that both Isolde and Emanuel valued “customers, competitors, and employees” over revenue models. They believed that the flexibility each company had was necessary to maintain competitive advantage in their respective markets. Another option to unify the two business models was to focus on services, but Emanuel and Isolde argued that services wouldn’t work as a profit driver but is still immensely important.
In the case where the department heads must merge their divisions together, I would encourage all parties to work together to distinguish and determine what aspects of the divisions could be unified versus what should stay flexible and separate. I believe the best solution should be an appropriate mix of the two rather than forcing a single rigid structure or simply keeping the status quo.
